Segment-Based Dunning 2025: B2B vs B2C vs E...

Based on our analysis of hundreds of SaaS companies, one-size-fits-all dunning is a revenue leak. A $49/month consumer customer has completely different payment failure patterns, communication preferences, and recovery potential than a $50,000/year enterprise account—yet most SaaS companies use identical dunning sequences for both. According to a 2024 ProfitWell analysis, companies that segment their dunning by customer type achieve 25-40% higher recovery rates than those using generic approaches. The differences are substantial: enterprise customers often have payment failures due to procurement processes and require account manager involvement, while B2C customers typically face insufficient funds and respond to SMS urgency. SMB customers fall somewhere between, needing professional communication without the high-touch enterprise treatment. Retry timing, communication channels, escalation paths, and even the tone of messages should all vary by segment. This comprehensive guide covers everything you need to implement segment-based dunning: understanding the unique failure patterns and recovery dynamics for B2C, SMB, mid-market, and enterprise customers; designing segment-specific retry and communication strategies; when to involve human intervention; and how to measure segment-level performance. Whether you serve a single segment or multiple, understanding these dynamics helps you recover more revenue while respecting the different relationships you have with different customer types.

Why Segment-Based Dunning Matters

Different customer segments have fundamentally different payment failure causes, recovery dynamics, and communication preferences. Treating them the same wastes recovery potential and damages relationships.

Failure Patterns by Segment

Payment failures have different root causes across segments: B2C consumers: Primarily insufficient funds (60%+), expired cards, and forgotten subscriptions. Failures cluster around end-of-month when bank balances are low. SMB businesses: Mix of insufficient funds, expired corporate cards, and card holder changes when employees leave. Failures relate to cash flow cycles. Mid-market: Procurement-related failures (corporate card limits, approval workflows), bank policy changes, and card reissuance during security updates. Enterprise: Payment method complexity (invoicing, wire transfers, PO requirements), accounts payable delays, budget cycle timing, and organizational changes. Understanding these patterns is essential for designing effective recovery strategies.

Recovery Potential Differences

Recovery rates and timelines vary dramatically by segment: B2C: Quick recovery when funds arrive (next paycheck), but highest churn risk if customer was already considering cancellation. Recovery rate: 50-65%. SMB: Moderate recovery timeline (1-2 weeks), recoverable if business is still operating. Recovery rate: 60-70%. Mid-market: Longer recovery (2-4 weeks due to internal processes), but high recovery rate once the issue reaches the right person. Recovery rate: 70-80%. Enterprise: Longest recovery (can be 4-8 weeks due to procurement), but highest ultimate recovery rate because contracts are in place. Recovery rate: 80-90%. These differences should inform grace periods, escalation timing, and expected outcomes.

Relationship Value Differences

The stakes of dunning vary enormously by segment: B2C ($50-200/year LTV): Low individual impact but high volume. Optimize for efficiency; accept some churn to avoid over-investment per customer. SMB ($500-5,000/year LTV): Moderate individual impact. Balance efficiency with personalization. Worth some manual effort for at-risk accounts. Mid-market ($5K-50K/year LTV): Significant individual impact. Worth account manager involvement for payment issues. Enterprise ($50K+/year LTV): Very high individual impact. Worth executive escalation, legal involvement if needed, and extensive recovery effort. Dunning investment should scale with customer value.

Communication Preference Differences

How customers want to be contacted varies by segment: B2C: Email and SMS are effective. Informal tone works. Quick, simple messages with one-click update links. SMB: Professional email is primary. LinkedIn or phone for escalation. Balance between casual and formal. Mid-market: Formal email to billing contacts. Account manager involvement for persistent issues. Professional documentation of communications. Enterprise: Account manager or customer success-led. May need to involve procurement, legal, or executive sponsors. Detailed communication trails. Using B2C tactics on enterprise (mass SMS) or enterprise tactics on B2C (account manager calls) is inefficient and often counterproductive.

The Segment-Value Matrix

Think about segments in two dimensions: Revenue value (low to high) and Communication complexity (low to high). B2C: Low value, low complexity—automate everything. SMB: Low-medium value, medium complexity—automate with human escalation triggers. Mid-market: Medium-high value, medium-high complexity—hybrid automation with account management support. Enterprise: High value, high complexity—human-led with automation support. Match your investment to both dimensions.

B2C Consumer Dunning Strategy

B2C dunning requires high efficiency at scale. With lower individual customer value, you can't afford extensive manual intervention—automation must do the heavy lifting.

