Dunning Email Sequence: Recover Failed Payments and Reduce Involuntary Churn
Failed payments are silent revenue killers. Unlike voluntary churn, where customers actively decide to leave, involuntary churn happens when payment methods fail, and customers don't even realize their subscription has lapsed. The good news? This is the most recoverable type of churn with the right dunning sequence.
Dunning (the process of communicating with customers about failed payments) can recover 20-40% of failed payments when done well. Most SaaS companies leave this money on the table with generic, ineffective payment failure emails.
This guide covers the complete dunning email sequence: from pre-failure prevention to post-cancellation recovery, with templates you can adapt for your business.
Why Dunning Matters More Than You Think
Involuntary churn typically accounts for 20-40% of all SaaS churn. That's revenue lost not because customers wanted to leave, but because of expired cards, insufficient funds, or outdated billing information.
| Metric | Impact |
|---|---|
| Failed payment rate | 5-10% of all subscription charges |
| Recovery rate (no dunning) | 10-15% |
| Recovery rate (basic dunning) | 25-35% |
| Recovery rate (optimized dunning) | 40-60% |
| Revenue at stake | 5-10% of MRR monthly |
The difference between basic and optimized dunning can represent 2-3% of your entire MRR, recovered automatically every month.
The Complete Dunning Sequence Structure
An effective dunning sequence has five phases, each with a specific purpose:
| Phase | Timing | Goal | Tone |
|---|---|---|---|
| 1. Pre-Failure Warning | 3-7 days before card expiration | Prevent failure entirely | Helpful, informational |
| 2. First Failure Notification | Immediately after failure | Alert and provide easy fix | Calm, clear |
| 3. Retry Reminders | 3-day intervals during retry period | Maintain urgency without panic | Friendly urgency |
| 4. Final Notice | 1-3 days before cancellation | Last chance, clear consequences | Direct, urgent |
| 5. Post-Cancellation | After account suspended | Recovery opportunity | Respectful, open door |
Phase 1: Pre-Failure Warning
The best dunning email is one you never have to send. Pre-failure warnings catch expiring cards before they fail.
Email 1: Card Expiration Warning (7 Days)
Sent when a credit card is expiring within the next billing cycle.
Soft, helpful approach to card update
Your card ending in [lastFour] expires soon
Hi [firstName],
Quick heads up: the credit card we have on file for your [productName] subscription expires on [expirationDate].
Your next billing date is [nextBillingDate], so you'll want to update your payment method before then to avoid any interruption.
Update your card here: [updatePaymentLink]
Takes about 30 seconds. Your subscription renews at [subscriptionPrice] on [nextBillingDate].
If you have any questions about your billing, just reply to this email.
Best, [senderName]
Email 2: Card Expiration Reminder (3 Days)
Follow-up for customers who haven't updated yet.
Second reminder with added convenience
Reminder: Your card expires in 3 days
Hi [firstName],
Just a quick follow-up: your card ending in [lastFour] expires on [expirationDate].
I know updating payment info is easy to put off, so here's the direct link again:
[updatePaymentLink]
Your subscription ([subscriptionPrice]) will attempt to charge on [nextBillingDate]. If the card has expired, the payment will fail.
If you've already updated your card, you can ignore this email.
Best, [senderName]
Phase 2: First Failure Notification
When a payment fails, respond immediately. The longer you wait, the lower your recovery rate.
Immediate Failure Email
Sent within minutes of payment failure.
Non-alarming notification with easy fix
Your [productName] payment didn't go through
Hi [firstName],
We tried to process your [productName] subscription payment of [subscriptionPrice], but it didn't go through.
This happens sometimes. It could be:
- An expired card
- Insufficient funds
- A bank security hold
- Outdated billing info
The quick fix: Update your payment method here: [updatePaymentLink]
We'll automatically retry the payment over the next [retryDays] days. But updating your card now ensures there's no interruption to your service.
If you think this is a mistake or need help, just reply to this email.
Best, [senderName]
Phase 3: Retry Reminders
Most payment processors retry failed payments automatically. Use this window to communicate with increasing urgency.
Retry Reminder 1 (Day 3)
Gentle nudge about ongoing issue
Quick reminder about your payment
Hi [firstName],
Following up on your [productName] payment that didn't go through [daysSinceFailure] days ago.
We've retried the payment automatically, but it still isn't processing. This usually means the card on file needs to be updated.
Update your payment method: [updatePaymentLink]
Your account is still active, but if we can't process payment within the next [daysRemaining] days, we'll have to suspend your access.
Takes about 30 seconds to fix: [updatePaymentLink]
Best, [senderName]
Retry Reminder 2 (Day 6)
More direct about timeline
[daysRemaining] days until your account is suspended
Hi [firstName],
I've sent a few emails about your [productName] payment. We've tried [retryCount] times to process it, but it keeps failing.
In [daysRemaining] days, we'll have to suspend your account.
When that happens:
- You'll lose access to [productName]
- Your [dataType] will be preserved for [dataRetentionDays] days
- You can reactivate anytime by updating your payment
I really don't want that to happen. If there's any issue with the charge or you need help, please reply to this email.
If you just need to update your card: [updatePaymentLink]
Best, [senderName]
Phase 4: Final Notice
The last email before account suspension. Make consequences crystal clear.
Direct, unmistakable final notice
Final notice: [productName] account suspension tomorrow
Hi [firstName],
This is your final notice before account suspension.
Despite [retryCount] payment attempts and multiple emails, we haven't been able to process your [productName] payment of [subscriptionPrice].
Your account will be suspended tomorrow ([suspensionDate]).
