Business Models
Dunning
Definition
Dunning the process of recovering failed subscription payments through retries and customer communication. Includes automated retry attempts, customer notifications, and grace periods before cancellation. Effective dunning recovers 10-30% of failed payments. Optimize retry timing based on decline reason. Balance persistence with customer experience - over-aggressive dunning annoys customers.
Related Terms
Subscription Billing
A payment model where customers are charged on a recurring schedule (monthly, annually, etc.) for ongoing access to products or services. Requires card-on-file capability and careful attention to authorization rates, dunning, and involuntary churn. Card networks have specific rules for subscription billing including clear disclosure and easy cancellation. Higher risk classification due to chargeback patterns.
Retry Logic
Automated rules for retrying failed transactions. Not all declines should be retried - and retry timing matters. Insufficient funds should be retried in a few days; expired card should prompt card update. Intelligent retry can recover 10-30% of soft declines. Important for subscription billing to reduce involuntary churn from temporary payment failures.
Involuntary Churn
Customer loss due to payment failures rather than intentional cancellation. Caused by expired cards, insufficient funds, or technical issues. Represents 20-40% of subscription churn. Prevention requires card updater services, smart retry logic, and effective dunning. Involuntary churn is largely preventable with proper payment optimization.
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