MBA1219 Failed Payments. Are You Leaving Money on The Table?

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Hey, welcome to the $100 RBA Show. Powerful business lessons. You can't afford to miss any every day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. And in today's lesson you will learn Failed Payments Are you leaving money on the table? If you run a business with any kind of reoccurring payment, a SaaS business, a membership site, any business that charges somebody on a regular basis, monthly, annually, Even if you have a service where you charge people a retainer every month, you are all too familiar with failed payments. You're charging people's credit cards on a regular basis and sometimes those charges fail because hey, insufficient funds on the card, an expired credit card, a credit card that's been canceled. And many of us, we have no system in place to recover this. We have no system in place to say hey, this person failed. Let's make sure that they're paying. Many of us, especially we're just starting out, when those people fail payment, their membership or billing cycle cancels and you lose that customer. In today's lesson, I'm going to share with you some tools and some techniques to recover these payments to recover these customers and how after we've implemented this, we've been able to recover thousands of dollars every month. Thousands of dollars that we were just giving away because we didn't have this in place. This is probably the easiest thing you can do to increase profits in the next month. We got A lot to cover. So let's get into it. Let's get down to business. The reason why anybody starts any kind of business that has reoccurring payments, whether it's a membership, a retainer, a software as a service is to have predictable revenue month after month. This gives your company value. It also makes it more lucrative when it comes to selling the company one day. But it also allows you to predict your spending as a business. But one of the things that ruin this predictability is failed payments when people's credit cards fail. And if you've been running a business like this for some time, you'll know that this happens a lot more often than what people actually think till this day. I'm surprised about how many cards fail when it's time to pay their membership. And yes, most of the failures are because of insufficient funds. But sometimes it's an expired card or it's a canceled card. Where they had a card, they lost it, they canceled it, but they already put that card number and expiration into your system and they just need to update it. Now, the first thing you gotta recognize is that this is going to happen. This is happening all the time. So you need to prepare for it. You have a plan so you can recover as much money as possible. Luckily, it's actually not that hard to do this. There are two tools I recommend when it comes to setting this up, and I say set this up, is that you need to have an automated system to email your customers, to notify them even within your software that, hey, something's wrong with your account, your payment failed, and we need you to pay or update your credit card in order for you to have continued service. You can't be chasing these people down manually. This is so hard, especially as you're growing your business. You have your hands in everything. So let automation take care of it. Now, most of these tools work great with the major payment processors like Stripe or Braintree or Reoccurley. And basically what it does is it integrates with your payment processor. It knows when a payment fails, and it emails the customer a series of emails and instructions to update their credit card. And in fact, they give them a little email with a link that takes them to a form they can fill right away to update their credit card so their service can continue, so you can charge them and get that money. Without this system in place, without this automation, you have basically two other options. One, you ignore all these failed payments and lose out on hundreds or thousands of dollars every month.

Bad idea.

