What is dunning?
Dunning refers to the communication a company sends out to remind its customers to update their payment details when a credit or debit card payment is declined. Dunning is used as a tool to help reduce involuntary customer churn, thus increasing customer lifetime value. It is a particularly useful tool for subscription ecommerce stores, where customers are not entering payment information with every charge—this runs the risk of the recurring payment details becoming out of date over time.
Dunning includes both seamlessly clearing payments behind the scenes using a customer’s existing card information, and obtaining new payment details directly from the customer. In the past, companies used to send “pre-dunning” communication to customers reminding them before their payment information failed. Today, with advancements to automatic card update technology, this strategy is no longer relevant or effective.
Many payment issues can be resolved simply by retrying a customer’s current payment details on file, with no action needed on the customer end. To avoid sending unnecessary emails each time a payment fails, one strategy is for businesses to create custom retry schedules to make the process more seamless for customers. Another effective strategy is to ensure dunning emails are consistent with your overall brand identity. Finally, tracking and measuring your performance over time through intentional data and analytics is important for continually optimizing your processes and systems.