BFD S1EP9 â Payment Plan Customer Stopped Paying? What to Do Before an Installment Plan Goes Sideways
Business Fire Drills Podcast | Fire Drill 08: Before an Installment Plan Goes Sideways
Speaker: Tamsen Horton (cleaned transcript; light edits for punctuation and name spelling)
You sold a $1,500 program on six payments of $250. Payment three fails. Expired card. Happens all the time. You send a friendly reminder. Nothing. A week later, you notice they're still logging in, still watching modules. Now what? Do you shut off their access? Do you let it slide? Do you email something you'll regret?
Nothing here is shady. Nobody did anything wrong. It's just a payment plan going sideways.
I'm attorney Tamsen Horton. Business moments like this are predictable. Your panic is optional. This is your Business Fire Drill: Before an Installment Plan Goes Sideways. Short and practical. So let's get going.
THE ALARM
Here is what this fire alarm looks like. A failed charge that never gets fixed. A customer who wants out halfway through, after they've already gotten the bulk of what they were paying for. Or a chargeback on payment four from someone who has decided they've paid enough, but they're not done logging in. And my favorite is the customer who says, "Wait, I thought $497 was the total. I didn't know it was monthly." Now the confusion itself is the fight.
Same fire alarm every time: a payment didn't land and you don't have a rule to point to.
SMOKE DETECTOR
Okay, before we run the drill, I need you to do something. Why do we have smoke detectors? To alert us before the house is on fire. That's it. That's its whole job. I have a free smoke detector for your business, and it's called exactly that, the Smoke Detector. Eleven questions, about three minutes, give or take. No email is required, and it tells you which three fires your business is most likely to have. If you're offering payment plans, I want you to go take it today. Not someday, today. The link is in the show notes. Go use the smoke detector.
REACTING OR RESPONDING?
Now, back. Are we reacting or are we responding? Reacting to this fire alarm looks like this. You say, "Just this once, no worries, I'll extend your access." And then you do it again for the next person. Or you go the other way and lock someone out instantly with nothing documented, and now you've got a real dispute on your hands.
Responding to this fire alarm is different. The payment plan terms were written and shown at checkout before payment one. So when something goes wrong, there's a rule to follow instead of a negotiation that needs to take place.
RUN THE DRILL: D-R-I-L-L
D, Don't react. No "just this once" waivers. No instant lockouts either. Check what the terms actually say first, before you do anything else.
R, Record everything. Save the payment plan terms the customer agreed to at checkout, the date of every payment, and every message about the missed one. Depending on the technology you've hired to be your employee in this regard (I personally hired Kajabi in 2015), Kajabi keeps track of this. I know what terms were agreed to. I know when the offer was purchased. The payment record is there, and all the messages about missed payments or payments not going through. All of that is in my Kajabi system. That's the team tech employee I hired. So depending on your tech employee, that is where you want to pull that information from.
I, Identify the real risk. Is this an expired card, or is someone trying to keep access without paying the rest? Those are going to need different responses. An expired card needs those friendly nudge reminders. More than likely, again depending on the tech you've hired, those are going out without you needing to do anything. The other one needs your terms: someone who just stops paying on what they agreed to pay.
L, Lead with calm. One short, factual message: "Your payment of $250 didn't go through. Here's the link to update your card. Per the payment plan you agreed to, access pauses if it isn't resolved by Friday." Done. And when we're running the drill, all of these responses are done ahead of time. You don't have to think on your feet. You don't have to think in the midst of the fire, ever.
L, Lock in the lesson. Once it's over, ask yourself: did my purchase terms and my retry process actually protect me? If not, that's what we're going to fix.
SMOKE DETECTOR, AGAIN
Now, here's the thing. You just heard the five steps that make up the drill, and some of you are thinking, "Hmm, I'm not sure I have any of this in place." That's exactly what the Smoke Detector is for. It tells you where your gaps are, those smoldering fires, so you're not guessing. Take it. Three minutes. It's free. It's in the show notes. And it will point you to the fire drills you need most. Go use the smoke detector.
