SaaS non-payers are the cruelest joke in our industry. Many businesses choose a recurring billing or subscription billing model because they won't have to deal with things like collections. Unfortunately, payment problems are all too common in SaaS.

"Unintentional churn is surprisingly common and one of the more preventable issues to address." --Leo Farina, Founder, SaaSMetrics

As Leo Farina notes, unintentional churn is preventable, and we're going to show you just how to do it. Here's a solution that makes working with SaaS customers who have payment issues easy and painless.

When SaaS Customers Don't Pay

Customers who don't pay cause a portion of overall churn in most SaaS businesses. This kind of churn is known as unintentional churn: the customer didn't knowingly end their business relationship with you. Instead, they churned because of a payment issue.

Non-payment in SaaS means you attempted to charge the customer's form of payment (usually credit, debit, ACH, or PayPal) for their upcoming period of service, and the payment didn't go through (the credit card was declined or expired, the ACH/checking account was overdrawn, etc.). You might suspend the nonpayer's account or continue service, the latter more common in B2B.

At that point, you should begin the long, arduous task of contacting your non-paying customer. If you don't make an effort to track down that customer, you're giving that account up to churn without a fight.

That's not okay.

Why We Hate Dealing with Non-Payers

We're going to fight, but that doesn't mean we're looking forward to the battle. Contacting customers to get new payment information isn't fun or easy.

Team members assume the worst about these communications, eg. that the customer will be confrontational

• Procrastination is common as a result
• Manually sending an email to each non-payer takes time and money
• If the non-payer doesn't respond to email, a phone call is required
• Reaching a customer with just one phone call is as likely as winning the lottery
• Some customers won't provide a credit card number over the phone. Rock, meet hard place.

The worst thing is this: the longer it takes to get in touch with non-payers, the longer they might be surviving without your product (if you choose to discontinue their service). When you do finally get in touch with them, they might churn. For real this time.

An Easy Fix: the Automated Email

Wouldn't it be great it you could prevent this kind of churn simply by sending an automated email? Guess what, you can -- and ChargeOver's customers send these emails every billing period. You can emulate this process using basic office software if you do your recurring billing manually or if your recurring billing provider doesn't have this feature (known as "dunning").

Write the Email

First, you'll write a simple email that accomplishes two goals:

• Alerts your customer to the fact that they didn't pay you
• Requests payment from your customer

The first goal is a basic one, but some SaaS startups just don't think of it. There's a good chance that your customer doesn't know they haven't paid you. Setting up automated emails ensures that every customer who isn't a paying customer is alerted right away.

With the two basic goals in mind, write your email so that it fits your brand's voice and the segment of customers who purchase the product or service that is billed. If your company has multiple brands or segments, you may need to prepare a separate email for each of those customer segments. (Don't worry -- ChargeOver can manage multiple dunning email templates.)

Here are some additional tips for successful dunning emails. We've also provided an example of some solid dunning email copy for "fakeSaas," a consumer-focused SaaS.

• Be friendly. Assume the non-payment was some kind of mistake. Embarrassing a customer in a bad spot won't help you get paid.
• Express urgency. Indicate that you "just attempted to charge" or that the payment was for "this month's service" to show the time frame.
• Reduce friction. Make it easy for the customer to provide payment information by directing him or her to your online payment page.
• Explain consequences. Tell the customer what will happen if they don't respond. Do not threaten.
• Be personal. Send the email from a person's account and sign the email from a person.

Have any other surefire tips for dunning emails? Please share them in the comments of this post!

Format & Set Up the Email

Take some time to format this email nicely. Remember, you're making a template that can be used thousands of times. In ChargeOver, you can import full HTML email templates so your "payment invitation" fits your brand. Add in variable fields like the customer's first name and the amount due with a click. If you're emulating this process without using ChargeOver, look for "merge fields" in your office software. You should be able to pull the name and email address data you need.

Then, set up your ChargeOver account to send out this email the day after a customer's payment fails. This gives you time to retry payment cards to rule out bank error.  As the emails are sent, ChargeOver will create a fully searchable record of each email for your team to reference. If a customer does call about a dunning email, your team will know exactly what was sent and when.

If you're not using an automated system to generate and send these emails, we recommend creating an index of the emails sent and the dates they were sent for customer service and corporate record keeping purposes.

Send & Follow-Up

Put your automated system in action. Will every issue be resolved by a single email? Sorry, but no. Some may need a second email or a phone call. The phone calls do go much easier if your team can open by saying: "I'm calling to follow up on an email we sent...". Pay attention to your results and tweak your programs if necessary. Your goal is to reduce the amount of indirect churn as much as possible. And you will.

Win the War on Non-Payer Churn

Once you've seen the results of automated email follow-up on non-payers, you'll never do it any other way. Our customers are amazed at how effective a single email can be -- and at the fact that most literally write it, set it up, and never worry about that step of the process again.