B2C Failure Characteristics

Consumer payment failures are predictable: Primary cause: Insufficient funds (60-70% of failures). Customers are living paycheck-to-paycheck or overspent. Secondary cause: Expired cards (20-25%). Consumers often forget to update payment methods. Tertiary causes: Lost/stolen cards, fraud blocks, forgotten subscriptions. Timing patterns: Failures spike end-of-month (before payday) and early January (holiday spending hangover). Recovery window: Narrow—if funds aren't available within 1-2 pay cycles, they often won't be. B2C customers also have the shortest decision cycle: they'll churn quickly if the product isn't essential.

Retry Strategy for B2C

Optimize for pay cycle alignment: Retry 1 (Day 1): Immediate retry to catch transient issues. Retry 2 (Day 3): Early in week, before other bills hit. Retry 3 (Day 7): Aligned with weekly pay cycle. Retry 4 (Day 15): Aligned with bi-weekly pay cycle (1st or 15th). Retry 5 (Day 21-28): Final attempt, aligned with monthly pay cycle. Total: 5 retries over 3-4 weeks. Time-of-day: Early morning (after overnight direct deposits) or mid-day. Beyond 4 weeks, recovery rates drop below 10%—exit gracefully and pursue win-back later.

Communication Strategy for B2C

Keep it simple and action-oriented: Email 1 (Day 1): "Your payment didn't go through—here's how to fix it [link]." Casual, helpful. Email 2 (Day 7): "Reminder: Update your payment to keep [service]." Clear value reminder. SMS (Day 14): "Last chance: Update payment at [short link] or lose access on [date]." Urgency. Email 3 (Day 21): "Your subscription will be canceled. We'd love to keep you—update now." In-app notification: Show persistent banner for users who log in. Total: 3-4 emails + 1 SMS + in-app. Keep emails short (under 100 words). One clear CTA. Mobile-friendly payment update flow.

B2C Special Tactics

B2C-specific recovery approaches: Payment method diversity: Offer PayPal, Apple Pay, Google Pay as alternatives. Some customers have funds on different payment methods. Pause option: "Can't pay right now? Pause for 30 days instead of losing everything." Converts churn to delayed recovery. Downgrade offer: "Stay with us at $4.99/month instead of canceling." Retains some revenue. Win-back campaigns: After involuntary churn, targeted campaigns at month 2-3 often recover 10-20% of churned customers. Annual plan upsell: After recovery, offer annual plan at discount—reduces future failure risk.

B2C Dunning Benchmark

Target metrics for B2C: Recovery rate: 50-65%. Time to recovery: 7-14 days average. Involuntary churn: <2% of MRR monthly. Communication response rate: 20%+ email open, 5%+ click. Cost per recovery: <$2 (almost entirely automated). If you're below these benchmarks, your B2C dunning has optimization opportunity.

SMB Business Dunning Strategy

SMB customers require more professionalism than B2C but can't justify the high-touch approach of enterprise. The key is professional automation with smart human escalation triggers.

SMB Failure Characteristics

Small business payment failures have different patterns: Primary cause: Business cash flow issues (40-50%). Small businesses often have tight margins and variable revenue. Secondary cause: Corporate card changes (25-30%). Card holder left company, card expired, spending limits hit. Tertiary causes: Bank account issues, fraud flags on business transactions. Timing patterns: End of quarter (when business expenses pile up), seasonal businesses in off-season. Recovery dynamics: Recoverable if the business is still operating; often just needs the right person notified.

Retry Strategy for SMB

Account for business billing cycles: Retry 1 (Day 1): Immediate retry. Retry 2 (Day 3-4): Early week, business hours. Retry 3 (Day 10): After typical invoice payment cycles. Retry 4 (Day 17-18): After biweekly business billing cycles. Retry 5 (Day 25-28): End of month, when businesses often settle accounts. Retry 6 (Day 35, if extended grace): Month-end settlement. Total: 5-6 retries over 4-5 weeks. Time-of-day: Business hours (10 AM - 4 PM local time). SMB customers often need slightly longer grace periods than B2C because business payment processes are slower.

Communication Strategy for SMB

Professional but not formal: Email 1 (Day 1): "Your [Company Name] subscription payment failed. Update payment method here [link] to avoid service interruption." Professional subject line. Email 2 (Day 7): "Payment reminder for [Company Name]." Include what they'll lose access to. Email 3 (Day 14): "Action required: Your subscription will be suspended on [date]." Clear deadline. Phone call or personal email (Day 18-21): For accounts above revenue threshold, personal outreach from support or success. Email 4 (Day 28): "Final notice: Payment required by [date] to avoid cancellation." Tone: Professional, respectful of their business. Not casual like B2C, not stiff like enterprise.

