I lost $2,400 in a single month to failed payments before I set up any dunning process. Cards expired, bank declines, insufficient funds. Users who were perfectly happy with the product just quietly disappeared because their payment bounced and nobody told them.
The frustrating part is that most of these users would have happily updated their card if someone had asked. They weren't trying to leave. They didn't even know there was a problem.
Failed payment recovery is the highest-ROI email automation you can build. You're not convincing anyone to buy. You're just reminding people who already want your product to update a credit card. The revenue is sitting right there.
The Scale of the Problem
Let's do some quick math. If you have 500 paying customers at $50/month, that's $25,000 MRR. Industry data suggests 2-5% of recurring charges fail each month. That's $500-$1,250 in failed payments every single month.
Without a dunning process, you'll recover maybe 10-20% of that passively (some payment processors retry automatically). With a good email sequence, you'll recover 50-70%. That's the difference between losing $1,000/month and losing $375/month.
Over a year, a simple email sequence could save you $7,500+ in recovered revenue. For most SaaS companies, that's worth more than acquiring dozens of new customers.
Why Payments Fail
Understanding why payments fail helps you write better recovery emails:
Expired cards are the most common cause. Credit cards expire every 3-4 years, and users rarely update payment info proactively. This is completely fixable with a simple reminder.
Insufficient funds usually means the charge hit at a bad time. Retrying a few days later often works. Your email just needs to buy time.
Bank declines happen when the bank flags the charge as suspicious, the card has spending limits, or there's a fraud hold. These need the user to call their bank or use a different card.
Outdated billing info catches users who got a new card number (lost card, fraud replacement) but forgot to update your service.
The good news: none of these reasons mean the user wants to leave. They just need a nudge.
The Recovery Email Sequence
Email 1: Friendly Alert (Day 0, within hours of failure)
Subject: "Quick heads up about your [Product] account"
The first email should be warm and non-alarming. Most people feel slightly embarrassed about payment failures, so keep it casual.
"Hey [name],
Just a quick heads up. Your payment for [Product] didn't go through today. This usually happens when a card expires or your bank flags an unfamiliar charge.
No worries at all. Your account is fully active. Just update your payment info when you get a chance:
[Update payment info button]
Takes about 30 seconds. If you run into any issues, just reply to this email and I'll help sort it out.
[Founder name]"
Key elements: No panic, full access confirmed, direct link to update, offer to help, personal sign-off.
Email 2: Helpful Reminder (Day 3)
Subject: "Still need to update your card"
"Hey [name],
Wanted to follow up on the payment issue from a few days ago. Your [Product] account is still active, but I want to make sure it stays that way.
Common reasons cards get declined:
- Card expired (check the expiry date)
- Bank flagged the charge (a quick call to your bank usually fixes this)
- New card number (if you got a replacement card recently)
Update your card here: [Direct link]
If you're having trouble or want to switch to a different payment method, just let me know. Happy to help.
[Founder name]"
This email adds value by explaining common causes. It positions you as helpful, not demanding.
Email 3: Urgency Increase (Day 7)
Subject: "Your [Product] access expires in 7 days"
"Hey [name],
I've been trying to reach you about a payment issue on your account. Your last charge didn't go through, and I want to make sure you don't lose access to [Product].
Here's where things stand:
- Your account is still fully active right now
- We'll need to pause your account in 7 days if we can't process payment
- All your [data/campaigns/projects] will be saved, but you won't be able to access them
Update your payment info: [Direct link]
If something's changed and you'd like to cancel instead, that's okay too. Just let me know so I can make sure your data is handled properly.
[Founder name]"
This email introduces consequences without being aggressive. Mentioning data preservation shows you care about the user, not just their money.
Email 4: Final Warning (Day 12)
Subject: "Last chance to keep your [Product] account"
"Hey [name],
This is my last email about the payment issue on your account. Your access to [Product] will be paused in 2 days.
I'd hate to see you lose access, especially since [mention their usage - "you've built 12 campaigns" or "your team uses this daily"].
One click to fix it: [Update payment info button]
If you want to cancel, no hard feelings. Reply and I'll take care of it. But if this is just a card issue, it takes 30 seconds to update.
[Founder name]"
The personalization here matters. Referencing their actual usage creates loss aversion. "You've built 12 campaigns" hits harder than "your account will be paused."
Email 5: Account Paused (Day 14)
Subject: "Your [Product] account has been paused"
"Hey [name],
Your [Product] account has been paused due to the unresolved payment issue. Your data is safe and will be kept for 30 days.
To reactivate instantly:
- Update your payment info: [Direct link]
- Your account will be restored immediately with all your data intact
If you'd like to discuss anything or need help, just reply to this email.
[Founder name]"
Even after pausing, keep the door open. Some users will come back days or weeks later when they realize they need the product.
