6 Expert Invoicing Strategies to Drive Customer Satisfaction & Reduce Churn

They say money makes the world go round, but have you ever wondered what makes your company’s money go round?

Neither sales nor customers are sufficient answers, as they fail to capture the broad picture of your business. However, customer satisfaction (CSAT), churn, and invoicing… well, those are closer to the truth.

If that doesn't make complete sense to you just yet, don't worry. In this article, we'll show you the often-overlooked connection between your company's invoicing strategies and your CSAT and churn metrics, as well as how you can leverage this relationship to drive company-wide positive change and boost revenue.

The Importance of Customer Satisfaction & Churn in Revenue

Let's start from the top. You should be aware that customer satisfaction and churn are some of the most important metrics for any company. However, it can be difficult to grasp how overreaching their effects are and how your invoicing strategies play into them. And so, let's play a quick round of catch-up before we jump into all that good stuff promised above.

Focused on Customer Satisfaction

Customer satisfaction is a metric detailing your customers' overall happiness with your company. It's affected by various factors, chiefly the quality and price of your products and services, customer support, discounts and deals, and your company's overall omnichannel experience.

However, gauging your CSAT can be a little complicated despite knowing that. It requires you to proactively gather customer feedback via on-site ratings, email, social media questionnaires, or otherwise. Thankfully, the actual calculation is simple.

As we said earlier, your CSAT score affects a lot, and understanding where you stand with your customers will let you draw better conclusions regarding your entire company's performance. In particular, it'll help you know your revenue, churn, customer loyalty, brand reputation, as well as employee morale, and productivity.

If you're looking to enhance customer experience (CX), consider implementing a customer experience platform, which centralizes customer interactions, data, and analytics and provides tools for optimizing and personalizing your customer interactions, ultimately leading to improved satisfaction and loyalty.

Focused on Churn

Churn is another vital metric. In this case, it explains how many of your long-term customers stop doing business with you (i.e., churn) in any given time frame – typically per month, quarter, or year. Churn is directly affected by CSAT, and in turn, all its factors too.

Unlike customer satisfaction, churn is rather easy to track and calculate. All you need to do is divide the number of lost customers by your total customers at the beginning of the period you're trying to evaluate. Here's how that looks as an equation.

Customer churn is the direct opposite of customer retention.

High churn rate communicates to you that, for whatever reason, your clients are unhappy (i.e., you have low CSAT). Of course, “high” and “low” are relative terms and depend wholly on your industry and previous company performance. For reference, see the diagram below detailing customer retention rates.

Source: ExplodingTopics

However, if you do find that you're churning more customers faster than before, it's time to pay attention and start investigating. First, you'll want to go back to the previous section and assess your current CSAT value. From there, you'll be able to put on your best Sherlock Holmes cap and use deduction to identify what's causing it.

One of the most frequently overlooked factors that can negatively affect your CSAT and churn is actually your invoicing, so let's take a look at that.

How Invoicing Affects Customer Satisfaction & Churn

One could be forgiven for thinking that invoicing has nothing to do with the vital metrics outlined above. However, nothing is ever quite so simple when it comes to money. The invoices you issue are your last interactions with your clients in any single transaction, so they carry quite a lot of weight.

Here are just a few aspects of invoices that can affect your customer satisfaction and churn:

a) Clarity: No one likes to feel like they've been cheated. Even if it's nothing more than a fading suspicion, it will still leave a bad taste in your mouth. Hence, it's crucial you take care to create invoice templates that are easily legible and include the products/services provided, as well as individual and total prices.

You want your customers to be able to easily look and see whether they've received everything they paid for (for the agreed price) and have no questions left in their minds. Otherwise, you risk them starting to doubt your trustworthiness, which never ends well.

b) Timeliness: Another thing to keep a close eye on, especially when dealing with B2B clients, is whether or not you issue and deliver your invoices on time. Unlike traditional customers, businesses tend to have complex billing cycles, and disrupting them might cause you and your client a lot of stress. So, we can say that timely invoicing is crucial in a job market where businesses value efficiency.

Being late with your online invoicing not only means you're unlikely to get paid on time but also creates an image of irresponsible management. Worse yet, if you somehow manage to throw a wrench into your client's operations, they might conclude that your products/services are not worth the trouble and go to a competitor.

c) Payment Flexibility: As a best practice, you typically want to cater to your customers in all aspects of your business to make the concept of giving you money as appealing and easy to stomach as possible. And one of the better ways of doing that is by giving clients the freedom of choice regarding their payment methods.

Whether it’s B2B or B2C, no one will complain about being able to pick whatever payment method fits them best. But turn that concept on its head, and you'll quickly find that forcing people to pay you in the only way you're most comfortable with is a quick way of creating unhappy customers and causing churn.

d) Billing Disputes: We've spoken about the negative effect a questionable-looking invoice can have. Now imagine you issue an invoice that's incorrect in some way. Just that alone is sure to send your reputation plummeting through the ground, but mistakes happen. What matters even more, is how you handle this situation.

Be gracious, proactive, and willing to make things right, and you might actually turn the situation around and win your disgruntled client over with excellent customer service. However, if you fail to repair the relationship and fix the damage done, you can wave that particular customer and the associated revenue stream goodbye.

e) Personalization: Let's talk about something without potentially catastrophic consequences for a change. As mentioned earlier, your invoices help form a relationship between your company and the customer. And if your interactions are positive, branding your financial documents can help reinforce the good brand image they have of you.

f) Proactive Communication: In the current economic climate, changes in prices and policies are inescapable. And although these rarely come as good news, communicating them promptly and efficiently can mitigate their negative effect.

