Customer churn occurs when a customer stops to purchase from you - that is, leaves your company for a competitor.
Depending on your industry and competitive environment, it is 5-10 times more expensive to acquire a new customer than keep your current customers satisfied and returning.
Accounts receivable collection processes are not always seen as affecting customer satisfaction.
Why do they have an impact?>>>
A/R is affecting Customer Retention
The importance of customer retention and hence measuring churn rate is clear in any business today. CFOs and finance departments are closely involved in calculating churn rates to support sales and customer service in protecting the company's cash flow and margins.
The Obvious Player in the Customer Journey
However, it is not always as obvious that the financial department is very much present during the customer journey.
Invoicing, payment reminders, and debt collections include several touch points of interactions with customers truly affecting the customer experience (CX).
So, understanding the role that Accounts Receivable processes play in the eyes of customers leads to profound discussions and improvement to fine-tune communications to improve customer satisfaction and engagement.
The Forgotten Churn Prevention Potential
Every customer is charged for the products and services they consume, hence billing is an inevitable touch point during any customer journey. However, communications related to invoices and overdue payments are the moments that present the highest potential for churn.
So, payment reminders need to be dealt with as part of great customer service
Are your customers mostly hearing from your company when they receive the monthly invoice? If yes, you have a very strong reason to revise the way you communicate.
Rather than sending legal implications or unexpected fines to settle client debt, leading to unwarranted conflicts and prompting them in an impolite manner, there are at least two considerations to be taken into account:
1. Keep in mind the costs to acquire a new customer against the costs for customer retention (the former being 5-10more expensive)
2. Overdue payments do not always occur due to the inability to pay. As mentioned before, according to On-time’s data, over 30 % of all late payments are due to mere human error. Therefore, many consider it a good service if the company sends them timely reminders before due dates.
How to fight against customer churn with timely payment reminders
1. Use a combination of omnichannel solutions
The best way to reach the customers and get their attention on time is through a combination of mobile native customer-friendly channels.
Timely payment reminders are appreciated by customers. Automated voice calls make the best form of direct payment reminders which have the highest potential to reach and activate payments. Late payments are often tied to personal insecurities and embarrassment. An automated phone call is a safe interlocutor in such situations.
SMS reminders have been proven to be very efficient in increasing the turnover ratio, and they are a must-have feature in any automation platform for accounts receivable collection.
Let a human take the lead for high-priority cases near the end of the payment cycle.
2. Learn from comparing customer segments
Use outbound automated call campaigns to compare different customer segments. It’s a rule of thumb in any business to segment customers, and more so when you are dealing with finances and credit. This is because a lot of your cash flow depends on how you are maintaining relationships with high and low-priority customers.
Strategize your calling campaigns into segments that best suit your business interests to learn more about your customers. This way you can optimize your automated payment reminder calls timely and appropriately for the right segments as the situations demand.
If you want to know how to deploy automated voice call campaigns, you can book a meeting with our experts to know more about payment collection optimization.
3. Engage in Active Communication
One of the most common reasons for payments piling up and invoices mounting is insufficient and badly timed communication. Keep consistent with follow-ups and reminders.
Customers often perceive passive communication and invoicing delays as relaxed payment conditions. Sometimes they won’t pay an invoice if they don’t understand what, how, and when to pay. This leads to piling up of returns and increases the Days sales outstanding(DSO).
Engage in active communication even if it is for sending out payment reminders or terms that you have set for your payments collection process – and be proactive. Follow-ups not only help to educate your customer but keeps the channel of communication open. It sets a good stage for initiating the final payment process.
Rather than emails, the best alternative is to use calls for payment reminders, as it ensures the message has been received and the charges are understood.
You can customize the process to check on your customers regularly as per your need. Just remember to keep it brief and to the point to make sure your message is communicated. You can also add an option to gather the information you need to learn more about your customer.
Touching base at regular intervals creates significant differences in your customer service, collection, and revenue. Know more about the benefits of active payments collection vs. passive payments collection here.
4. Use Automation but make it Human-like
There is no doubt that humans have a higher convincing and negotiating power. So, try to fix your automated phone call with a human voice as it sounds natural and communicates the information smoothly.
Many of our customers have gone one-step ahead to brand their automated voice call with a name. Couple it up with a kind and friendly reminder message and you are good to go!
Wondering what an automated voice call should say or sound like? Well, anything you want!
What are the hidden optimization and learning opportunities in the payment reminder process
Voice approach securing an innovative and pleasant CX
Automation of manual calls and AI-based optimization
Systematically reducing credit risks at an early stage
Helps to allocate human personnel's time in service tasks such as negotiating payment plans
Focus on service and CS helps to lower churn
Learn from customer segments
Modern, easy-to-manage tool set for A/R and collection teams
Rate and identify customers at risk - Predicting churn and acting upon it!
While measuring the churn rate accurately is a fundamental healthy check of your business, it is even more important to deep dive into the underlying reasons causing customers to terminate the relationship. Once these variables are detected, predicting the churn rate becomes more relevant. Furthermore, the company needs to act upon the early warning signs, or, preferably, avoid them in the first place.
Best tools for payment reminding and collection communications provide the company with two things. The use of the tool produces valuable information on client behaviour. The big data provided can be used to find significant parameters for predictive analysis. Secondly, the tool can be used to optimize the process accordingly, hence building continuous learning and improvement.
Measurable Results: Benefits from Payment Reminder Automation
Automation improves customer experience as you can approach clients consistently and promptly and provide them with the support they need. On top of improving your NPS and CSAT metrics, On-time customers report the following improvements in their operative and financial metrics:
Higher Reach within shorter time-period results in reduced DSO
Better efficiency enables the allocation of resources to more value-adding tasks:
Finally, we have researched customers' reactions to combined multi-communications with automated calls and SMS messages as payment reminders. Robocalls & SMS cadences improve customer satisfaction and hence prevent churn as customers receive a thoughtful reminder service fast and conveniently. Connect with us if you too want to reduce your churn with automated payment reminders for A/R collections.
Book a meeting with us for additional info!