Dunning Email Best Practices for SaaS

What is Dunning and Why Does It Matter?

Dunning is the process of communicating with customers about failed payments and encouraging them to update their payment information. The term comes from the 17th-century verb "to dun," meaning to make persistent demands for payment. In the modern SaaS context, dunning has evolved into a sophisticated customer communication strategy that balances urgency with relationship preservation.

Done right, dunning can recover 50-70% of failed payments without damaging customer relationships. Done poorly, it can frustrate customers and accelerate their departure. The key is striking the right balance between persistence and respect, making it easy for customers to resolve the issue while maintaining a positive brand experience.

Designing an Effective Dunning Email Sequence

A typical dunning sequence includes 4-6 emails sent over a 2-3 week period. Each email serves a specific purpose in the recovery journey:

• Email 1 (Day 0): Immediate, friendly notification. "Oops, your payment didn't go through!" Keep it light and helpful, assuming it's a simple oversight.
• Email 2 (Day 3): Gentle reminder with clear call-to-action. Provide context about what will happen if the issue isn't resolved.
• Email 3 (Day 7): Increased urgency. Mention potential service interruption and offer to help if they're experiencing issues.
• Email 4 (Day 10): Final warning before action. Be clear and direct about the timeline and consequences.
• Email 5 (Day 14): Account suspension notice with easy reactivation path.

Crafting Dunning Emails That Convert

The most effective dunning emails share several characteristics:

• Clear subject lines: "Action needed: Update your payment for [Product Name]" works better than vague subjects.
• One-click update links: Reduce friction by deep-linking directly to the payment update page, pre-authenticated if possible.
• Friendly, helpful tone: Avoid aggressive language. Most payment failures aren't the customer's fault, and they shouldn't feel blamed.
• Visible support options: Make it easy for customers to reach out if they're having trouble or need assistance.
• Mobile optimization: Many customers will read these emails on their phones, so ensure the experience works well on small screens.

Beyond Email: Multi-Channel Dunning

While email remains the primary dunning channel, supplementing with in-app notifications, push notifications, and even SMS can significantly improve recovery rates. In-app banners are particularly effective because they catch customers when they're actively using your product—exactly when they're most motivated to maintain access.

Measuring and Optimizing Your Dunning Performance

Track recovery rates at each stage of your dunning sequence to identify optimization opportunities. If email 3 has a notably lower open rate, test different subject lines. If customers are opening but not clicking, improve your call-to-action. A/B test timing, copy, and design to continuously improve performance. Most businesses see their biggest wins in the first week of the dunning sequence, so focus optimization efforts there first.