We run at about 97.5% retention rate. (Meaning per 1000 customers we lose on average 25 per month). While looking at the numbers over the year, I noticed that more then 50% of our cancelations are from dead beats who don't pay. If we throw out these customers and the ones that just cancel because the site or business didn't work, our rate would be 99.5%. This tells me our service and support is solid, but billing sucks.

1) What are some of your retention rates?
2) How do you collect on people who cancel credit cards so it can't be billed, and use this as a form of cancellation vs. just e-mailing or calling?


We currentally only e-mail customers about billing declines or past due accounts. What do some of you guys/gals do?

We recently started sending out a paper notice (form letter) on any account for which suspension was pending. In the past we just sent an e-mail, but since that got such little response I had felt a paper notice would do the trick.

Well - it didn't. Out of about 30 suspensions for non-payment we had to do last month, only 3 of them paid based on the "pending suspension" notice (e-mailed and postal mailed), and only 2 additional ones paid after the account was turned off. The other 25-ish never even e-mailed us to see why their account was turned off.

It's a very difficult thing - we try to be very nice and give customers plenty of time to respond to our notices (we only suspend them after we've sent out 3 different notices - it takes about 60 days from the time they fail to pay before we suspend them).

We're seriously considering getting more strict. I've finally figured out that the people who are going to pay are going to pay based on the first notice, and future notices are just by and large wasting our time.

We're currently exploring options for collections agencies - anyone out there have an agency that actually works, and will actually go after people and (most importantly) report deadbeats to the credit bureaus? We've used 3 collections agencies in 3 years with minimal results and none of them were willing to report to the credit bureaus.

Anyway - I wish you the best of luck, and if you find the secret to getting deadbeats to pay, please tell me.

Thanks,

Jason

We're seriously considering getting more strict. I've finally figured out that the people who are going to pay are going to pay based on the first notice, and future notices are just by and large wasting our time.

We started out giving 60 days. We quickly moved that to 30 days. After a year, we changed it to 14 days. We are actually changing this to 7 days! on 1/1/02. You are right, those who are going to pay, do so within a few days. We will no longer let people float after their credit card was declined. We may upset a or two customer because of the quick action we take, however we now have a much smaller accounts receivable. Also, if a customer calls and says they won't be able to pay for a week or two, we have no trouble extending due dates.

As far as collections, we have never used one. We have over 100 accounts in collections status totaling over $2500. This is over 2 years of records too. We are going to be submitting all those to a third party collector. We just need to find one. We have talked to a few. Seems like the best you can hope to collect is 20%. We found one company that does collections online (meaning you set up a account online, and submit accounts online) and will not bill unless they collect. I will post the company when I get to work tomorrow.

From my personal point of view 60 days is way too long and 7 days is way to short :)
7 days, just think of holidays or a business trip - not everyone is checking email every 5 minutes. Many "normal" people do it not even, some only once a week.

I don`t think 7 days it to short, in fact that is what I use. I agree that if they are going to pay that it will be in that time frame, I learned that from experience also. If you have a website you should be checking your email more than once a week, if not then they don`t have the responsibility to run a site. I am not running a charitable organization here, I want my money! :D

Originally posted by SiperNet
If you have a website you should be checking your email more than once a week, if not then they don`t have the responsibility to run a site.

:rolleyes:
Don't generalize. That's simply not true e.g. for small personal sites. And not everyone is so adicted to the Net that he checks his emails even when he is on a holiday trip.

I do tend to throw a little common sense into the mix and know that if it is around a holiday that it may take longer. ;)

We are normally giving customers 30 days up to 15GB account, bigger ones 10-14 days of delay maximum.
We encourage them with access disabling and when it does not work we delete account.

I always found that funny when you suspend someones account and you hear from them within hours, I just think what the hell I sent you 10 emails over the last week and they think it was some sort of suprise that it was suspended. :)

Originally posted by SiperNet
I always found that funny when you suspend someones account and you hear from them within hours, I just think what the hell I sent you 10 emails over the last week and they think it was some sort of suprise that it was suspended. :)

Yeah , I found that. It is amazing how people are suddenly completly contactable after having 'email trouble' which only affected mail from *@studio-51.co.uk !!

We have a technical term for these, Custards.

'Customers' who are Bastards.

However, this is not strictly true, as normally at this point they are not customers.

Originally posted by Jason Ellis
It's a very difficult thing - we try to be very nice and give customers plenty of time to respond to our notices (we only suspend them after we've sent out 3 different notices - it takes about 60 days from the time they fail to pay before we suspend them).

We're seriously considering getting more strict. I've finally figured out that the people who are going to pay are going to pay based on the first notice, and future notices are just by and large wasting our time.


Bit long 60 days, isn't it? :rolleyes: Are you a charity? Try not paying your phone or electricity bill for 60 days! You know what's going to happen! We send bills 5-7 days before due date. 5-7 days after due date the customer get's an final notice. If he doesn't pay then it just takes a click to tell him fu^^^off :D

What are the dead beat ratios?

Like I said, for every 1000, I can guarantee 15 will be people who don't bother canceling, they just let the card get declined. Is this high? How are some of your guys ratios?

just a question to you guys.. or umbillycord

Do you guys have recurring transactions from your merchant?
Or do clients put in their CC Info, every beginning of the month?

