Master the Art of Revenue Recovery to Grow Your Bottom Line
As the global economy braces for a possible recession in 2023, mastering the art of revenue recovery is essential for businesses hoping to navigate uncertain times and emerge victorious in an increasingly competitive marketplace. Enterprises lose significant revenue to billing inaccuracies, fraudulent activity, inefficient revenue management systems, and a lack of attention in the payments space.
Revenue recovery refers to the complex process of identifying the root causes of revenue loss and implementing strategies to optimize revenue retention and growth. In this blog post, we will explore the concept of revenue recovery, its importance, strategies to recover revenue losses, and the tools available to facilitate this process.
What is Revenue Recovery?
Revenue recovery is a complex process that enables businesses to optimize revenue retention and growth by identifying and addressing the root causes of revenue loss. It encompasses a range of sophisticated strategies and techniques that are designed to mitigate future losses and position businesses for long-term success.
Why is it Important?
Revenue Recovery is important because it helps businesses identify and address revenue leakage caused by inefficient pricing strategies, operational inefficiencies, or poor sales performance. It also improves customer satisfaction and loyalty. In doing so, it enables sustainable growth by tying up loose ends and allowing your business to unlock its true potential.
Also Read: Some Effective Methods Beyond Dunning Management To Recover The Lost Revenue
How to Strategically Implement Revenue Recovery?
Implementing revenue recovery in your business requires a systematic approach. Here are the steps involved in the process:
Step 1: Identify Revenue Losses
Identifying the problem is the first step toward finding a solution to it. After all, you can’t fix what you don’t know is broken! Identifying revenue leakage necessitates the use of a premium revenue management system, such as SubscriptionFlow, to keep close tabs on cash flow.
- Monitor the Revenue Cycle:
Monitoring the revenue cycle allows you to identify potential areas of revenue leakage due to operational inefficiencies, errors, or poor decision-making. This can include missed sales opportunities, billing errors, underpricing, unauthorized discounts, and uncollected fees, among many other potential culprits. Only through robust accounting and revenue automation systems can a business exercise full control over the revenue cycle to assess where money is leaking out of its bottom line.
- Monitor the Payments Space:
Keeping a close eye on payment processing can help you identify issues at the heart of revenue growth. Friction in the payment processing flow can lead to high cart abandonment. This may be due to available payment method constraints or failed payments/chargebacks. Any hiccup during this critical process can create catastrophic revenue leaks. The importance of setting up a secure, seamless, and personalized checkout process and providing ample payment flexibility cannot be overstated.
Step 2: Determine the Causes of Revenue Loss
Once you have identified revenue losses, the next step is to determine what causes these losses.
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- Customer Segmentation:
Analyzing customer data can help you identify patterns in customer behavior that could be leading to revenue losses, such as high churn rates or low renewal rates. Customer segmentation is one fool-proof strategy to identify recoverable revenue. Here are some ways to segment your customers:
- Involuntarily Churned
Customers who have involuntarily churned, such as those who experienced a failed payment, can often be recovered through smart dunning strategies.
- Customers Close to Churning
Customers who are close to churning, such as those who have not used your product or service in a while, can be targeted with personalized campaigns to encourage them to stay.
- Customers Approaching Renewal Dates
Customers approaching renewal dates can be targeted with promotions or discounts to incentivize them to renew their subscriptions.
- Look at Customer Support Chats:
Analyzing customer support chats can provide insight into customer issues or complaints that could be leading to revenue losses. It also facilitates product-led growth from the most important perspective i.e. the users.
Step 3: Develop and Implement a Recovery Plan
Once you have identified the causes of revenue loss and segmented your customers, the next step is to develop a recovery plan. Here are some actionable strategies for revenue recovery:
- Implement Smart Dunning Strategies
Smart dunning strategies involve sending automated email reminders to customers who have experienced a failed payment, with personalized messaging and incentives to encourage them to update their payment information. It is important to limit dunning emails and know when to stop but this is known to be an effective way to recover a failed payment producing involuntary churn.
- Strategize Collection Journeys for High-Risk Defaulters
High-risk defaulters, such as those with a history of failed payments, can be targeted with personalized collection journeys to encourage them to update their payment information ahead of payment failure or employ more appropriate dunning strategies for this demographic.
- Optimize Retry Strategy for Failed Payments
Optimizing your retry strategy for failed payments involves setting up a system that automatically retries failed payments at different intervals. Optimizing the time-of-day and day-of-week for retries has been shown to influence payment recovery success. Similarly, choosing between tokens and PANs, using the magic date for card expiration, and setting up an account updater service all contribute towards successful payment retries.
Read more: https://subscriptionflow.com/2023/03/how-to-manage-subscription-payment-failures/
- Supply Maximum Payment Flexibility
Providing maximum payment flexibility, such as accepting multiple payment methods is key to successful payments. Similarly, allowing customers to upgrade/downgrade, suspend or cancel at any point during the billing cycle through a self-service portal encourages customer retention. With subscription management software, you can automate proration to optimize the customer subscription journey.
- Personalization
Personalizing your communication with customers, such as through targeted campaigns or personalized messaging, can help build customer loyalty and increase revenue recovery rates. Utilizing this highly effective marketing and sales strategy when setting up a dunning strategy has also proved to be effective in revenue recovery from payment failures.
Step 4: Monitor and Analyze the Results
The final step in implementing revenue recovery is to monitor and analyze your results. This requires the use of revenue recovery tools, such as analytics dashboards and reporting tools, to track progress and identify areas for improvement. SubscriptionFlow offers you a robust revenue management system to deflect churn, track usage, and stay on top of your revenue recovery game.
Conclusion
In conclusion, it is essential for businesses to monitor the revenue cycle, payments space, and customer support chats to identify causes of revenue leaks, and segment customers to develop personalized recovery plans. A successful recovery plan includes implementing smart dunning strategies, strategizing collection journeys, optimizing retry strategies for failed payments, providing maximum payment flexibility, and personalizing communication with customers. By following these steps, businesses can not only recover lost revenue but also improve customer loyalty, ensuring sustainable growth even in uncertain economic times.
