How to manage credit card declines and quiet quitters

By Ken Abbott, Woodinville Winery Services

Wineries are constantly managing their club membership and it takes a lot of work. Members get certain benefits, privileges, and special access. They are the most desired customer, and wineries treat them that way. No matter how good of a job a winery does at maintaining their members’ happiness, they sometimes drift away or forget to update their credit card. It is a well-known scenario in the industry. The winery processes the charges for the latest allotment and inevitably, many members’ orders come back as declined due to the credit card. The issue will always be there. You do have a choice on how to handle it though. It is time to simplify how you deal with credit card updating and quiet quitters. Let’s go over the scenarios and then create a strategy that works for maintaining your customers’ cards.

A good place to begin is to review why credit cards are declined in the first place. Almost every decline will be for the following reasons:

· Expiration – The card has simply expired.

· The credit card was compromised, so the customer canceled it.

· The member got a new card or canceled the one you have on file.

· The customer hit their credit limit.

· The information you have in your system does not match what the credit card processor has. This can be address, name, phone number, or email.

· The customer has quiet-quit your club.

Declined credit cards will happen. How many of them you have can be an indicator of how well you are managing the accounts of your club members. According to Visa and Mastercard, recurring charges on a credit card are declined about 15% of the time on average. So, take that as an industry average. In the wine industry, it is not uncommon for some wineries to have around a 30% decline rate. Some see declines as high as 50% of their club processing. If this is you, it is time to manage those accounts in a different way. With proper management, your decline rate can be under 10%, which will make your job easier in the long run. 

Before we get to how to keep your decline rate down, it would be prudent to address the dreaded quiet quitters. Members will sometimes forgo letting you know that they no longer want to be in the club and will quit by not updating their credit card. Maybe they don’t like the wine anymore, they are cutting down on wine, or they did not have a good experience in the tasting room. They may be quitting for financial reasons, relocation, or they just have too many clubs. The reasons do not matter at this point, because communication has failed, and they have not updated their account information. (As a side note, every winery should have a retention plan for members who do want to quit. That is a discussion for another blog.) We are focusing on how to deal with current members that have been declined. Below are 7 ways to improve your credit card approval rate.

Strategies for improving your approval rate.

1. Cancel inactive members.

This sounds easier than it is. Every winery can set their own limits to how many declines a member can have. They key is to set a limit. If you have a 

member who has been declined 10 times in a row, it should be obvious that they left you. A good rule of thumb may be to set that limit at 3. If a member does not return communication and has been declined 3 times, it is time to set them free and take them out of your club. It is better to not continue working for someone who does not want to be there. The number of people you count as club members does not mean much if 40% of them are not buying your wine. Wine clubs extend benefits to their members for free tastings, discounts and more. If they are not buying the allotments or coming into the tasting room, then they should not get those benefits. Canceling these members does not change your bottom line one bit, because they are not buying from you. I have seen many wine club managers fret over canceling inactive members since it leads to a reduction in club numbers. Just remember, they are not a member if they are not acting like members. It is better to have 800 members with a 10% decline rate than to have 1000 members with a 30% decline rate. You get a better result without dealing with dead-end transactions. 

Canceling members often cause a club manager a lot of anxiety. Here are some common reasons members are not canceled by club managers:

· They may come back. – Yes, they might. You are not canceling their account. You are canceling their membership. If you are doing your job, then they have received several emails from you as well as phone calls. They ignored those communications for a reason. If they want to come back, and you want to allow them back in the club, you can do that. There is no reason to keep them in the club while you wait for them to come around. Less than 5% of these accounts will come back as members. If, on the rare occasion, they do want to come back, you already have their account information, so you just need to add a new credit card and move them back to the club. Sometimes, the final email that states “your club has been canceled” is the last spark that brings a phone call to update the credit card.

· They have been members forever. – It can be tough to say goodbye to the members you know the most. Some members don’t want to share their reasons for leaving, so they just left. If you let them go gracefully and leave the door open for them to come back, they may do just that. You can still give them the best service possible when and if they make it back to your tasting room. 

· I cannot reach them and want to give them another chance – It is understandable. You don’t want to give up on them. Think back to the number of emails and phone calls they have already received. You are knocking on a door that will never open while the quiet quitter is wondering why you keep reaching out. Just let it go.