SMB Special Tactics

SMB-specific recovery approaches: Multiple contacts: If possible, collect backup email (owner vs. admin) and notify both for payment issues. Invoice option: Some SMB customers prefer invoices over cards. Offer invoice payment as alternative. Phone outreach threshold: For customers above $X/month, trigger phone outreach after 2 failed retries. Quarter-end sensitivity: If failure occurs near quarter-end, business may be prioritizing other bills—extra patience may help. Net terms flexibility: Offer net-15 or net-30 payment terms for businesses struggling with immediate payment.

SMB Dunning Benchmark

Target metrics for SMB: Recovery rate: 60-70%. Time to recovery: 10-20 days average. Involuntary churn: <1.5% of MRR monthly. Human intervention rate: 10-20% of failures trigger human outreach. Cost per recovery: $5-15 (mostly automated with some human intervention). SMB customers are worth moderate investment—not B2C automation only, not enterprise white-glove.

Mid-Market Dunning Strategy

Mid-market customers ($5K-$50K ACV) justify significant recovery investment. They have complex internal processes but aren't large enough for dedicated account teams—a hybrid approach works best.

Mid-Market Failure Characteristics

Mid-market failures often involve organizational complexity: Primary cause: Procurement process issues (40-50%). Corporate card limits, approval workflows, card expiration during security refresh. Secondary cause: Personnel changes (20-30%). The person who set up billing left; new person doesn't know about the charge. Tertiary causes: Budget cycle timing, vendor rationalization reviews. Timing patterns: Fiscal year-end (budget runs out), Q1 (new budget not yet released). Recovery dynamics: High recovery potential because contracts exist—just need to navigate internal bureaucracy.

Retry Strategy for Mid-Market

Allow time for internal processes: Retry 1 (Day 1): Immediate retry. Retry 2 (Day 5): Early in process. Retry 3 (Day 12): After typical corporate billing cycle. Retry 4 (Day 20): After escalation has had time to work. Retry 5 (Day 30): Before grace period ends. Retry 6 (Day 45, extended grace): Final attempt with full escalation. Total: 5-6 retries over 4-6 weeks. Time-of-day: Business hours, Tuesday-Thursday (highest corporate activity). Mid-market often needs extended grace periods (30-45 days) because internal processes move slowly.

Communication Strategy for Mid-Market

Multi-stakeholder communication: Email 1 (Day 1): To billing contact: "Payment failed for [Contract/Account Name]. Please update or contact us to resolve." Email 2 (Day 7): To billing contact + CC primary user contact: "Payment reminder—please update or let us know if we should contact someone else." Account manager outreach (Day 10-12): Personal email or call from CSM to primary contact. "I noticed a payment issue—how can I help resolve this?" Email 3 (Day 20): Formal notice to multiple contacts including any executive sponsor. Executive escalation (Day 25+): If relationship includes executive sponsor, brief notification of issue. Final notice (Day 35-40): Formal letter-style email with clear deadline and consequences.

Mid-Market Special Tactics

Mid-market recovery requires relationship leverage: Account manager involvement: CSMs should proactively help navigate internal procurement. Offer to provide documentation (invoices, W-9s, contracts) to facilitate payment. Alternative payment methods: Invoice with net-30, wire transfer, ACH—whatever their AP process requires. Executive escalation: If you have executive relationship, brief notification often unsticks procurement. Proof of value: Provide usage reports or value documentation if customer is considering whether to continue. Contract leverage: Remind of contract terms while offering flexibility on timing. PO/invoice path: Many mid-market customers need purchase orders before payment—accommodate this.

Mid-Market Dunning Benchmark

Target metrics for mid-market: Recovery rate: 70-80%. Time to recovery: 15-30 days average (longer internal processes). Involuntary churn: <1% of MRR monthly. Human intervention rate: 40-60% of failures involve account manager. Cost per recovery: $50-150 (significant human involvement). These customers are worth the investment—a $20K ACV customer recovered is worth hours of account manager time.

Enterprise Dunning Strategy

Enterprise customers ($50K+ ACV) require human-led recovery with automation support. The value at stake justifies extensive effort, and the complexity of enterprise procurement requires human navigation.

