Why is tracking your payment acceptance rate important?
If your payment acceptance rate is low, you’re losing revenue from:
- Prospective customers who are actively trying to purchase your service.
- Existing customers who are trying to extend (or even expand) the use of your service.
By using the different ways of segmenting payment acceptance listed above, you can find the cause and ultimately prevent this from happening.
Our work with over 2000 SaaS companies tells us that the main reasons payments fail are lack of funds in the customers’ account or because of lost, missing, or expired cards.
For first time purchases, this means you can lose the customer.
At the point of renewal, it means your customers can churn without intending to pause or stop their use of your service – meaning you lose revenue from the current and any future billing cycles. We call this involuntary churn – which accounts for 20-40% of your overall churn rate.
With this in mind, it’s clear to see how identifying and fixing these problems can have a big impact and help drive your net revenue retention (NRR). To put it in perspective, just a 2% improvement in monthly subscription renewals drives can drive 21% more revenue in 12 months.