We dont get alot of deadbeats, the billing software runs every night, and after reciving an email (your credit card has failed) every day for a week, most people enter a new card

after 30 days, those who don't, we just kick them flat out (hey, almost 30 warnings, Ithink we are beeing fair :D )

my main consern is with Fraud, I had people commiting fraud that even had the rightfull owner's phone number .. and when I call the person to ask why the chargeback , they are horrified to realise the thieve had that kind of info (righ name, address and phone)

some people think that CC fraud is only somebody getting a hold of their CC number and exp. date .. nope, it's getting allot more personal that than :(

Originally posted by microsol


Bit long 60 days, isn't it?

Well, when close to 95% of your accounts are business accounts, sometimes you have to make sacrifices. Businesses expect and demand a 30-day net due on bills - so if we give them 30 days to get a payment to us, and then we send out a past due notice, another 15 days until we send them a notice that their account is due for suspension, and then 15 days later we suspend it. That's 60 days.

Now, most of you are talking about credit card declines - I'm not - those we give 30 days on, period. I'm talking about invoices. The customer gets an invoice they get 30 days to pay. If they don't, we follow up with a past due notice, then a pending suspension notice, and then we shut them off.

But, yeah, if someone's credit card declines, that's only 30 days (they don't get the luxury of an invoice in that case - just the past due and pending suspension notices).

It's annoying - but as I said, you have to compromise when you're dealing with almost entirely businesses. I know that when I get a bill I expect to have 30 days to pay it, and most businesses are the same way. 30 days is standard in the business world.

Jason

Do you guys have recurring transactions from your merchant?
Or do clients put in their CC Info, every beginning of the month?

We input it once into our Mercant Account. It auto bills each month. If it is declined, we delete that entry so we don't keep getting billed for runs.

We then send a notice every few days to the customer.

Businesses expect and demand a 30-day net due on bills - so if we give them 30 days to get a payment to us

True. We too love pushing net 30 to net 60 with companies too. This is just good cash flow management. Everyone does it. We actually changed the way we do business invoicing after having a company do it to us. (It pissed us off, but they get their money on time :D). We pre-bill 28 days before the due date. We give them 28 days to send in payment. If it is not in on due date, we send out a notice they will be shut down in 14 days. That gives them almost 45 days to pay. If they don't, we only lose 14 days to them.

It has been my personal experience that customers who are willing to continue make payments within 5-10 days from the date of notice about there credit card is decline. Rest just never answer the email. We give 14 days period to pay for there services. We have around 98-96% customer retention ratio. and i have noticed most off the web site which get turned off are personal or non commercial web sites.

30 days may be standard in business world but it is not in internet world. If i will not pay my service provider for 15 days he may suspend my server or turn me off, so why should i give my customer liberty of 30 - 60 days.? It also depend upon size of your company. When i was new i use to think, since running web site does not take any efforts from us because they keep running on server with other accounts, it may be good idea if i will give them more grace period in order to get back lost customers, but this doesn't work at all.

Originally posted by Jason Ellis

Now, most of you are talking about credit card declines - I'm not - those we give 30 days on, period. I'm talking about invoices. The customer gets an invoice they get 30 days to pay. If they don't, we follow up with a past due notice, then a pending suspension notice, and then we shut them off.


I MUST ask again: Do you run a charity? The time you give them is definately too long! :eek:

Do YOU get 60 days to pay your invoices to providers you might use? What's if the customer decides to blow another 20 gigs and then just takes his domain to a new provider?

This is how we do it: The customer gets the invoice 5-7 days before due date. 5-7 days AFTER due date we send him a last notice that he have to pay within 5-7 days otherwise his account will be suspended. Then you see if the person is willing to pay his bill or not. If yes, they WILL contact you. If his doesn't pay withing the time given his account will be suspended and we send another email telling him exactly that. If he does not pay until 7 days after the account suspension his account will be deleted and that's it! Now count all this time: a total of 7 days before due date and another 14! days after due date. After we just blow his data. I think this is really enough time we give to the customer to pay his invoice.

Good luck with collection agencies.

We've got well over $50,000 of past due accounts which are currently in an uncollectable states Mostly from a few large dot coms that when dot bomb.

Genereally, a chapter 11 company will pay off their secured creditors first. Then it's a feeding frenzy between everyone else _if_ there is anything else... which their rarely is.

I guess it makes sense to cancel service quickly. There is no point letting it drag out. We made that mistake last quarter and probably won't make it again.

Originally posted by nopzor
Good luck with collection agencies.

We've got well over $50,000 of past due accounts which are currently in an uncollectable states Mostly from a few large dot coms that when dot bomb.

Genereally, a chapter 11 company will pay off their secured creditors first. Then it's a feeding frenzy between everyone else _if_ there is anything else... which their rarely is.

I guess it makes sense to cancel service quickly. There is no point letting it drag out. We made that mistake last quarter and probably won't make it again. So; what do you do for collections?
And; how fast is quickly?

What do we do?
There's really not much we can do -- that's the point.

How fast is quickly?
I think you should send out a final demand notice after no more than 30 days. The final demand can be due in 3 business days. I think it's important to send the final demand notice by registered mail (especially for large accounts).