What that means:
- Immediate loss of access to [productName]
- Your data preserved for [dataRetentionDays] days
- Reactivation available anytime after updating payment
Prevent suspension now: [updatePaymentLink]
If you've decided not to continue with [productName], no action needed. But if this is just a payment issue, please update your card before tomorrow.
Questions? This is your last chance to reach out before suspension.
Best, [senderName]
Phase 5: Post-Cancellation Recovery
Even after suspension, recovery is possible. These emails target customers whose accounts have been suspended.
Email 1: Account Suspended Notification
Confirms suspension with reactivation path
Your [productName] account has been suspended
Hi [firstName],
Your [productName] account has been suspended due to payment failure.
What this means:
- You no longer have access to [productName]
- Your data is preserved for [dataRetentionDays] days
- You can reactivate anytime
To reactivate: [reactivateLink]
When you reactivate:
- Instant access restored
- All your data and settings preserved
- Charge for current billing period only (no back-payment)
If you've decided not to continue with us, your data will be automatically deleted after [dataRetentionDays] days. You don't need to do anything.
Questions? Reply to this email.
Best, [senderName]
Email 2: Data Deletion Warning (Day 20 of 30)
Clear countdown to data deletion
[daysRemaining] days until your data is permanently deleted
Hi [firstName],
Your [productName] account has been suspended for [daysSinceSuspension] days.
In [daysRemaining] days, your data will be permanently deleted:
- [dataType1]
- [dataType2]
- [dataType3]
- All account settings and history
Once deleted, this data cannot be recovered.
Reactivate to preserve your data: [reactivateLink]
If you've moved on from [productName], no action needed. This is just a courtesy notice before permanent deletion.
Best, [senderName]
Dunning Best Practices
Timing Recommendations
| When to Send | Purpose | |
|---|---|---|
| Pre-failure warning 1 | 7 days before card expiration | Early prevention |
| Pre-failure warning 2 | 3 days before card expiration | Reminder |
| First failure | Within 1 hour of failure | Immediate notification |
| Retry reminder 1 | Day 3 | Maintain urgency |
| Retry reminder 2 | Day 6 | Escalate urgency |
| Final notice | Day 9 (1 day before suspension) | Last chance |
| Suspension notification | Immediately after suspension | Confirm status |
| Data deletion warning | 10 days before deletion | Final recovery opportunity |
Card Update Page Best Practices
Your card update page is just as important as your emails. Make it:
- One-step: Don't make customers log in first if possible
- Mobile-friendly: 40%+ of dunning clicks happen on mobile
- Clear: Show exactly what they're updating and what happens next
- Secure-looking: Display security badges, SSL indicators
- Fast: No loading delays or unnecessary steps
Involuntary vs. Voluntary Churn
Not all failed payments are involuntary. Some customers let payments fail intentionally to avoid cancellation conversations.
Signs of intentional payment failure:
- Low usage before failure
- No response to any dunning emails
- Previous cancellation requests
- Support complaints
For these customers, consider:
- Adding optional feedback collection earlier in the sequence
- Offering easier cancellation as an alternative
- Reducing email frequency to avoid annoyance
Common Dunning Mistakes
-
Waiting too long to start: Send pre-failure warnings 7+ days before expiration, not after.
-
Generic, robotic emails: Personalized emails recover 20-30% more than templates that read like system notifications.
-
No escalation path: A single dunning email recovers far less than a structured sequence with increasing urgency.
-
Ignoring failure reasons: Different failure reasons (expired, declined, insufficient funds) need different messaging.
-
Giving up after suspension: Post-suspension recovery emails can recapture 10-15% of suspended accounts.
Measuring Dunning Success
Track these metrics to optimize your dunning sequence:
| Metric | What It Measures | Target |
|---|---|---|
| Pre-failure update rate | % who update before card expires | >30% |
| First-attempt recovery rate | % who update after first failure email | >15% |
| Overall recovery rate | % of failed payments eventually recovered | >40% |
| Time to recovery | Average days from first failure to recovery | <7 days |
| Suspension rate | % of failed payments leading to suspension | <30% |
| Post-suspension recovery | % of suspended accounts that reactivate | >10% |
Implementing Your Dunning Sequence
Week 1: Foundation
- Set up pre-failure warning triggers (card expiration data)
- Create first failure notification email
- Configure card update page
Week 2: Retry Sequence
- Create retry reminder emails (day 3 and day 6)
- Set up automatic retry schedule with your payment processor
- Configure failure reason segmentation
Week 3: Final Notice and Suspension
- Create final notice email
- Set up account suspension workflow
- Create suspension notification email
Week 4: Recovery and Optimization
- Create data deletion warning email
- Set up recovery tracking and metrics
- Test entire sequence end-to-end
For more on building automated email sequences based on customer behavior, check out our guide on automated email sequences. You can also learn about churn prevention email sequences for proactive retention, and win-back email sequences for recovering churned customers.
The Bottom Line
Dunning isn't about pestering customers for money. It's about making it easy for customers who want to stay to actually stay.
Most failed payments aren't intentional. Customers forget to update cards, banks flag unusual charges, and life gets busy. Your dunning sequence should be helpful, not aggressive. Provide clear information, easy solutions, and appropriate urgency without making customers feel harassed.
The best dunning sequences feel like helpful reminders, not collection notices. When customers eventually update their payment, they should feel relieved that you helped them avoid losing access, not annoyed that you nagged them.
Start with pre-failure prevention. It's easier to avoid a failed payment than to recover one. Then build a structured sequence that escalates appropriately and provides multiple paths to resolution. The revenue you recover will pay for the effort many times over.