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How to Reduce Failed Membership Payments

How to Reduce Failed Membership Payments

Memberships are a fantastic way to develop recurring revenue, but retaining your members in the long term requires the right technology. 

This article discusses one of the most common blockers of membership retention – involuntary churn – and how ROLLER helps you prevent it. 

What is involuntary membership churn?

The term membership churn refers to when a membership is canceled, either deliberately or unknowingly, by your guests.

Voluntary membership churn is when your guest actively decides to cancel their services with you. Among many other reasons, this could be because they no longer need your services, can’t afford to continue their membership, or don’t see the value.

Conversely, involuntary membership churn happens when a customer is unintentionally lost due to a failed membership payment. It’s called involuntary because your guests aren’t aware it’s happening. Because it’s not voluntary, this often flies under the radar of both guests and operators, resulting in significant revenue loss. 

What is involuntary membership churn?

Failed membership payments occur for a number of different reasons. Here are some of the common causes of involuntary membership churn:

  • Insufficient funds on the card
  • Expired or outdated payment information
  • Lost or stolen card

Think back to the last time you got a new credit card or had a large expense that drained your spending account. It’s easy to forget how this will impact your automated monthly charges, and therefore easy for membership or subscription payments to fail.

In fact, venues lose as much as 10% of their monthly recurring membership base from failed payments alone, so our team is constantly developing our payment technology to get this rate as low as possible.

How can I prevent involuntary membership churn?

Fortunately, using the right tools, involuntary churn can be handled with ease.

ROLLER Payments, our in-built payment processor, is specifically designed to identify cases of involuntary churn and stop them in their tracks. Here are the ways we help reduce involuntary churn.

1. Smart Dunning

Simply put, dunning is when a business systematically attempts to collect failed payments. This can come in the form of:

  • Hand-delivered or electronic reminders
  • Phone calls
  • Retrying the failed transaction, either manually or automatically

We take this a step further with our Smart Dunning functionality, which leverages machine learning to automatically process the failed payment at the optimal time.

After two failed attempts to collect the payment, Smart Dunning automatically kicks in and will continue to attempt collection. The days and times that the retry attempts occur are optimized based on when they’re most likely to be successful, based on factors such as region and the reason the transaction was declined. 

Smart Dunning reduces membership churn by 0.5% on average, saving you valuable revenue that would have been otherwise lost. To put this in perspective, a venue with 10,000 members paying $30 per month would retain an additional $1,500 per month in membership revenue! 

This technology is underpinned by our partner Adyen, who built this machine learning algorithm based on the billions of global transactions they process from some of the world’s biggest brands, including Uber, Spotify, and McDonald's.

And the best part? The small fee is only charged when a payment is successfully recovered, so the feature pays for itself.

2. Automatic card updates

This innovation automatically updates card information, reducing the risk of failed payments and saving guests the trouble of manually updating their card details.

For example, when a guest’s card expires, is lost or stolen, and is replaced by a new card, ROLLER Payments can often update the guest’s payment details to charge the new card without the guest having to do it themselves. 

Get started with ROLLER Payments

With so many ways to ensure your hard-earned dollars don’t go astray, what’s stopping you from giving it a go? We can easily move your members from your existing payment provider onto ROLLER Payments so that your venue can take advantage of our advanced membership technology.

Contact our team today to learn more about accessing ROLLER Payments or how you can prevent involuntary churn.