This is a guest post by Kristen DeCosta. Kristen is the Growth Lead at Churn Buster. She is dedicated to educating companies and founders on the importance of customer retention and the dangers of ignoring churn. When she's not busting churn and crafting content, you can find her hiking a mountain or snuggling with her three rescue pups, Cooper, Tobi, and Finn.
Transactional emails are dead in the water without world-class email deliverability. And failed outreach can quickly wreak havoc on recurring revenue. Using a reliable email service will ensure your most important emails into the right inbox ASAP while promoting trust and transparency.
Where newsletters and marketing campaigns are pivotal to your success, transactional emails have a direct impact on your bottom line. Dunning emails, in particular, are dangerous to leave in the hands of a shaky email delivery service. If you cannot rely on their delivery, you could be losing customers and revenue right under your nose.
What exactly are dunning emails? #
You may already know what dunning emails are, but let’s take a step back and dive deeper.
When a recurring payment fails, there’s usually an issue with the card on file. When automatic card retries can’t resolve the issue, you'll need to email your customer for the updated card information. These are dunning emails. And the success (or failure) of them can have long-term implications for your business.
Look at it this way: If you retain one more customer per month, you will see a total of 78 recovered payments after 12 months. At Churn Buster, we call this the Rule of 78.
Now let’s put some numbers to it.
Let’s say your company has 100 “at-risk” customers facing billing issues every month, each valued at $30/month. If 2% of your dunning emails fail to deliver, you’ll see a loss of $60/month in MRR. With the rule of 78 applied, we can calculate your revenue loss after 12 months is $4,500. With 500 at-risk customers, that 12-month loss jumps to $23,400. With 1,000 at-risk customers per month, you’re looking at a $62,400.
Now that’s a scaling impact.
Optimizing your dunning campaigns can be complex, but it all starts with deliverability. The customer won't update the payment information if they never receive your email, or worse, if that email ends up in their spam folder. And then it’s a guaranteed churn (unless you can get on the phone with them).
Recover more revenue with reliable email delivery #
Reliable email delivery is the most important factor for dunning campaigns, check. However, getting in the inbox is only the first way that a solid delivery service can up your bottom line. Next up, making sure your dunning emails are trustworthy when they get there.
Here are a few (more) ways a reliable email service provider can improve your dunning campaigns:
1. Technical specs for deliverability #
Dunning emails can end up in spam folders, and it happens more often than you’d think. When payments fail, it’s critical to get into a customer’s inbox as soon as possible. DKIM, SPF, custom return-paths, and DMARC can build trust and improve deliverability.
DKIM (DomainKeys Identified Mail) validates the authenticity of email messages. It is key to sending legitimate emails and avoiding any “via [dunning provider]” tags. This is huge for dunning campaigns, as via tags and the like can increase consumer anxiety and hurt your chances of recovery. Over time, DKIM records also help senders build domain reputation, which is increasingly important for deliverability.
SPF (Sender Policy Framework) records and custom return-paths are also important for ensuring deliverability. With most email service providers, SPF can be handled for you automatically. Not all ESPs are fully on board, though, and some may ask you to set up SPF records. It’s a little extra work for you, but it’s still worth setting up if they suggest it.
DMARC (Domain-based Message Authentication, Reporting & Conformance) is a standard designed to mitigate phishing emails. It’s a way for you to publish a policy informing ISPs how to handle emails that claim to be from your domain but fail to align. You can tell them to do nothing, to quarantine (send it to the spam folder), or reject it. It also gives those ISPs a place to send aggregate reports about sources attempting to send email on your behalf. This way, you can correct any configuration mistakes with legitimate sources and have better insight into possible illegitimate and nefarious sources.
In the bigger picture, DKIM and custom return-paths help ensure full DMARC alignment. If you don’t have either a quarantine or reject policy established for your domain, you should be alright. However, once you implement a more aggressive policy, having both DKIM and a custom return-path can help ensure that legitimate emails don’t get caught in spam or rejected.
Let’s say you send your dunning emails to firstname.lastname@example.org, but Jan is not the credit card holder on the account. So, Jan forwards the dunning email to email@example.com (the credit card holder). This action could potentially break the DKIM and disrupt DMARC standards. If this happens, Mark never gets the email, Jan doesn’t know about the failed delivery, and the card information never gets updated. But, if the return-path is aligned, then the email will pass, all is well, and Mark gets the email from Jan. And you’ve saved an account.
2. Sender identity #
With billing-related emails, trust is the more important than ever. Consumers are more sensitive about phishing schemes and credit card scams. This awareness makes people wary of clicking on links requesting credit card information. Transparency is the only way to combat this.
When dunning providers don't connect your domain to a DKIM DNS record, any dunning emails sent on your behalf will show in the inbox as: "From: Your Company via dunning-provider.com" or worse, "From: your-company-1otSoFG1bb3rlshH3re@dunning-provider.com". This increases customer anxiety and decreases revenue recovery.
Every dunning provider should be using a reliable email deliverability service, but most don’t, leaving you with limited customization. If you do not have control over the sender identity in your dunning campaigns, you could be putting your revenue at risk. In the end, it’s up to you to decide who the email comes from. The from name is important when it comes to trust, so choose wisely.
3. White label service #
Advanced dunning providers should offer white label service. This puts your brand at the forefront of all communications, instead of theirs. It only takes a minute to set up, and it allows you to reap all the benefits of sending transactional emails. White label services increase the sender reputation of your domain. This can lead to high open rates and fewer instances of spam complaints.
4. Bounce handling #
What happens when transactional emails bounce? It can be a scary thought. When a dunning email bounces, it can be a bad sign for your company. At best, you’ve lost one of your contacts for the account. At worst, you’ve lost your only contact on the account.
Luckily, a bounce isn't always the end of the road. You can hop on a call, reach out to the team, find a new contact, and get the card info updated. But, how do you know when your dunning emails bounce?
A reliable email delivery service like Postmark allows dunning providers to monitor all emails sent out. And with customizable webhooks, you can be alerted whenever a bounce happens. Postmark even offers Rebound, a tool to help make it easier for your end users to address delivery issues proactively. A bounced dunning email will inevitably lead to a churned customer if you don’t know it happened. Ensure you are alerted of these bounces and start recovering more revenue.
Wrapping up: #
If you’re not ready for it, involuntary churn can creep into your business and have dire impacts on your growth. A missed inbox means lost revenue, so every small improvement to your recovery system can have staggering long-term effects. Invest in a dunning provider who prioritizes deliverability and sets your business up for sustainable success.