Only 17% of Subscription Firms Track Failed Payments Despite Bottom Line Damage
Failed payments are the kryptonite of conversion, and as such require a more systematic approach to preventing them.
The “Decision Guide: Tracking Failed Payments,” a PYMNTS and FlexPay collaboration based on a survey of 200 executives, shows the extent to which failed payments harm businesses, and points to the metrics and indicators companies need to monitor closely to prevent this.
Illustrating the extent of the problem and it tends to happen, the study states that “Just 17% of subscription-focused firms currently track failed payments despite their substantial impact on business performance,” adding that 58% 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.”
Per the Guide, “failed payments alone cost the subscription industry hundreds of millions of dollars each year in lost revenue. Just 50% of subscription providers acknowledge that this poorly tracked metric significantly drives customer churn, and just a small fraction recognizes it as the primary cause.”
Data suggests that the impact of failed payments on revenue in the subscription industry is significant and often unrecognized. “On average, subscription providers lose an estimated 9% of revenue to failed payments. Providers in the health and fitness industry were hit hardest in the last year, with an average revenue loss of 11%, while gaming companies performed slightly better than other firms,” per the guide.
To overcome this widespread problem, top performers in recovering failed payments explicitly those failures. The guide notes that “top performers are 12 times more likely than bottom performers to use third-party payment recovery software solutions. This approach leads to payment recovery rates 1.5 times higher than bottom performers, making it a key strategy for maximizing business performance.”
Get your copy: Decision Guide — Tracking Failed Payments