Users churn because their credit card expired
Up to 30% of churn is involuntary — expired cards, insufficient funds. A dunning sequence recovers most of it.
When to use
You have recurring billing. Even with 50 paying users, failed payment recovery adds up.
Hypothesis template
If we implement smart dunning with fill in: retry schedule and fill in: email sequence, we'll recover fill in: target% of failed payments that would otherwise churn.
Method
The problem: A user's credit card expires or gets declined. If you don't recover it, they churn — even though they didn't want to leave.
What works: An automated dunning sequence: retry the card on smart intervals, send friendly emails, and make it dead simple to update payment info.
The result: Good dunning recovers 50-70% of failed payments. For most SaaS, involuntary churn is 20-30% of total churn, so this is free money.
How to do it:
- Set up automated payment retries: day 1, day 3, day 5, day 7 (card networks resolve many issues within days)
- Send a friendly email on first failure: "Your payment didn't go through. Update your card to keep your account."
- Include a one-click link to update payment info
- Send a second email on day 3 with a reminder of what they'll lose
- Day 7: "Last chance — your account will be downgraded tomorrow"
- Don't immediately cancel — give a grace period
Key insight: This isn't really "monetization" — it's preventing accidental churn. 9 out of 10 failed payments are users who want to keep paying.
Success metrics
- •Failed payment recovery rate
- •Revenue recovered per month
- •Involuntary churn reduction
- •Card update rate from emails
Prerequisites
- A billing system that supports retries (Stripe handles most of this)
- Email templates for the dunning sequence
- A page where users can update payment info
Common pitfalls
- •Immediately canceling on first failure
- •Not sending any notification emails
- •Making it hard to update payment info
- •Being aggressive or threatening in dunning emails
Source: Stripe, Baremetrics. Smart dunning recovers 50-70% of failed payments that would otherwise churn.
Suggested ICE scores
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