It’s natural to blame your customers for not paying, but before you accuse them of bad behavior, make sure your own house is in order. Rule number one in algorithmic recovery is to approach debtors from a CRM perspective as opposed to a disciplinary one. With this strategy, it’s far more likely you’ll get customers back on regularly paying terms for the long run.
Broken payment infrastructure
Customers can’t pay if your payment platforms malfunction. It’s a good idea to check your systems regularly and to build in plenty of redundancy. Do your bills clearly state how to pay? Do you offer your customers enough payment options? Do you accept a full range of credit cards?
If your customers can pay online, do you have a secure payment back end? Do the aesthetics of your online payment portal convey security? For many customers, a poorly functioning payment channel is more than enough justification to refuse to pay and ignore your follow-up requests.
This type of non-payer is actually quite easy to identify. They go dark following incomplete payment cycles, whether it’s a failed auto-bill authorization or, worse (from a UX perspective), after successive manual attempts to pay. For these customers it’s essential you have a sound follow-up protocol, starting with an apology.
Poor product performance
Are you sure your customers are getting the product or experience you think they’re paying for? Does everything work as promised? Could there have been a lapse in customer service? Has usage decreased over time? Sometimes an olive branch is more effective than a repo man.
Often there’s a complaint to your customer service team that precedes non-payment in this category. If you know you have an unpopular caveat in your satisfaction policy, it’s best to get in front of complaints with a sound communications strategy. This way you can resolve issues long before the customer decides not to pay. Increasing customer retention even by 5% can lead to an increase in profits by 25% to 95%.
Real financial issues
Some customers are in the midst of legitimate financial difficulties. They have every intention of paying you when they get back on their feet. You can identify this type by their spotty payment behavior or when they downgrade tiers on payment plans. Also, these customers usually have a genuine need for your product, so it’s common to see a surge of use before they drop off. In our experience, if you’re flexible in this circumstance, these customers return and eagerly pay you – almost as a way to thank you for being sensitive in their time of need.
All of that said, the one common denominator here is transparency. It’s crucial to have data infrastructure that provides actionable insights. If you don’t know what customers are doing on your website, it’s impossible to know why you lost them.
On the flip side, giving debtors a window into how their delinquency hurts your business often breaks down barriers and lets them know you’re as vulnerable as they are. This window into your business could simply be your willingness to work with them to come to some sort of agreement, whether that’s a payment plan or an overall reduction in the amount due. Insights, research, attention to detail – these are the factors that get you paid. It’s not the bark or even the bite, for that matter. It’s how you sit and wag your tail.