Enterprise Failure Characteristics

Enterprise payment issues are rarely about ability to pay: Primary cause: Procurement/AP process failures (50-60%). Invoice not received, wrong PO, approval stuck in workflow, budget line item exhausted. Secondary cause: Contract/billing misalignment (20-30%). Payment method changed, billing contact no longer at company, renewal not processed. Tertiary causes: Vendor rationalization (being reviewed for termination), budget cuts. Note: "Insufficient funds" is almost never the cause for enterprise—they have the money, the process is broken. Recovery dynamics: Very high recovery rate because contracts exist and the enterprise wants the product—they just need help fixing the process.

Enterprise Recovery Process

Human-led with process support: Day 1: Automated notification to billing contact for awareness. Day 1-3: Account manager notified immediately. Personal outreach to primary contact and billing contact. Day 5-10: Account manager investigates root cause. Works with customer's AP to identify blocker. Day 10-20: Escalation to customer success leadership if unresolved. Engagement with customer executive sponsor if needed. Day 20-30: Executive-to-executive escalation if still unresolved (your VP to their VP). Day 30+: Legal/contract involvement only as last resort. Total timeline: Can extend to 60-90 days for enterprise—the relationship is worth the patience.

Communication Strategy for Enterprise

High-touch, multi-threaded: Day 1: Brief, professional email to billing contact (automated). Day 2-3: Account manager personal email to primary contact: "I noticed a payment issue—let me help resolve it." Day 5: If no response, account manager email to multiple contacts (primary, billing, executive sponsor). Day 10: Phone call from account manager to primary contact. Day 15: Customer success manager involvement with escalation to CS leadership. Day 20+: Executive sponsor email (if relationship exists). Day 30+: Formal letter from your leadership if necessary. Tone: Helpful, problem-solving focused. Never accusatory—enterprise knows they owe you money; they need help fixing their process.

Enterprise Special Tactics

Enterprise recovery leverages relationship depth: Procurement navigation: Offer to call their AP directly, provide whatever documentation they need, resubmit invoices in required format. Contract reference: Gently remind of contract terms while focusing on helping them meet obligations. Executive relationships: Brief executive sponsors who can clear internal blockers. Flexibility: Offer bridge arrangements (continue service while payment processes) for trusted customers. Service impact: If service interruption is necessary, coordinate timing to minimize business impact. Legal last resort: Contract enforcement letters only after all relationship approaches exhausted. Documentation: Keep detailed records of all communications for contract reference if needed.

Enterprise Dunning Benchmark

Target metrics for enterprise: Recovery rate: 80-90%+. Time to recovery: 20-45 days average (complex processes). Involuntary churn: <0.5% of ARR annually. Human intervention rate: 90%+ of failures involve account manager. Cost per recovery: $200-500+ (extensive human involvement). A $100K ACV customer is worth significant investment to recover—multiple account manager hours, executive involvement, even on-site visits if necessary.

Implementing Segment-Based Dunning

Moving from one-size-fits-all to segment-based dunning requires technical implementation, team alignment, and ongoing optimization.

Segmentation Criteria

Define clear segment boundaries: Revenue-based: B2C (<$500/year), SMB ($500-$5K/year), Mid-market ($5K-$50K/year), Enterprise ($50K+/year). Adjust thresholds based on your business. Business type: Consumer vs. business (can often infer from email domain, payment method, plan type). Contract type: Self-serve vs. sales-assisted vs. contracted. Account characteristics: Tenure (new vs. established), engagement level, expansion potential. Assign segment at customer creation and update based on changes (upgrades, contract signature, etc.). Segment should drive automated dunning flow selection.

Technical Implementation

Configure your billing system for segment-based flows: Stripe Billing: Use customer metadata to store segment; trigger different Stripe Billing retry schedules per segment. Dunning automation: Configure separate email sequences per segment in your email/CRM system. Escalation triggers: Set up alerts to notify account managers when mid-market/enterprise customers hit certain dunning stages. Dashboard: Build segment-level dunning performance visibility. Most billing systems support this natively; if not, build the logic in your application layer that interacts with Stripe.

Team Alignment

Ensure teams understand their role in segment-based dunning: Support team: Handle B2C and SMB escalations. Know when to escalate to success. Customer success: Own mid-market and enterprise recovery. Have playbooks for common scenarios. Sales: May need involvement for enterprise contract issues or renewal-related failures. Finance: Provide flexibility guidance (payment terms, bridges) and escalation path for unusual situations. Leadership: Be available for executive escalation in enterprise cases. Document clear handoff triggers and responsibilities.

