In today’s multi-channel world, an effective strategy is a “must-do” for SaaS benefactors, in a quest to drive business value. The consistently changing SaaS landscape has unlocked a smorgasbord of opportunities for both businesses and end-users to revel in and make the best out of their investments. Well, the core factor behind SaaS popularity is credited to its recurring nature. Indeed, this automated billing structure via recurring credit card payment makes the collection more detectible and smooth. Amidst this, most SaaS providers are on the lookout for weapons to deal with the biggest foe of this booming cloud hosting model – increasing customer churn rate (voluntary and involuntary).
The reasons cited by chief information officers for involuntary customer attrition – when a subscriber’s credit card limit goes abruptly down, and when timely payments are not made and subscriptions are canceled owing to non-payment. This could be because the credit card has got expired, canceled, or stolen, and the customer has not updated his data in the merchant’s billing system.
Like other problems, this catch 22 situation can also be addressed with the help of leading-edge tools and strategies. It goes without saying that taking hold of customer churn rate can have a direct impact on business’s frontline performance. Not to mention, your selection of tools and techniques matters up to a great extent in curtailing the attrition rate – whether you offer VPS hosting, email hosting, IaaS or SaaS services.
Apparently, SaaS vendors should strive to implement solutions that demand less user interaction and are simple to handle. As the issuing banks have all the rights to decide whether they are going to accept or terminate the charge, providers should have valid customer transaction data to show to the credit card issuing bank for successful recurring payments. Apart from this, there are various other things that cloud hosting service providers can do on their part to increase the chances of their claims being accepted.
This blog attempt to elucidate some of those methods that can increase the chance of getting the charge accepted and ultimately decline the attrition metrics:
Payment Method Updater: This is one of the best services offered by a trail of leading card providers like MasterCard, American Express, and Visa to automatically update new card details, in addition to, its account number, effective from and expiry date in the provider’s billing system. It is found that most of the times, customers forget to update their reissued credit card details, which substantially terminates their subscription for the service. The changes could be due to card expiration, theft, or because of cancellations. Thus, by having the payment updater in place, changes in credit card details can be automatically saved, reducing the chances for payment decline.
Recurring Flag: Flagging transactions as recurring cuts off the chances of payment declination as it conveys a message to the issuing bank that the transaction is one of a regular series for that particular credit card. Depending on your popularity and number of transactions, these issuing banks treat you as an important merchant and can even whitelist you in their systems, which will ultimately reduce the chances for recurring charge rejection.
Bank Identification Number (BIN) Filters: There is a host of credit cards that have an extremely high failure rate for particular charges. For the first-time charge, these cards work, but later on, fail. By having a bank identification number, you can easily blacklist such cards. When any user signs up for your service, you can crosscheck the BIN and blacklist it if the card falls into your compiled blacklisted list.
Merchant Category Code: A Merchant Category Code is a four-digit number allocated to a business by credit card brands like MasterCard and VISA, depending on the portfolio of products/services the business offers. Typically, assigning a code is a sole decision of the credit card brands, however, you can request for a new code if you think that it will reciprocate your business well. It goes without saying that having an appropriate category code is important because if your code is different from the business, your charge gets canceled.
Card Statement: Every month, cardholders receive a bank statement that lists all the transactions made. Unrecognized charges in the statement can fuel up the reason for disputes. Thus, SaaS providers should try to use short and simple names and specify how their recurring payment should be reflected in the statement.
SaaS providers can follow above mentioned recommendations to curtail customer attrition rate and ramp-up on the success roadmap.
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Software As A Service