Subscription Businesses Lose 9% of Revenue From Failed Payments

Subscription businesses are overlooking the significant negative impact of failed payments on their bottom lines. While many companies focus on customer churn, just a small share recognizes failed payments as the primary cause.

Our data shows that the impact of failed payments on revenue in the subscription industry is substantial and underappreciated: Subscription providers lose, on average, 9% of annual revenue to failed payments. However, subscription firms that track failed payments lose dramatically less revenue and recover significantly more of these payments than those that do not track this metric.

In “Decision Guide: Tracking Failed Payments,” a PYMNTS and FlexPay collaboration, we surveyed 200 executives to explore the link between payments friction, customer churn and best practices of the firms that best manage these challenges.

This decision guide answers some of the big questions facing the industry.

• What do subscription businesses miss?

Currently, just 17% of subscription-focused firms track failed payments, despite their substantial impact on business performance. Fifty-eight percent of subscription businesses focus solely on outcome-based metrics such as customer churn and retention, which may be easier to measure but are not as crucial.

• How much money are failed payments costing subscription providers?

The impact of failed payments on revenue in the subscription industry is underappreciated. On average, subscription providers lose approximately 9% of revenues to failed payments. Providers in the health and fitness industry were hit hardest in the last year, with an average revenue loss of 11%.

• What are the benefits of tracking failed payments?

Many subscription providers believe that tracking failed payments would not improve their bottom line — but our data reveals a clear return on investment. Subscription businesses that track and analyze failed payments lose 37% less revenue than those that do not track this metric. Additionally, on average, providers that track failed payments recover 43% more of these payments.

To learn more about the subscription industry’s best practices for tracking and recovering failed payments and revenue, download the report.