09 Nov Why Dunning Is An Untapped Growth Opportunity – And How To Get Great Results
Dunning, the process of methodically communicating with customers to ensure the collection of accounts receivable, is usually seen as just another debt collection tool – and something that’s frustrating and unpleasant for the end recipient. Yet it doesn’t need to be this way. In fact, dunning can serve as an untapped way to minimize revenue loss while simultaneously providing your customers with excellent customer service. Once you treat dunning like it’s just another way of engaging with your customers, you can use it as a communication platform to better support your customers and improve their satisfaction with your company.
So how do you transition the dunning process to something less intimidating and more positive for both your company and your customers?
Read on to find out…
- Keep Your Tone Friendly And Helpful
Remember that your tone matters. So, don’t make it seem like you’re trying to shake people down to get paid. Try to build customer loyalty instead, while simultaneously getting customers who have outstanding invoices to make a payment.How do you successfully accomplish this type of feat?By sending people gentle reminders that their bills are overdue. You can even go so far as to personalize them a little, like “A Personal Note for Thomas Smith,” for added effect.
Even if messages about neglected payments must get more urgent in tone, they should always stay professional. Around 50% of all lost customers are due to failed transactions and expired credit cards, many of which wind up being completely accidental in nature. Think about how much you would alienate a long-standing customer if you blasted off a rather nasty email about a failed payment, all because they forgot to update their billing information when their credit card expired 3 weeks ago.
BONUS TIP: always remember to say “thank you” to your customers after payments have been made. This serves as a reminder that you’re in a valued business relationship with them, which helps build brand loyalty.
- Offer Flexibility In Payment Options
Here’s something that nonprofits figured out quite some time ago: by offering different payment plans and/or terms, you maximize the amount of money you collect. Letting people pay in smaller increments over time often results in people paying more than they initially had planned for. If possible, let your customers select their preferred monthly payment date, so that they are able to pay you as they get paid.If you use dunning in combination with a variety of different payment options, you will engender more trust and loyalty in your customers, since most will appreciate having this type of flexibility.
- Sell Upgrades And Add-Ons
You should always try to cross-sell and up-sell during the dunning process, as this is a great way to promote add-ons and account upgrades. When you contact customers to let them know about missed payments, share details regarding promotions you’re running, and/or market different plans/packages to them. This serves as a prime opportunity to introduce them to new features and programs they might miss out on if their account ends up being canceled, which helps to draw them back in. After all, who wants to miss out on a great promo, or cool new features that are coming down the pipeline?Dunning can also serve as a prime opportunity to introduce new plans to customers with existing plans that just don’t fit in with their needs anymore. It doesn’t have to just be a stagnant process of chasing after payments: service delivery and marketing should also be incorporated into the mix.
- Practice Progressive Messaging
Customers appreciate getting the benefit of the doubt, just like you do, because let’s face it: we all forget things now and then. So, don’t hit your customers with late fees right off the bat. Practice progressive messaging instead.What this means is that your first message should just be a friendly reminder about a missed payment. After this first message is sent, if payment still hasn’t be remitted, send out a more formal notice regarding the overdue invoice. If a customer still hasn’t paid by the third message, notify them that late fees will begin.Remember to escalate urgency in your messaging based on how long it has been since a payment was received.
And speaking of messaging, a good rule of thumb is to use more than one type of communication channel. Emails that mention credit card numbers are frequently blocked by spam filters, so alternate forms of communication like text messages and snail mail can be useful.
- Focus On Timing
The phrase “timing is everything” applies to many different things in business, including dunning. You’re more likely to collect payments by messaging your customers as close to the due date possible, and more likely to obtain larger payments if you send reminders to people ten days before they start accumulating late fees. You can also send reminder notifications to your customers regarding upcoming due dates, which will help to ensure they pay on time.BONUS TIP: set up a system that will notify your customers at regular intervals. So, for example, send a reminder message three days after a missed payment, and then again after seven days, 14 days, and 21 days. Your timing model may vary, but consistency is key when dunning.
Dunning can – and should – be much more than just a debt collection tool. It’s one of the best revenue-rescuing systems out there, but your success will ultimately depend on how you use it. By embracing the tips outlined above, you’ll accomplish something that many other businesses struggle with: successfully collecting on past due invoices without alienating your customers in the process.