Question for the day: If your subscription business could recover failed payments, how much would that add to your monthly revenue? Ah, failed payments—the bane of subscription businesses and membership sites. Unfortunately, these happen more often than one might think. In fact, a 2020 study from LexisNexis Risk Solutions reported that failed payments have cost the global economy an estimate of $118.5 billion in fees, labor, and lost businesses. Pretty alarming, right? When a payment fails, it means your business just lost revenue. Right there and then. Plain and simple. However, here’s some good news: not all failed payments are lost causes. Read on to learn more about how your brand can recover failed payments. Why do payments fail? Did you know that you’re losing 10% of your revenue due to failed payments? Let’s take a look at the most common causes behind failed payments: The credit card has already expired The customer’s credit card is already at the maximum spending limit The credit card used or payment method doesn’t have a sufficient balance The payment gateway has detected suspicious or fraudulent activity and blocked the card or payment method from being used Human errors such as incorrect card number typed or typographical error All of the reasons listed above have one thing in common: they are all involuntary. The customers didn’t do this on purpose. In fact, there’s a big chance that they may not even be aware that their payment failed. How can you recover failed payments? Since most of the reasons for failed payments are involuntary, the possibility of recovering your lost revenue is high—if you play your cards right. Here are three strategies to help recover failed payments. Set up a dunning email automation Dunning emails are the automated emails sent when customers’ payments fail. These emails remind your customers to settle their pending payments—usually in sets of three to five emails. There are also various dunning software options that can help bigger companies set up and monitor their dunning attempts. But while dunning emails are a good attempt to recover failed payments, some business owners are not comfortable with this strategy—mostly due to their own bad experiences of receiving badly written dunning emails. Here’s a tip: Create a personal approach, and avoid sounding too generic or even robotic. Personalized emails can give you higher transaction rates (up to six times). Plus, badly written dunning emails can result in customer complaints after multiple follow-ups instead of the desired outcome of recovered revenue. Reach out via outbound recovery calls and emails Some businesses prefer doing manual outbound calls or emails instead of setting up an automated system. For example, start-ups and smaller companies usually do this because their outbound specialist can still handle the number of “lost” customers. Though it can be tedious and time-consuming, the greatest advantage of this strategy is the amount and quality of personalization you can put into the customer experience. If you are considering this strategy, here are some quick tips for outbound calls and emails: Identify the customers to reach out to and familiarize yourself with their profile and their customer journey so far. Review the individual customer’s subscription and payment history. Take note of two things: why the payment failed and the last dunning email the customer received. Use this information for a super personalized conversation when you call your customer or when you send out an email. Use the opportunity to build an actual conversation so you can guide your customers through the process of payment. [tip]If you can’t reach your customer via phone call and if they are not responding to emails either, try leaving a voicemail message. Don’t forget to leave a number they can call back if they want to.[/tip] Outsource failed payment recovery specialists As your business grows, the instances of failed payments will also go up. While reasons will vary from technical issues, involuntary churn, or suspicious acts—it will get to a point where it will be too tedious for you to handle. At the same time, you can’t just ignore the slew of failed payments. So what should you do? Consider hiring a failed payment recovery specialist who can solely focus on handling the entire recovery process. They can also implement outbound communications via email, chat, or phone to expand and complement your existing dunning system. Because a specialist can focus on recovering failed payments, you can focus on other aspects of your business such as strengthening your customer retention strategies, product development, and operations. How to use ecommerce analytics to recover more failed payments Regardless of the strategies you choose to execute, you will need to assess, monitor, and evaluate the results by looking at the numbers. That way, you’ll know what’s working and what’s not so you can figure out the payment recovery strategy that works the best. Here’s where data tracking and ecommerce analytics come in: Check your customers’ purchase and engagement history so you can further personalize your approach. Review recurring charges and subscription product performance to pinpoint the exact instance of the failed payment. Access demographics of your churned customers to have a better understanding of how to reach out to them. For example, their location will give you an idea of the best times to call them. One important thing to note: data tracking and analytics are not limited to the recovery process. With access to powerful and comprehensive data, you can set up your entire customer lifecycle strategy to be data-driven. You’re not just moving around blindly trying strategy after strategy. You’ll be moving along efficiently with strategies that are backed by data. Here are some examples of how you can maximize a data analytics platform: Study your churn rate patterns by comparing numbers from different time periods. Pinpoint the reasons for churn to see if there’s a recurring reason that you can tackle. Analyze demographics, purchase behavior, and marketing channels to determine where revenue comes from. Connect the platform with your other tools. Littledata, for example, integrates with Shopify, BigCommerce, and even Recharge. Get an overall view of how your eCommerce store is really doing—so you can act accordingly depending on what’s needed. The better your customer experience is, the less you’ll have to worry about customer churn. While failed payments may still occur, your brand already has an established relationship with your customers. Recovering your lost revenue will be a much smoother process. Wrap up: Use eCommerce analytics as your strategy’s foundation Data is literally power and knowledge at your fingertips. Start making better business decisions with accurate data across all touchpoints and channels. Combine Littledata and Recover Payments and start recovering more failed payments—you’ll be surprised at how much more revenue there is. This is a guest post from Regina Ongkiko, content writer at LTVplus. She is passionate about creating content that provides value and impacts businesses. You can read more of her work at reginaongkiko.com. She loves getting her inspiration and ideas from the great outdoors.