Timing and Retry Strategy
Your payment processor probably retries failed charges automatically, but the schedule matters:
Retry the charge at least 3 times over the dunning period. Many processors let you configure retry timing. Space retries 3-4 days apart to catch different billing cycles and account balance timing.
Coordinate emails with retries. Don't send a "your payment failed" email right before a retry succeeds. That's confusing. Send the first email after the initial failure, then subsequent emails only if the latest retry also failed.
Time of month matters. Cards with insufficient funds at the end of the month might work at the beginning of the next month (after payday). If your billing cycle hits on the 28th-31st, consider retrying on the 1st-3rd.
Making the Update Process Frictionless
The single biggest factor in recovery rates is how easy you make it to update payment info. Every click between "open email" and "card updated" reduces your recovery rate.
Direct link to payment page. Don't link to your dashboard and expect users to find the billing section. Link directly to the payment update page, pre-authenticated if possible.
Accept multiple payment methods. If someone's credit card keeps failing, offering PayPal, debit card, or bank transfer as alternatives can save the account.
Pre-fill what you can. If you're updating a card, pre-fill the billing address and other fields. The less the user has to type, the more likely they'll complete it.
Mobile-friendly. Most dunning emails get opened on phones. If your payment update page doesn't work well on mobile, you're losing recoveries.
Smart Dunning: Beyond Basic Emails
Segment by Payment Failure Reason
Different failure reasons deserve different messaging:
- Expired card: "Your card ending in 4242 expired. Update to your new card to keep things running."
- Insufficient funds: Softer messaging, maybe suggest the retry will happen automatically in a few days.
- Bank decline: "Your bank declined the charge. This sometimes happens with new subscriptions. A quick call to your bank usually resolves it."
Segment by Customer Value
Your $500/month enterprise customer deserves a different recovery experience than your $9/month user:
- High-value accounts ($200+/month): Personal email from founder or account manager, phone call on day 3, offer to help troubleshoot.
- Mid-value accounts ($50-200/month): Standard email sequence with personalization.
- Low-value accounts ($9-50/month): Automated sequence, but still personal tone.
Pre-dunning: Prevent Failures Before They Happen
The best dunning email is the one you never have to send:
Card expiry alerts. If you store card expiry dates (you should), send a reminder 30 days before: "Your card ending in 4242 expires next month. Update it now to avoid any interruption."
Pre-charge notifications. For annual plans or large charges, send a heads-up: "Your annual renewal of $588 will be charged on March 15th. Make sure your payment info is up to date."
These pre-emptive emails can reduce failed payments by 20-30%.
What Not to Do
Don't be aggressive or guilt-trippy. "Your account is PAST DUE" or "URGENT: Payment required immediately" might get clicks, but they damage your relationship. These users aren't deadbeats. They have a card problem.
Don't hide the cancellation option. If someone genuinely wants to cancel, making it hard doesn't help. It just creates resentment. Include a "if you'd like to cancel instead, just reply" in your later emails.
Don't cut access too fast. The standard grace period is 7-14 days. Cutting access after 24 hours is aggressive and counterproductive. Users need time to notice the email and take action.
Don't send from noreply@. Failed payment emails need to feel like real communication. Send from a real person, and make replies go to a monitored inbox. Some users will reply with questions or issues that, if answered, lead to recovery.
Don't forget in-app notifications. Email is your primary channel, but add a banner or notification inside the app too. "Payment issue detected. Update your card to avoid interruption." Catch users when they're already in the product.
Measuring Recovery Performance
Track these metrics weekly:
- Recovery rate: % of failed payments that are eventually collected (target: 50-70%)
- Time to recovery: Average days between failure and successful payment (lower is better)
- Email engagement by position: Which email in the sequence drives the most recoveries?
- Recovery by failure reason: Expired cards vs. insufficient funds vs. bank declines
- Net revenue saved: Total dollar amount recovered through dunning
The email position data is particularly valuable. If 60% of recoveries happen from Email 1 and only 5% from Email 5, your first email is doing the heavy lifting. Optimize it relentlessly.
Start Here
- Today: Check your payment processor's dashboard for current failed payment volume. Know the size of the problem.
- This week: Set up a 3-email dunning sequence with direct links to your payment update page. Even a basic sequence recovers significant revenue.
- Next week: Add pre-dunning alerts for cards expiring in the next 30 days.
- Ongoing: Monitor recovery rates and optimize email timing and copy based on what's working.
With Sequenzy, you can connect your Stripe account and get dunning sequences running automatically. Failed payment events trigger the sequence, successful payment stops it. No code needed for the payment tracking since the Stripe integration handles all of that. Whatever tool you use, the math is clear: a few hours setting up dunning emails can recover thousands in annual revenue.