Measuring Segment Performance

Track dunning metrics separately by segment: Recovery rate by segment: Are all segments performing to benchmark? Time to recovery by segment: Is enterprise taking too long? Is B2C too slow? Involuntary churn by segment: Which segments are you losing? Cost per recovery by segment: Is investment appropriate to value? Escalation effectiveness: When humans get involved, does it help? Recovery by root cause within segment: Insufficient funds vs. expired card vs. process issues. Compare segment performance to benchmarks and investigate underperformance.

The Segmentation Payoff

Companies that implement segment-based dunning typically see: 25-40% improvement in overall recovery rate. 20-30% reduction in involuntary churn. More efficient resource allocation (less human time on B2C, more on enterprise). Better customer relationships (appropriate treatment for each segment). The implementation investment pays back within months through improved recovery.

Frequently Asked Questions

How do I segment customers for dunning?

Common segmentation criteria: Revenue—B2C (<$500/year), SMB ($500-$5K), Mid-market ($5K-$50K), Enterprise ($50K+). Business type—Consumer vs. business (infer from email domain, payment method). Contract type—Self-serve vs. contracted. You can also factor in tenure, engagement, and expansion potential. Assign segment at customer creation and update based on changes. The segment should automatically select the appropriate dunning flow.

What are the key differences between B2B and B2C dunning?

Key differences: Failure causes—B2C is primarily insufficient funds; B2B involves procurement processes and personnel changes. Recovery timeline—B2C is fast (1-2 weeks); B2B can be 4-8 weeks for enterprise. Communication—B2C uses email/SMS with casual tone; B2B requires formal multi-stakeholder communication. Human involvement—B2C is almost fully automated; B2B enterprise is almost fully human-led. Investment—B2C optimizes for efficiency; B2B enterprise justifies significant per-customer effort.

When should I involve account managers in dunning?

Involve account managers for: Mid-market customers after 2-3 automated attempts fail. Enterprise customers immediately (day 1-3). Any customer above a revenue threshold (e.g., >$10K ACV). Customers with executive relationships that can be leveraged. Complex situations (contract disputes, procurement issues, personnel changes). Account managers add value by navigating internal customer processes, providing documentation, and leveraging relationships—not by just sending more emails.

How long should the grace period be for enterprise customers?

Enterprise grace periods should be longer: 30-45 days is standard; 60-90 days may be appropriate for very large accounts. Enterprise procurement processes are slow—approvals, budget reviews, PO generation all take time. The goal isn't to rush the process; it's to navigate it effectively. Contracted enterprise customers will almost always pay eventually—the investment in patience pays off through near-100% recovery rates.

Should I use SMS for business customers?

Generally no for B2B. SMS feels inappropriate for business relationships and may violate expectations about communication channels. Exception: Urgent final notice for SMB where you have mobile contact consent and the customer hasn't responded to email. For mid-market and enterprise, phone calls are preferred over SMS for escalation. Reserve SMS for B2C consumer customers where it's effective and expected.

How does QuantLedger help with segment-based dunning?

QuantLedger provides segment-level dunning analytics: Recovery rate, time to recovery, and churn by customer segment. Failure pattern analysis by segment—understanding what's driving failures. Escalation effectiveness tracking—when human intervention helps. Cost per recovery by segment—ensuring appropriate investment. Benchmarking against segment standards. This visibility enables optimization of segment-specific strategies and identification of underperforming segments that need attention.

Key Takeaways

Segment-based dunning is essential for maximizing recovery while respecting different customer relationships. B2C customers need efficient, automated recovery aligned with pay cycles. SMB customers need professional automation with smart human escalation. Mid-market customers need hybrid approaches with significant account manager involvement. Enterprise customers need human-led recovery with automation support. The differences aren't just about recovery tactics—they reflect fundamentally different failure causes, recovery dynamics, and relationship values. A $50/month consumer with insufficient funds needs a quick SMS reminder. A $100K/year enterprise with a stuck procurement process needs executive intervention and patience. Treating them the same wastes resources and damages relationships. Implementing segment-based dunning requires technical configuration, team alignment, and ongoing measurement—but the payoff is significant: 25-40% better recovery rates, lower involuntary churn, and more appropriate resource allocation. Tools like QuantLedger provide the segment-level visibility needed to optimize each segment's strategy and track performance against benchmarks. The goal isn't just recovering payments—it's recovering them in a way that preserves and strengthens the customer relationship.

Claire Dunphy