On the other hand, choosing to update your customers regarding any changes a minute to midnight, or worse yet, not at all, is sure to damage whatever good understanding you had beforehand. Do this at a particularly bad time, and the effects could be irreversible.

6 Invoicing Strategies to Boost Customer Satisfaction & Combat Churn

Effective communication is essential for a transparent invoicing process. Ensure you are consistently available for your clients with the aid of auto-responsive texts throughout the invoicing process. Now that we understand how your invoicing can affect your customer satisfaction and churn both positively and negatively, it's time we ask, “What can you do about it?” Well, we'll tell you exactly that in the following twelve steps.

1. Discuss the Payment Terms Beforehand

As with any healthy relationship, it's important to start off with your clients on the right foot. If you're in a B2C industry, your terms of service don't have to be communicated individually – a section on your website and at checkout are enough.

But when it comes to B2B, we wholly recommend you discuss payment terms during the first negotiation stages. Explicitly state the expected issue and delivery times of your invoices, as well as acceptable deadlines and forms of payment.

Just these simple steps can help you elevate to a trustworthy provider in your customers' eyes. Keep to them, and you'll develop a long, prosperous, mutually beneficial customer relationship.

2. Make the Invoicing/Payment Process as Simple as Possible

As we said earlier, any extra step added to your billing prolongs the process and exponentially increases the chances of you not getting your money. To ensure no complications arise, make your invoicing as simple as possible.

Avoid any unnecessary confirmations or additional paperwork. Ideally, the process should involve nothing more than an order, product/service delivery, invoice issue and delivery, and payment.

Stick to time-tested basics, and not only will you get your money on time, but the customer and your finance team will also thank you.

3. Keep Your Invoices Clear, But Comprehensive

Clarity is just as important in your actual invoices as in the entire billing process, so creating a legible invoice template containing all the necessary items and sections is a must.

Although all parts of your invoice are equally important from a legal standpoint, the ones your customers care most about and you should pay extra attention to include the list of items (products/services) provided, individual price, and total price.

Any confusion regarding these sections is sure to cause frustration, so the best practice is to visually separate them from the rest via stylized borders and graphics to draw the reader’s eye naturally.

4. Offer Multiple Payment Options

If you want to promote sales and avoid annoyed customers and late payments, removing barriers from the payment process is vital – particularly regarding payment options. Your clients want to be accommodated at every step of the way, and forcing them to use a payment gate they're uncomfortable with will surely not win you any favors.

So, if you want to make sure your CSAT stays high and you keep getting paid on time, you should offer a good selection of payment options, including card, Apple Pay, Google Pay, bank transfer, and more.

5. Use SMS payment reminders

Facing issues with clients forgetting invoices is a common challenge in the modern business landscape. To address this, there's a specific invoicing strategy that harnesses the power of digital communication.

In today's world, where clients' email inboxes are often inundated with a multitude of messages, it's easy for an email containing an invoice to be overlooked or lost. Depending solely on email notifications in such scenarios may not be the most effective approach. A more proactive strategy involves the use of SMS reminders. This method ensures that your invoices stand out and receive the attention they deserve.

The effectiveness of SMS payment reminders lies in their immediacy and the direct line of communication they establish between you and your clients. The primary advantage of utilizing SMS for payment reminders is its high accessibility and convenience. Unlike emails, which may go unchecked for extended periods, SMS messages are typically read soon after they're received. This immediacy significantly increases the likelihood of your message being noticed and acted upon promptly. Moreover, SMS communication with Mobile Text Alerts software adds a personal touch to your interactions, demonstrating a commitment to customer satisfaction and fostering a positive business relationship.

6. Use Automated Invoicing Software

Another great way of driving customer satisfaction and reducing churn is by improving the back end of your invoicing processes with invoice software. Instead of trying to manually coordinate your digital paperwork, these systems allow you to take charge of your finances all in one place.

According to FinancesOnline, 82% of SMBs use some form of billing software in their operations. And for a good reason, as it can help companies automate and oversee tasks related to their invoice processes. Invoice management software can fulfill a variety of roles and offer many features and invoicing benefits.

These include quick and easy invoice (and other document) creation, faster billing and payments, comprehensive financial reporting, secure cloud encryption, reduced paperwork, and more.

However, it's not just you who benefits from using automated invoice software. It allows your customers to enjoy a much better experience by ensuring you always deliver accurate and professional invoices in a timely manner, they get notified of upcoming/missed payments with automated reminders, and you can solve any disputes efficiently by accessing transaction and payment history.

In a sense, onboarding an invoicing system is the end-all-be-all of invoicing strategies for driving customer satisfaction and limiting churn, as it combines many of the best practices in a single, streamlined package.

In closing…

Understanding the connection between invoicing strategies, customer satisfaction (CSAT), and churn is crucial for company success. Customer satisfaction and churn significantly impact your overall performance and revenue, and in turn, both are highly influenced by your invoicing processes.

Clarity, timeliness, flexibility, personalization, and effective communication are all vital to delivering an excellent customer experience. And if you want to make the most of them, you'd do well to take full advantage of the five expert strategies described above.

Remember to cater to your customers by discussing payment terms ahead of time and possibly allowing them a little wiggle room to make the process work for you both. Don't underestimate the value of choice when it comes to payment options either, and make sure to give clients all the information they need in a visually pleasing and professional package.

Do all that, and you'll be able to rest easy knowing that if your CSAT drops or churn skyrockets, it's not your invoicing at fault.

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DAVID FAČKO SEO and Content Specialist at Billdu

David Fačko serves as an SEO and Content specialist at Billdu, globally recognized as one of the top-rated invoicing software for freelancers and small businesses.

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Email: david.facko@billdu.com