THE FIRE EXTINGUISHER
Now, we also have a fire extinguisher. Just like in our homes, we buy it and we put it in the house before the fire happens. (When we lock in the lesson, yes, some of us might be buying fire extinguishers, but that's after we got burned.) So we are going to build this before the fire.
Number one, clear payment plan terms at checkout. How many payments? What happens if one fails? Whether access is tied to payment status, and what the refund window really is.
Number two, automatic payment retry, sometimes called dunning, turned on in your processor. My recurring payments run through Stripe, and I set that up for the frequency and the message that it sends. Once I've set it up, I don't need to send a reminder myself. The computer just triggers it. Kajabi and Stripe, my two employees, take care of it and handle it. Most failed cards are just expired cards. Let the system try again before you have to.
Number three, access tied to payment status, wherever your platform supports it, so you're not the one manually deciding who gets in. I am not sitting over here turning people's access on and off. Kajabi does that. She is my top performing employee. When the payment fails, she contacts Stripe, another top performing employee that I have. The two of them work it out. Stripe says, "Person, we need your attention over here." Stripe and Kajabi keep talking with the person. And if it isn't resolved, Stripe tells Kajabi, "Hey, I couldn't get this to go through," and Kajabi says, "No problem, I've got it. We're turning off their access." Or if the payment goes through, Stripe says, "All good over here," and Kajabi says, "Great, fun working with you. We'll leave this one alone." So you're not doing this manually. Your team tech employees are the ones handling this for you.
Number four, the payment plan language is built into your purchase terms. The Purchase Terms Generator does that for you, so it's the same in every single offer. The Purchase Terms Generator is one of the three pieces of the legal infrastructure triangle. Business Fire Drills are one portion. Your public-facing documents are the Legal Bundle Generator. Your privately facing documents are the Purchase Terms Generator. If you need help with any of that, check the links in the show notes and the description.
If the fire is already on, check what they agreed to before you respond. Don't restore access just to smooth things over. Send one calm message that reinforces the terms. And if this keeps happening, decide on purpose whether a payment plan still makes sense for this offer.
I had an offer that I ran pre-pandemic to an audience group that was not my normal audience group. I had found my way into this niche group of people, and I had never had an issue with payment plans, ever. This new audience group, that I was thrilled to be a part of and thrilled to provide legal resources to, suddenly had two a week, sometimes three a week, of payment plans failing. And I was like, whoa, whoa, this is new. First I thought it was me, so I checked everything. Nope, that was all good. This audience group just had no problem reneging on their payment plan. So I said, okay, thanks for showing me your behavior. I no longer offer payment plans to this audience group. You can deal with Visa. You can make payments to Visa and MasterCard and Discover, but I am not going to work with continual payment plans that are failing. It really was just, by happenstance, a pattern of behavior that was common in this niche, and it was a niche I had not worked with before. So I adjusted my own offers when I saw what was going on.
YOUR NEXT RIGHT DECISION
That brings us to your next right decision. You have three options.
One, do nothing. Your terms are clear at checkout, your retry is on, and access is tied to payment. You're good. You have this fire drill all taken care of.
Two, put the drill in place. You've been handling these one conversation at a time. Start with the checkout terms. That is the cleanest, easiest place to start: what is required, and giving it to them at the time of checkout.
Three, as you were listening, you immediately thought of a friend, the one who just launched a payment plan. Send them this. They are one missed installment away from this exact conversation.
FREE HOMEWORK
Here is your free homework. Open your checkout page, pretend you're a customer, and ask: could I tell in 10 seconds how many payments there are and what happens if one fails? If not, I want you to fix that first.
A payment plan works until someone feels like they've gotten what they came for. The businesses that handle it well decided the rules way before that moment.
So tell me: have you ever had a payment plan go sideways? What happened? And follow the links in the show notes for the Smoke Detector and the full Fire Drill kit, because business moments are predictable. Your panic is optional. Run this fire drill before the fire alarm goes off.
