How to Write Effective Dunning Emails

Key takeaways:

Dunning emails help you prevent involuntary churn by letting customers know about failed payment methods
Optimizing each component of a dunning email can increase the chance of success
Brands can add their brand voice and a flair of creativity to dunning emails, but having clear instructions and easy options for payment method updates is essential
Tools like Baremetrics Recover can identify potential missed payments before they happen, leveraging dunning emails to prevent involuntary churn

When most SaaS companies talk about reducing churn, they’re usually referring to voluntary churn, when customers intentionally cancel their subscription.

However, there’s another type of churn that gets overlooked. And if you’re not careful, it can slowly eat away at your revenue and bleed your company dry.

I’m talking about involuntary churn. The customers whose subscriptions end because their credit card payments failed and they never updated their payment information.

According to our data, SaaS and subscriptions businesses lose around 9% of their MRR due to failed payments on average.

Luckily, you don’t have to just sit back and let it happen.

Actively sending emails (a.k.a dunning emails) to customers when their payments fail is your best bet at recovering that lost revenue.

RECOVER Dunning management on auto-pilot Around 9% of your MRR is at risk to failed payments. What are you doing about it?

Understanding Dunning Management

Dunning Management is the process of asking customers to pay you for money owed as a result of failed payments.

The payments usually fail because the card on file is expired, they have insufficient funds, or an issue with their bank.

When that happens, SaaS companies typically send an email (or series of emails) to let the customer know the payment failed. The dunning process and give them the opportunity to update their billing information and make a payment. Those emails are called dunning emails.

How to Send a Payment Failed Email

If you use a payment processing tool like Stripe, you likely have a basic subscription dunning email setup.

They typically look like this:

Signable dunning email

Source: Signable

When the email goes out, your customers just have to click on the call to action and update their info. Simple and easy.

But if you’re looking for something a little more advanced, that gives you more customization options and data, you can use a dunning tool like Recover (our product).

With Recover, you can create a series of automated dunning emails that go out to customers when their payments fail. You can also get data on how much revenue you’re recovering from your dunning emails over time.

Baremetrics Recover email overview

Once you have your tool of choice, you can get down to business. Because just sending out any old email and asking for payment isn’t a guarantee you’ll get paid.

The 4 Components of A Dunning Email

The goal of your dunning email is to get your customer to update their billing information. It sounds simple, but think about all the things that need to happen in order for it to be successful.

The email has to make it to the customer’s inbox
The user has to open your email
They have to read the email and decide to take action
They may need to locate a credit card number, or alternative payment option
They need to complete the actual task of updating their information

Subject line

Your subject line has one job: to get your customer to open the email.

Always remember that your dunning email is just one of dozens (or even hundreds) of messages in your customer’s inbox. If you want to get seen, you need to stand out.

Here's an example from CanIRank:

CanIRank Dunning Email

Email Body

The key to writing an effective dunning email is to get to the point. The body of your email should tell your customer two things (the 1-2 punch):

What happened
What they need to do (your call to action)

For best results, make it as easy as possible and remind users that it will only take a minute of their time.

Here’s a great example from SoapBox.

soapbox dunning email example

Alternative Options

Hopefully, between your subject line and the body of your email your customers update their info. But it doesn’t always work out that way.

Sometimes your customer’s payment fails because they can’t afford to keep using your product or are struggling to resolve an issue with their bank.

That’s when the “closing” of your dunning email can come in handy.

For instance, Nifty gives customers a few ways to get more help aside from updating their billing details.

nifty dunning email example

Juicer has a similar approach in their dunning emails, but they link directly to their FAQ section about declined payments.

The goal here is to offer any additional options and supoprt that your customers may need, whether that includes downgrading to an affordable option (downgrades are better than cancellations) or getting additional help from your support team.

Be sure to check out our article on Tips to Improve your Dunning Email Recovery Rate.

Tired of missing out on potential revenue ? Get a free trial of Baremetrics today!

Expired credit cards shouldn't mean lost customers

FAQ

What is a dunning email?

A dunning email is an automated message sent to subscribers when a payment fails, asking them to update their billing information before their subscription is cancelled. The term comes from dunning management, the broader process of recovering money owed due to failed or lapsed payments. In a SaaS context, payments typically fail because a card has expired, a bank has flagged the charge, or a customer has insufficient funds. Because these failures happen without the customer actively deciding to leave, the revenue lost is called involuntary churn. A well-timed dunning notice gives the subscriber a clear, low-friction path to fix the issue, which is why dunning emails are one of the most direct levers a subscription business has for protecting MRR.
What is the difference between dunning management and payment retry logic?

Dunning management is the full process of recovering revenue from failed payments, which includes both automated payment retries and customer-facing communication like dunning emails, dunning letters, and dunning notices. Payment retry logic is just one part of that process: the back-end rule that determines how many times and at what intervals your billing system attempts to charge a card again. Dunning management wraps around that retry logic by also notifying the customer, giving them an easy way to update their payment method, and tracking how much revenue is actually recovered. For SaaS businesses, relying on retry logic alone leaves money on the table because a significant share of failed payments require the subscriber to take action, not just a second charge attempt.
How do I write a dunning email that actually recovers failed payments?

An effective dunning email gets to the point immediately and makes it as easy as possible for the subscriber to fix their payment in under a minute. Start with a subject line that is specific enough to stand out in a crowded inbox, naming the problem clearly rather than being vague or overly formal. In the body, state what happened and what the customer needs to do in two sentences or fewer, then link directly to a payment update page so there is zero friction between reading the email and completing the action. From there, consider adding a secondary option such as a link to your support team or a downgrade path, because some customers whose cards decline are struggling with affordability, not just a lapsed card. Baremetrics Recover lets you build a sequence of these dunning emails with timing rules and tracks how much MRR each message recovers, so you can refine your dunning process based on real revenue data rather than guesswork.
How much MRR do SaaS companies typically lose to failed payments?

According to Baremetrics data, SaaS and subscription businesses lose around 9% of their MRR on average due to failed payments, making involuntary churn a material revenue problem for companies at almost any stage. That figure is separate from voluntary churn, where customers actively decide to cancel, which means most standard churn reduction strategies do not address it at all. For a business doing $100K MRR, that could represent $9K in monthly revenue that disappears not because customers are unhappy but because a card expired or a bank blocked the charge. A structured dunning process, including a timed sequence of dunning emails and automated payment retries, is the most direct way to recover that revenue before it becomes permanent churn.
What platforms offer automated failed payment recovery for subscription businesses?

Baremetrics Recover is a purpose-built automated failed payment recovery tool for SaaS and subscription businesses running on Stripe, Braintree, or Recurly. It automatically retries failed charges on an optimised schedule and sends a configurable sequence of dunning emails to subscribers whose payments fail, prompting them to update their billing information before their subscription lapses. Unlike the basic dunning notice included in most payment processors, Recover gives you visibility into recovered MRR over time so you can measure the direct revenue impact of your dunning strategy. For subscription businesses where involuntary churn is quietly eroding MRR, having a dedicated dunning management tool rather than relying on default processor settings makes a measurable difference to revenue retained.

How to Write Effective Dunning Emails (With Examples)

Table of Contents

Understanding Dunning Management

How to Send a Payment Failed Email