· I don’t want my club member count to go down – This goes back to what we discussed above. The count does not matter if it does not produce anything. Also, as part of planning, it is nice to have accurate and predictable numbers so you can plan your wine depletion accordingly. Having unrealistic numbers for your wine club throws off planning. For many, this means setting a cap to the number of members allowed in a club. Hopefully, you have a waiting list. If you do, then you simply take out an inactive member and add an active one from the waiting list.

The gist is to not be afraid to cancel members when it is appropriate, and you should do so. This may be the first thing you have to evaluate when looking at your declines and bringing your club into a more accurate representation. It is a tough step, but a very necessary one.

2. Be proactive with notices and updating.

Monitoring the club accounts for nearly expired cards and expired cards is very important. It is a way to avoid a declined card in the first place. Watch your accounts for when cards will expire or check for expired cards prior to doing club processing. It is an opportunity to reach out to those customers and get them on board before the next shipment. Sending a notice 30 days ahead of the next processing date with a link or reminder to update their card can be very effective. The percentage of updates tends to be higher than updates after the decline. If you miss them, then when their card is declined, they should get another notice. Be consistent as possible in your methodology to keep them informed of their account status.

3. Use winery specific software.

Setting a foundation for club growth by using the right software not only sets the stage for easier club management, but it also establishes a system that you can depend on. When the operations of your winery expand, things get harder to manage. If you have a system to handle that volume from the beginning, you will not have to reinvent your process once you do grow. Winery specific software has avenues for customer contact, account management, reports that would include credit card status, club processing, and shipping. Using the right software can make club management much easier. When it comes to credit cards, you should choose software that can provide easy tracking of history, credit card processing, and help you anticipate any card problems that might arise. Software like Orderport covers all these areas along with so much more. Having the opportunity to easily update cards and send notices because your system is designed to accommodate it, will lead to less declined cards. 

Having a proper database on your software also reduces the chance of card declines due to non-matching information with the processor. It gives you a better avenue to update that information or find out what information does not match when you talk to the customer. 

4. Credit card updating service.

Wouldn’t it be nice if there was a service that helped you update credit cards? They do exist and they are worth every penny if they are payable service. Some credit card processing companies provide a paid service that automatically updates cards under certain circumstances. The most common circumstance is the expiration of a card that has been reissued with the same numbers to the same customer. The card is updated without you lifting a finger. It is a simple way to keep your rate of declines down and you do not have to make any requests to the customer. A few of the winery specific software companies can provide a roadmap to this service through their processing as well. With the advancement of credit card technology and tokenization of credit cards, this amenity is becoming much more common and easier to administer. Ask your software company or your card processing company about the service. 

5. Start on the right foot.

At the original juncture of bringing on a new club member, there is a chance to avoid problems in the future. Getting all the members’ information and recording it accurately is key. Verify all the client information up-front. Addresses, phone numbers, and emails all need to be accurate. These things must match the information that their credit card company has. It is OK to ask if the address on the card matches the information the member gave you. Most systems allow input for billing address and home address. If data does not match, it can lead to a decline at the first processing. If possible, avoid using paper sign up forms and enter members directly into your system. Most winery specific software will check the validity of the credit card before it saves it into the account. 

6. Give the best customer service possible.

Happy club members stay in your club longer and keep their credit cards updated because they love the wine, the experience, the tasting room, the staff, and the events. A winery will have an easier time keeping credit cards updated when the member feels connected and interested in everything at the winery. Make a point of providing the type of experience that will bring back the members time after time. You will find that those members are the ones initiating the update of their credit card without you having to ask. 

7. Club servicing company

Managing credit cards and member statuses are just one of the aspects of managing a wine club. It can take a lot of time away from other essential duties at the winery. An option for those that would like to have the club managed in a way that limits declined cards and efficiently manages the processes of the club, would be to enlist a wine club management company. Instituting the above policies, among others, is standard practice for a management company like Woodinville Winery Services. 

Most of these ideas take a little work up front, but the result is a club membership that produces better results and is more representative of your club reality. Incorporating these protocols into your club management will always pay good dividends. Put them into practice and watch your club become more productive. 

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