Starting up an online store is pretty effortless today. With convenient and inexpensive ecommerce solutions like Shopify, Magento, or Wix, anyone can create a clean-cut online store — even without coding skills — in a couple of hours. But few businesses can ultimately hope to square off with global retail giants like Amazon or eBay. One reason is ineffective and non-scalable business processes. Ecommerce profitability correlates strongly with a seller’s forethought and flexibility. Setting pricing, adding loyalty programs, choosing promotions, managing stock items — the more you control the details, the more predictable your revenues are. The best way to get the information you need to manage those details is by choosing the right metrics to monitor. In this article, we’re going to explore them and give you some practical optimization tips. How to determine which metrics matter for your business Your store’s size and the stage you’re at in its lifecycle will inform which specific metrics you need to pay the closest attention to. As an example, for a small store just starting out with a relatively low number of clients, it may be too early to obsess over average order value or customer lifetime value. On the flip side, for ecommerce giants that launch expensive advertising campaigns and spend millions handling sales and marketing teams, all types of “returns on” metrics may be key to consider. Choosing your “just-right” set of ecommerce indicators comes from experience. It’s neither a good idea to confine the number of metrics to one or two, nor to track several dozen benchmarks without a clear strategy. Likewise, poor analytics drawn from inaccurate data won’t provide enough information for you to make smart business decisions. Before you dive into the “universe” of ecommerce metrics, track where your store’s performance currently stands using the items below: Website trafficTotal number of conversionsOperational expensesAd expensesAbandoned purchases These are the minimum data required for calculations. With these figures, you can define 3 groups of metrics: Gross (e.g. revenue or profit)Mean values (e.g. an average value of the order)Percentages (e.g. returns on advertising expenses) What are the key metrics for retail ecommerce? The nine indicators listed below fit any type of online retail business, regardless of size or industry. You can calculate these metrics as soon as you're done reading this article using Google Analytics or your preferred data reporting tool Total Sales (and Total Revenue) Revenue is the income from selling goods and services. In financial reports, it’s often referred to as a “top line” indicator. Revenue fluctuation reflects the pace of business development and proves that your company can generate profit, making it good for investment. In terms of accounting, sales may be either equal to revenue or simply one of its components if you have additional revenues from supplementary operations. Overall, this metric is a strong high-level indicator of growth and stagnation for your store. Conversion Rate (CR) A conversion is when your lead takes a specific desired action that you’re tracking. Store owners can treat conversions as certain events, such as a click on the “Book a call” button or filling in the contact form. In ecommerce, conversions most often mean the act of purchasing. However, the “total” conversion consists of several subsequent actions, each of which can be monitored separately: Adding an item to the wishlistAdding an item to a shopping cartProceeding with a shopping cart to a checkoutFinalizing payment Conversion Rate is calculated as the number of conversions to the total number of online store visitors. It’s a good metric to judge how relevant your website traffic is. You may have many unique visitors, but if the majority of them leave without a purchase, start investigating your ad targeting and lead generation to make improvements. Average Order Value (AOV) AOV shows how much your leads spend on a single purchase, making it a good indicator for use in revenue predictions. All else being equal, growing traffic will positively influence your total income. But what's more important, AOV shows how commercially successful your product assortment is. If the dynamics for an average order value are negative, it’s time to review your product assortment and pricing strategies. There are some common tactics to increase AOV, and most target actions in the checkout: discounts, upselling, cross-selling, free shipping, and others. You can track checkout actions as well to get an even more complete picture and improve your AOV. Purchase Frequency This metric shows how many times an average customer buys something at your online store within a given period of time. To have meaningful value, you should calculate