Or you have to do this manually, which means either you're going to hire somebody to do it or you're going to do it yourself. Both are going to be costly, whether it's money or time. So the tools I recommend when it comes to taking care of failed charges is 1. Bare metrics. Bare Metrics is a tool so you can track your business metrics, but they also have an add on called Dunning that allows this feature to be in play. I like Barometrics a lot because it looks gorgeous and they have a lot of great inbuilt tools. So you can kind of install in your app a way for people to update their credit card along with a page that you can link to in your email. Like I mentioned, another tool that I have used and would recommend is Stunning. Now, Stunning is a tool that mainly focuses on dunning emails, this automated system of emailing people. Now, with both tools, whatever you choose, you can integrate it with your payment processor like Stripe. Once that happens, it takes a bit of time for that to happen, maybe about an hour. You're gonna set up some emails for every situation. And there are three major situations. Your payment has failed, your credit card is expired or about to expire, and one is if you have a renewal that's happening on an annual basis. I recommend this email series which reminds them a week in advance that hey, we're going to renew your account. One, this prevents failed payment because if they love your service, they love your app. They're going to make sure that, hey, is my credit card file still valid? Is it going to bounce back? Is it going to fail or is it going to be okay? Or they're going to say, hey, oh, I don't want to renew. And instead of being charged and asking for a refund or doing a chargeback, you're going to save a lot of headaches and they'll just cancel beforehand. I know you don't want a cancellation, but. But it's better than you actually issuing a refund or a chargeback, which is even worse. So I would set up these emails inside and it's very simple in these software options, Barometrics or Stunning. But what this does is that alerts your users in multiple ways, inside your software, inside your membership area, and it reminds them in an email. And what happens is that when it fails, they send them an email saying, hey, your credit card has failed. We're going to try again tomorrow. In one day it will attempt to process the payment again. If it fails again again, another email and you could set up three to Seven emails. Up to you. Now what this does from the customer's perspective is that it makes them aware of the fact that, hey, their account is delinquent. And for most adults that have enough money to afford your service or product, they're going to say, oh, I need to pay this bill, this is outstanding and they're going to go ahead and do it. Or in another scenario where their card is expired, they're going to go ahead and update it with a different card. Or because unfortunately people lose their card or there's some sort of fraud that happened on their card, they had to replace the card. They can be like, oh, I completely forgot about updating this card with this account. Got to do that now. And I find that you can easily recover about 50% of these failed payments with these automated emails. The other 50, they just failed because, hey, they can't afford it or they decided they don't want it anymore or, or they intentionally started maybe a free trial knowing their card doesn't have any credit in it and know it's going to fail. I know that sounds really bad, but that's just the reality of what happens in the world. But it doesn't negate the fact that there is money to be saved. And by setting up some emails, you're literally going to spend a couple hours to set this up and you're going to save hundreds, if not thousands of dollars every month. So even if these services cost like $100 a month or $200 a month, your ROI positive is ridiculous. Failed payments are a disaster without this automation.

Let me tell you about Intuit QuickBooks. When I was starting out my business, I remember sitting at my desk late at night, not working on my business, but cleaning up numbers, tracking and reconciling payments and wondering how this became my life. But once I automated the admin side of things of my finances, those nights had disappeared and I felt a whole lot better. Outdo it with Intuit QuickBooks. QuickBooks is the trusted end to end solution that businesses rely on for getting paid. Managing finances, paying employees, finding new customers and more. QuickBooks provides a team of AI agents and trusted experts. So doing it yourself no longer means doing it alone. Their payment agent gets you paid faster, their customer agent finds leads, follows up and secures more sales, and the accounting agent automates and categorizes transactions. Get your critical business jobs done with QuickBooks on the Intuit platform.

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To wrap up today's lesson, if you don't have a system to deal with failed payments with your reoccurring payments, your homework is to take care of this right now. You're going to save so much money. Most of these tools, like stunning or barometrics, they have a free trial. So you're actually going to make money before you even have to pay them. So set this up right now and thank me later because you're leaving money on the table. You need to follow up with customers. It's your duty to make sure they know, hey, we weren't able to charge you for this month or this year. You need to rectify this so we can continue to give you service. And one final tip, make it easy for them to do that. You could do that via email. You can put a link, you could put a form where they can just fill out their credit card information and hit send and it populates and updates the credit card information in your payment processor. This should be pain free for them. They get an email, they click a link, they put some information on a form and it's done. And with tools like this, they get confirmation. Hey, everything's cool, everything's fine. You've been charged. Well, there you have it. That wraps up today's lesson. If you love what you hear, hit subscribe right now on whatever you use to listen to podcasts, whether it's Spotify or Stitcher or Apple podcasts or Castbox or anything, we're on all of them. By hitting subscribe, you get the next episode downloaded to your device automatically so it's ready for you when you're ready to listen. That way you never miss a beat. Before I go, I want to leave you with this. There are certain projects, certain little things that you could do in your business that's going to take a little bit of time, a little investment, but help you in the long run. Like today's project. They're going to give you a bit of relief and a bit of breathing room. So take the time and put it in your calendar and make this happen. Don't neglect it. All right, I'll check you in tomorrow's episode Q and A Wednesday. I'll check you then. Take care.

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