The Impact of Failed Customer Payments and Passive Churn
Failed customer payments for recurring subscriptions are often seen as a cost of doing business when using subscription revenue models. Payment failure rates approaching 25% of recurring transactions are not uncommon. And these failures can happen for a variety of reasons, including an expired credit card, an incorrect billing address or insufficient funds, for example. Regardless of the cause, the consequences for the business go beyond a missed payment event. Often referred to as passive churn, these failed payments can severely affect the entire economics of the business, and therefore treating these as unavoidable can be a very expensive mistake. The impact of failed customer payments should be of concern to many in the organization including the CEO, CFO, CMO and COO. Today, complementary third-party technologies exist that address the issue in a comprehensive way and that can have a meaningful impact on the bottom line.