the metric for a considerable time frame — like six months to a year. Purchase frequency shows the share of repeat customers, as well. If the indicator is greater than 1, it means every lead makes more than one purchase in your online store, on average. Customer Retention Rate (CRR) Aside from acquiring customers, another big issue for ecommerce businesses is retaining them. That’s because nurturing existing clients is much cheaper than gaining new ones. The higher the retention rate is, the fewer expenses a company will need to impose to maintain and increase revenues in the future. You can use various techniques to re-engage online store visitors, with email marketing being one of the most popular retention channels. Create a sequence of nurturing emails or refer to drip campaign examples, e.g. ones by Snov.io, and send out interesting mass emails to clients. These may be assortment updates, reminders, special offers, or exclusive deals. The goal is to keep leads engaged and stay top of mind to drive sales. Customer Lifetime Value (CLV) CLV shows how much revenue a lead generates during their entire history as a client. In other words, this is a predicted sum of money that a customer will spend on products or services. CLV is closely connected with returns on acquisition expenses. If the lifetime value doesn’t cover and (ideally) exceed acquisition costs, the business won’t be profitable in the long term. You can determine CLV in a couple different ways: 1. Cohort analysis Divide your clients into groups with similar characteristics, e.g. upon the time they made the first purchase. Then, calculate the average revenue per user, per every cohort. 2. Individualized CLV Rather than calculating aggregated indicators, you can measure CLV for individual customers. This method requires more time, yet is more precise. Cart Abandonment Rate This metric shows the share of uncompleted shopping deals. An abandoned online shopping cart means your customers picked out items but left the website without purchasing them. Obviously, the higher the rate is, the more potential revenue you’ll lose because of an unclosed funnel. Users may be unable to complete the purchase due to technical issues, e.g. when the link to the checkout page doesn’t work, or due to the nature of goods.So, it makes sense that online stores selling luxury items have, on average, a higher cart abandonment rate than grocery stores. Although it’s impossible to reduce this metric to zero, keep it at 40% or lower and you’ll be in decent shape. Return on Advertising Spend (ROAS) ROAS shows the overall effectiveness of ad campaigns. It is usually calculated for different ad groups to compare the ratio of revenue and costs to earn it. ROAS less than 1 (or 100%) means a company loses money, as it spends more to acquire customers than it earns from them. Cost per Acquisition (CPA) CPA shows an average cost associated with a single conversion. CPA differs from ROAS in that it doesn’t take into account the money a company earns due to a conversion. Consider an example. An advertiser launched 2 ad campaigns and set a budget of $1,000 each. The first campaign resulted in 10 leads and $1,500 revenue, and the second yielded 10 leads and $2,000 revenue. The two campaigns will have equal CPAs ($1,000/10 leads = $100 per lead), but different ROAS (150% and 200%, respectively). Do you need to track all these metrics? It’s up to you which ecommerce metrics to track. Most of them are interrelated or complementary, so if something goes wrong, you’ll notice the issue anyway. For example, if CRR increases over time, the lifetime value and average order value will most likely increase as well. Or, at least, they won’t worsen. Small retailers that don’t run regular ad campaigns can neglect some indicators, e.g. CPA or ROAS. But as you reach a mid-sized level or plan expansion, it’s better to put analysis back on track and monitor all nine metrics. Ecommerce metrics: important questions to ask What’s the most important KPI for online retailers? Every business comes up with a unique set of KPIs, ultimately. However, CLV and Average Order Value are the top 2 metrics to monitor for the majority of retailers. How to increase conversions on an ecommerce website? First, use responsive styles for your online store. Make sure all images are well-optimized so that they look good and don’t worsen website loading speed. It’s also advisable to implement an online chat and a callback option. In the end, planning and development are impossible without frequently assessing performance. The nine metrics we’ve disclosed are basic for the majority of retailers. With these, you’ll see the big picture and have the intelligence to make informed business decisions. This is a guest post from Yulia Zubova, Outreach Specialist from Snov.io.