The Ultimate Retention Strategy For SaaS

September 21, 2021
Emmanuel Cohen

The Software as a Service (SaaS) industry is one of the fastest-growing industries in the world. Reports Valuates say that the global Software as a Service (SaaS) market size is projected to reach USD 307.3 Billion by 2026, from USD 158.2 Billion in 2020, at a CAGR of 11.7% during 2020-2026.

Without a doubt, SaaS companies are becoming well-equipped with all of the growth parameters they require. They are becoming more specialized in each vertical which contributes to their overall business growth. However, with such rapid growth comes a slew of new challenges that businesses must overcome.

Customer Churn is one such major challenge that affects every SaaS business. So far, the industry is still in its infancy, and there is no standardized approach to dealing with this challenge. Every organization is exploring, learning, and growing in its unique way.

When you’re hustling hard to grow recurring revenue as a SaaS, it’s always discouraging when customers cancel their subscription (Voluntary churn), but nothing is more frustrating than losing good customers to failed payments, especially the customers that wish to stay (involuntary churn).

A poor strategy for combating this involuntary churn will cost your company today and stifle growth in the future, and the problem will worsen as lost customer value accumulates over the months. The good news is, Subscription Management solution like Chargezen is already helping businesses deal with it without ruffling a feather.

SaaS Retention Strategies

While Chargezen is in place, there are some basic techniques that any business can implement to help optimize the process of recovering customers when payments fail and significantly reduce involuntary churn.

1. Prioritize Maintenance

It's fun to set up a simple system as a one-off project, but when you have a monthly revenue of 5 figures at stake, simple mistakes can be extremely costly and take months to discover.

This is why it's important to assign someone to keep an eye out for broken links, pages that aren't responding, deliverability issues, Stripe's API updates, and so on

Automated monitoring systems can also help here and relieve some of the burdens on your team.

A customer tries to update their card on your page, the card gets denied, and the customer doesn’t try another card. Monitoring such is one of the maintenance you could watch out for. 

Make contact with such a customer! Just don't resort to losing them easily.

2. Follow up

If you ever make the mistake of contacting a salesperson for a product inquiry and you don't buy immediately, they will follow up till you buy. Too many people give up too soon, whether they're sending sales or retention emails. We easily assume the customer we are prospecting is no longer interested, or that they're going to tell everyone that we're spamming them. However, this is not the case most times.

People get distracted when they have a long to-do list. And sometimes all they need is a gentle reminder. Chargezen receives card updates at every stage of the process, and they have successfully used it to retain more customers for businesses.

3. Reactivate Subscription

When the retry process wraps up, a customer can get marked as unpaid or canceled. So it's best to check with your payment processor on this

When it is set to “Mark as unpaid”

They will not automatically reattempt payment of an unpaid subscription once it is "marked as unpaid". So, let's say you have scheduled another attempt for day 20. It will end as another failure if the customer updates their card on the 21st day instead of the 20th day. The new card will remain on file, but no automatic payments will be attempted on the subscription.

The worst part is that if a subscription is marked as unpaid, all future months/years will generate an invoice, but payment will not be attempted.

So, in this case, you have a good card on file and a customer who expressed a desire to renew, but they might never pay you again.

When it is set to “Cancel Subscription”

This one isn't much better. Assume the same routine and let's say a card update occurs on the 21st day after you've scheduled a second attempt on the 20th day. The new card will be saved, but because there is no longer a subscription since you set it to "Cancel Subscription", payment will not be attempted, and future renewals will not occur.

You must either manually ensure that all customers who update their cards have their subscriptions reactivated. Alternatively, you must write code to handle these scenarios.

4. Strengthen Your Card Update Page

It’s important to recall that churners in this category are not canceling their subscription on purpose, so when you send customers an email reminder for failed payment, you must include a link to where they can update their card in the same email.

This is an important step as we see a lot of sub-optimal setups.

To ensure awesomeness, there are some features I recommend you build with your page:

  1. Test your card update page from time to time

 When businesses update their software or marketing suit, the page they link customers to sometimes gets broken during the update without realizing it for a long time.  If that scales from days to months, it can be catastrophic if not mended at the earliest. 

  1. Create a dedicated page where customers can update their card information.

If a modal is used to display the update form, other code on the page may interact or conflict with the billing code which will mess things up. If there isn't a conflict right now, one may arise after a future website update when you don't expect.

  1. Don’t demand customers to login for card update

The more steps customers are required to complete, the less likely they are to update card information. Ensure your customer can click a link, complete a simple form, and proceed to update card information.

