The Churn You're Not Seeing: How to Fix Failed Payments and Re-engage Idle Users

Happy Friday Everyone,

In our last issue, we discussed the "SaaS Growth Trap" and the importance of focusing on churn as a core business metric. Today, we're diving deeper into two specific, often-overlooked drivers of churn that could be silently draining your revenue and user base.

The first is a technical problem that masquerades as a customer decision: involuntary churn from failed payments. The second is a human problem: voluntary churn from customer disengagement.

Both are preventable, and fixing them not only saves customers but can also unlock new avenues for growth and product innovation. Let's break it down.

Part 1: The Silent Killer: How to Eliminate Failed Payment Churn

Did you know that according to industry estimates, between 20-40% of all SaaS churn is involuntary? This isn't customers actively choosing to leave your service. It’s churn by accident, most often due to a failed payment.

A credit card expires. It gets reported lost or stolen. A bank flags a transaction. A corporate card hits its limit. These small, mundane events force an unnecessary cancellation, creating friction and a negative experience for a customer who likely wanted to stay.

The good news is that this is one of the easiest and most impactful forms of churn to fix. Here are some modern methods you should implement:

• Automatic Card Updaters: Most major payment gateways (like Stripe and Braintree) work directly with card networks like Visa and Mastercard. They can automatically update expired or renewed card details without the customer ever needing to intervene. This is your first and best line of defence.

• Payment Tokenization: Instead of storing raw card details, use tokenization. A secure token replaces sensitive data, making it safer and much simpler for a customer to manage their payment methods. It provides a seamless experience when they do need to update their information.

• Smart Dunning & Pre-Dunning: "Dunning" is the process of communicating with customers about payment failures. A smart dunning system doesn't just email once; it retries the card at intelligent intervals (e.g., after payday) and sends a series of automated, friendly reminders. Even better is a pre-dunning strategy, which proactively emails customers a week before their card is set to expire, prompting them to update it and avoid any service interruption.

By automating payment recovery, you do more than just save revenue. You keep an active user seamlessly integrated into your platform. A successful payment maintains their momentum and engagement, preventing an accidental churn from becoming a permanent one.

Part 2: From Idle to Ideal: Re-engaging Inactive Users for Growth

Now, let's talk about the customers whose payments are fine, but who simply aren't using your product. These "idle users" are your biggest risk for active, voluntary churn. When their subscription renewal comes up, or when their finance department reviews software spend, your platform will be the first on the chopping block.

But this risk is also a massive opportunity. Actively re-engaging these users can do more than just prevent them from leaving; it can turn them into your most valuable source of insight and even drive expansion revenue.

Here’s how to wake up your sleeping users:

• Proactive, Value-Driven Outreach: Set up automated email sequences triggered by inactivity. Don't just say, "We miss you!" Instead, offer tangible value. Highlight a new feature they haven't tried or share a case study showing how a similar company achieved a specific outcome with your tool.

• In-App Guides and Checklists: Guide users towards the "aha!" moment. If you know that users who adopt Feature X are 80% less likely to churn, create in-app prompts and guides that lead inactive users directly to that feature.

• Turn Engagement into Expansion: As you re-engage a user, you might discover they are consistently hitting the limits of their current plan. This is the perfect moment for a contextual upgrade prompt. For example: "Looks like you're getting a lot of value from our reporting tools! Did you know our Pro Plan offers advanced, customisable reports to help you do even more?"

• Use Feedback to Fuel Your Roadmap: The most powerful tool for re-engagement is a simple conversation. For higher-value accounts, a personal email or call asking, "I noticed you haven't been as active lately. What challenges are you facing, and what could our product do to make your job easier?" is invaluable. This feedback is pure gold, directly informing your product development and ensuring you're building what your customers actually need.

Conclusion: A Two-Pronged Approach to Retention

Churn isn't a single problem, and it doesn't have a single solution. By combining a technical strategy to eliminate accidental payment churn with a human-centric strategy to re-engage inactive users, you build a powerful, resilient retention engine.

You fix the leaks that shouldn't exist while simultaneously strengthening your relationship with the customers who are on the fence. This holistic approach doesn't just save your business money; it makes your product better and your customer base stronger.

What's your experience? Is involuntary (payment) churn or voluntary (disengagement) churn a bigger challenge for your business right now? Let's discuss in the comments below!

If you're ready to build a comprehensive churn-reduction strategy, the team at ZenithHQ is here to help you identify the leaks and build the systems for sustainable growth.