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How to Recover Failed Payments in Your Coaching Business

How to Recover Failed Payments in Your Coaching Business

A successful coaching business can be a highly profitable, sustainable long-term enterprise, but several recurring problems can create bottlenecks to growth. One of the most substantial of those issues is recovering failed payments. 

Declined client payments due to a lack of funds can lead to a significant amount of time spent by coaches and their administrative teams chasing down clients and trying to recharge them when they default on payments. With many coaches selling high-priced offers that are split across multiple payments or recurring membership plans, a high rate of failed payments can significantly disrupt cash flow, reduce efficiency, and hinder growth. The big question, and one we frequently hear from the coaches we work with, is, how can these payment failures be dealt with more efficiently to increase the recapture rate and reduce the time spent managing them? 

This guide covers the most common types of failed payments, how to recognize them, and ultimately how to better prevent and respond to them in the future. 

The Most Common Causes of Failed Payments

There are several reasons a payment might fail, and not all of them are due to intentional attempts to avoid paying for your coaching services. Common issues you might encounter include:

  • System Errors - A system error can trigger when the card previously provided by a customer is expired, or the billing information they provided has changed or was entered incorrectly. 
  • Faulty Card Information - Incorrect card information due to changes by the owner is common, but so too are flags raised by the card issuer due to incorrect information being provided that triggers a fraud protection alert. There are many reasons these flags are raised, but if the purchase is legitimate, the cardholder often isn’t aware it has happened. 
  • Insufficient Funds - The most common reason for a failed payment is insufficient funds. 
  • Frozen Bank Account - Finally, a bank account can be frozen due to previous fraudulent activity or repeated violations. 

Whatever the reason, you’re left in a difficult position, unsure how to proceed with a new customer who has not yet paid or whose installment or subscription payments failed. 

How to Recognize a Failed Payment

Depending on how your payment structure is built, you may not be aware that failed payments have occurred. If you continue to provide coaching services to a customer when their payments have failed, it can cost your business revenue. It’s crucial to recognize failed payments as soon as possible so you can reach out and resolve them before providing services that haven’t been paid for. 

While you can check your payment history manually or wait for the 30-day past due notice to generate, the most efficient way to recognize and respond to failed payments is to set up an automated workflow. DepositFix is designed to integrate with HubSpot and automatically notify you and the customer when a payment fails. 

DepositFix automatically generates a “Failed” workflow in HubSpot with all of the necessary steps in place. The only thing you’ll need to do is update the email template for your brand and turn the workflow on. The “Failed” workflow will trigger as soon as a payment fails to go through, pulling personalization tokens from your customer’s transaction history and sending an automated email. While Stripe can also send automated receipt emails, they are generic and have a lower response rate. 

The Failed Payment workflow can be modified and activated through the following steps:

  1. Open the “DepositFix Failed Workflow” and add a "Send Email" action
  2. Select your company template and modify the email body
  3. In the email body, you can add any payment-related fields from Contact. To do that, click on Insert -> Personalization Token

The resulting workflow allows you to send any type of notification or task needed to automate the follow-up process for a failed payment. 

HubSpot workflow to send notifications or follow-ups for failed payments

Communicating with Your Customers About Failed Payments

With an automated workflow, you can quickly reach out to customers and let them know they have a failed payment. Remember that these are not always intentional, and the customer likely does not realize it has happened either. For that reason, approach them politely and assume the best intentions. 

  1. Send a polite inquiry informing your client that their recent payment attempt failed. 
  2. Include a sense of urgency to take action. Their account will be disrupted, or they will be unable to start their coaching sessions if they don’t resolve the issue by a certain date. 
  3. Make it as easy as possible to update their payment information. The more hoops they are asked to jump through, the less likely they will do it. 
  4. Be persistent with dunning messaging up to 30 days after the failed payment. 

Creating a Smarter Failed Payment Recovery System 

With these elements in mind, let’s take a closer look at what is needed to recover failed payments as quickly as possible. 

Your main tool is a dunning message—a notification to your prospective customer or client outlining the overdue payment, what actions are required, and when those actions must be taken. Initial messaging is often less formal, consisting of polite reminders designed to catch those who aren’t aware they have a payment problem. But as the failed payment ages, dunning messages can be employed to emphasize the state of their account and how soon they need to take action. 

You’ve likely received or at least seen several dunning messages. They tend to look like this:

dunning email - Source

Or this:

Dunning email - Source

Automatic collection by Stripe is one tool at your disposal at the same time that these emails are going out to remind your customers to pay. Smart Retries are machine-learning driven to attempt recharging the customer’s payment method based on the timing and circumstances most likely to result in a successful payment. The system will try up to eight times to recharge the customer’s payment method. 

While Stripe also offers automated emails to manage failed payments, these emails are generic and lack the flexibility and power of HubSpot’s automation systems and personalization tokens. However, with Stripe’s payment profile data, DepositFix can create a custom Billing Profile page that can be integrated into your automated follow-up emails:

1. Create a Billing Profile Page

Built into your DepositFix subscription, you can leverage Stripe payment data to build your Billing Profile. Here’s a quick summary of how to do so:

Because the information is pulled from Stripe automatically and hosted by DepositFix, it automatically updates with current payment information, allows users to update their payment details easily, and the layout can be customized to your business. You can read more details here about how to customize your billing profile page and prepare it for customers. 

2. Linking to the Billing Profile Page in Emails

The URL of the billing profile page is automatically appended to contact records in HubSpot under Payments > Billing Profile. You can find these properties under any contact record in your CRM on the side panel. This property is subsequently available as a personalization token that can be added to your emails.