  1. Ensure that your page is secured and that no credit card information is stored on your server. Send them directly to your payment processor for maximum security.

  1. So your subscribers don't get exhausted, your page should be responsive and mobile-friendly. Eliminate all copy and navigation, except if necessary. Experiment with different browsers, devices, and screen sizes. 

Even your most loyal customers can get genuinely buy and forget to update their payment information, and if you're a B2B company, you may have multiple points of contact who do not see the value/utility of your product. That's why you need to make the payment update process seamless. 

5. Recover unpaid Invoices

After a failed payment card is updated, you need to decide how far back you want to recover the unpaid invoices during that period. This applies only to merchants who keep providing the service after failed payments. 

Some businesses only go back 30–60 days intervals when recovering unpaid bills, some prefer to collect all unpaid invoices, while others prefer to simply forgive the debt and move on.

It all depends on your specific business model, but make sure you think about it and build the right solution.

You don't want customers to be surprised when they update their card after an extended delinquency period and are charged $100 ten different times.

It's fine if that's the way you want it but set some expectations with your customers in these situations or pre-inform them.

6. Establish Alternatives for Emergency

You should monitor not only payment integrations and API uptime, but also the uptime of your own dunning system.

You should monitor not only payment integrations and API uptime, but also the uptime of your own dunning system.

How fast are your card update pages?

When they go down, do you receive alerts?

Can you tell who attempted to access those pages during the outage?

When your email delivery provider (we use Postmark and love them) has downtime or their queues back up…do your emails still get sent out?

Do opens and bounces continue to be tracked?

7. Emails triggered by failed payment is not enough

The majority of in-house and free or low-cost dunning solutions are set up the easy way. This means emails are sent whenever a payment fails.

The issue with this approach is that emails are automatically sent when payments fail, and you have no control over optimizing the recovery process. Retention funnels that are driving traffic to a conversion point through email or phone calls can be optimized similarly to acquisition funnels. Create a process, evaluate the results, and iterate on the behavior.

8. Explore Edge Cases and Plug Leakages

Many edge cases can lead to revenue churn. If you're a high-growth or at-scale company, here are a few:

  • What if a customer’s email changes in your app — does it change in your payment processor?
  • What happens when an email bounces?
  • What happens when someone leaves their position at their company?
  • If a customer updates their card multiple times will they be billed multiple times?
  • How far back will you collect on delinquent invoices? When collecting on multiple invoices, will you get notified of large balances so you can personally manage the customer experience?
  • Will an invoice be auto-paid if it’s already been closed? What if it’s been forgiven?
  • What happens if your payment processor’s API is temporarily down?
  • Will payment be initiated if a customer updates their card after a subscription has been marked as canceled/unpaid?
  • How will customers with multiple subscriptions be handled? Customers with multiple customer IDs? Customers with discounts? In-trial?

9. Create Visibility

Startups might survive without visibility, but it’s very important once they start growing. You should care to know which of your methods are working and which isn’t. You need to be clear on these questions:

  • Are emails getting delivered?
  • Are emails getting opened?
  • Are people converting after clicking the link in your emails?
  • Who is currently past due? (what’s your current opportunity for recovery?)
  • Where is each person in your “funnel?”
  • How does our recovery break down over time? When a funnel ends in a “win,” what was the cause? Did they update their card? Was that before or after you emailed them? Was it reattempted successfully? When did it happen during the funnel timeline? Should you add another email to the end of the process?

10. Try Phone Calls

Emails are the backbone of your recovery process, but a phone call can make a difference too. That's especially true for high-value subscribers - you should give them a call for card updates if you get no response from emails.


Since people barely respond to phone calls from unknown numbers, you might have to leave them voicemails. You'll need a system in place for leaving effective voicemails and following up several times before speaking with a real person.

These calls, especially for B2B, pay off in the long run. Don't make the mistake of treating these calls as collections calls, like: "you owe us $100". Instead,  it's an opportunity to provide excellent customer service and keep your service running.

Most time, these calls are appreciated and provide businesses an opportunity to stay in touch with their most valuable customers. Finding opportunities to stay connected at various stages of a customer's lifecycle is a gift as a business owner.

This is not an exhaustive list of factors to consider, but it is a good starting point.

Final Thoughts

There are numerous ways you can adapt this guide to find solutions for your specific situation Understanding these concepts thoroughly will enable you to take your growth journey to a whole new level. Having a 360-degree view and ensuring that no stone is left unturned will help you develop and implement a foolproof strategy for your business. If you need help getting started, reach out to Chargezen support team or write me at

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