Why payments fail
Most of these are not a decision to cancel. The subscriber still wants the service and often does not know the payment failed.
- The card expired or was replaced
- Insufficient funds on the day of the charge
- The bank declined the charge as suspicious
- A spending limit was reached
- A temporary technical fault at the bank or processor
A typical dunning sequence
- Day 0: the renewal fails; retry later the same day and notify the subscriber
- Days 1 to 3: retry at a different time of day; send an email with a one-click link to update the card
- Days 5 to 7: retry again; show a notice in the app
- Days 10 to 14: final retry and final notice
- End of the period: cancel the subscription and offer an easy way back
What makes dunning effective
Timing retries for when funds are likely to be available, such as just after a typical payday, recovers more than retrying at fixed intervals. Card networks' account updater services refresh expired card numbers automatically. Keeping access open during a short grace period gives the subscriber a reason to fix the problem instead of forgetting the service.
Recovered payments are the cheapest retention there is: the customer has already been acquired and has not chosen to leave.
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