DepositFix billing profile

3. Create an Automated Email with a Link to Billing Profile 

This allows you to quickly and easily create an automated email that can be sent through the Failed Payment workflow you set up earlier. 

Use personalized links in HubSpot email templates

When the workflow triggers, this email will automatically populate the recipient’s first name and the link to their billing profile URL, where they can update their payment information. 

While the combination of Stripe data and DepositFix within HubSpot will provide you with a quick and easy way to send dunning messages, you may opt for a more robust toolset. Several dunning management tools are designed specifically for this, including:

Churnbuster.io

Churnbuster is an industry-leading tool often used by eCommerce brands and subscription services to automatically recapture payment information with a smooth customer experience designed to minimize friction. Their email campaigns, in particular, are highly effective with a higher success rate leading to fewer emails being sent. 

Stunning.co

Stunning offers several failed payment recovery tools integrated with Stripe and your existing account. This includes in-app notifications, backup payment integration, a library of dunning emails, dunning SMS integration, and automated sequences to recapture failed payments. 

Flexpay.io

Flexpay is an AI-powered payment recovery platform that addresses both soft declines and hard declines. They claim customer churn rate reduction of up to 48% and a significantly higher payment recovery rate than other tools. 

You should also be prepared to escalate further if automated dunning messages fail to recover payment information. Manual payment recovery can be done through a variety of channels, not just with emails but also through phone calls, LinkedIn and Facebook messages, and other online channels. This can be time-consuming, so many coaches opt to work with third-party services such as:

RecoverPayments.com

RecoverPaymetns integrates with Stripe and identifies how much revenue is lost per month due to failed payments. They then create a personalized omnichannel strategy for outreach to those individuals to recapture payments. If you’re eager for a hands-on solution with real people working with your brand, Recover Payments offers that. 

GravySolutions.io

GravySolutions offers virtual customer success agents starting at $550/month. They manually reach out and support your customers, building relationships and following up on failed payments in a way you don’t have time to personally. 

There is no silver bullet to recapture all failed payments automatically, but by having a multi-tiered process to capture as much as possible, you can streamline the process and reduce your manual effort. 

How to Prevent Failed Payments in the Future

Failed payments are a major headache that can take valuable time away from actually running your business, so beyond smarter recovery methods, consider how to prevent failed payments in general. Here are four tips for cutting back on how often it happens and how disruptive it is when it does occur. 

1. Don’t Use Manual Invoicing 

First up, avoid manual invoicing whenever possible. Automatic payments are highly recommended for all services that incur recurring payments, whether as part of an installment plan or monthly subscription. 

2. Offer Payment Plans

Break up your services across installment payments to reduce the risk of failed payments at the end of a service period. Many coaches who charge four or five figures for their services use payment plans to dilute the risk and end engagements early if someone stops paying. Others will use a combination of upfront and subscription fees to spread the payment options. 

You can view examples of each type of payment form offered by DepositFix here

3. Require Payment Before Access

The simplest way to reduce the risk of failed payments is to require payment in full upfront. One single payment made before any services are rendered will eliminate the risk of working for free, but it will also create a larger barrier to entry if the cost of your services is particularly high. Often, large discounts are required to encourage upfront payment. 

4. Offer Financing 

A fourth option many coaches are turning to, thanks to the implementation of sophisticated tools that support it, is financing. By partnering with a lender, you receive the sum of the service payment up front, and a third-party lender takes on the risk of recovering the funds from the customer (with interest, of course). There are several solutions, some of which are specifically designed for coaching:

CoachFinancing.com

CoachFinancing is used by 1000 coaches, allowing them to offer financing between $1,000 and $50,000 for coaching or consulting services, reducing the barrier to entry. Payments are received via direct deposit in 48-72 hours. 

FundmyContract.com

FundMyContract integrates with multiple lenders, allowing you to access a wider network of possible solutions for your customers, offering instant approvals, and ensuring you are paid faster for your services. 

General financing solutions are also available from easy-to-use solutions like Klarna and Afterpay. There are some additional steps required to set up financing solutions on your website, but it can remove one of the largest barriers to access for many potential customers and greatly reduces the payment recovery required on your end. 

What if None of This Works? 

Sometimes you’ve attempted everything on this list, and you still can’t recover the payment. Some people simply can’t afford to pay due to life circumstances or personal decisions. Realistically, you have three options in this case:

  1. Negotiate a Payment Plan or New Terms - Once you’ve attempted recovery for 30-60 days, consider offering discounted pricing or a new payment plan to accommodate a client’s life circumstances. You might even offer to pause the contract for some time. 
  2. Cut Your Losses and Say Goodbye - While there is another option, cutting your losses is the best course of action 99% of the time when someone simply won’t pay. Cancel their subscription, turn off access to all resources, and send a polite, understanding “breakup” email. Do NOT burn your bridges here. Show understanding and make it possible for them to come back in the future if they choose. Good customer service will always come back to you positively. 
  3. Debt Collection - We don’t recommend turning to debt collection for several reasons. It is time-consuming, can significantly impact your reputation, and you won’t recover all the funds as you’ll sell the debt for a fraction of what you are owed. 

Rather than chasing people down indefinitely, consider the circumstances that led someone not to pay and how you can improve customer satisfaction in a way that will help retain customers. Losing some customers to non-payment is a part of the business. Reducing that number as much as possible is how you grow and succeed. 

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