Solved: High Payment Failure Rate with New Product Trial

Hi there,

Thanks for reaching out! I've had a look at the situation you described, and I'm happy to give you some initial thoughts and guidance based on my experience.

First off, a 70% payment failure rate is incredibly high, so you're right to be concerned. This is definately not normal, and it's not just "the way it is". A rate that high points to a fundamental issue in your customer acquisition funnel, not just a technical problem with Stripe or a few users with burner cards. The decline codes you're seeing, especially "insufficient_funds," are a massive red flag. It tells me you're attracting an audience that either can't or won't pay for your product after the trial. The problem isn't the payment processor; the problem is who you're getting through the door in the first place.

You're spending money on ads to acquire users who have no intention of ever becoming paying customers. We need to fix that, otherwise you're just pouring money down the drain. Let's break down where I think the issues are and what you can do about them.

We'll need to look at who you're actually targeting...

This is the absolute core of the problem. You mentioned you're targeting the "big 5 english speaking countries." That's not a targeting strategy; it's just a set of locations. It's far too broad and tells you nothing about the person you're trying to sell to. It leads to generic ads that attract anyone and everyone, including the exact type of user who signs up for a $1 trial with a prepaid debit card with £1.01 on it.

You need to stop thinking about your customer in terms of demographics and start thinking about their problem. What is the specific, urgent, frustrating nightmare that your SaaS solves? Your Ideal Customer Profile (ICP) isn't a location; it's a problem state. Forgetting this is probably the most common mistake I see, and it's why so many ad campaigns fail to deliver real customers.

For example, let's pretend you have a B2C SaaS that helps people budget their personal finances. Your ICP isn't "people aged 25-45 in the UK". It's 'a young professional who gets a knot in their stomach every time they open their banking app, terrified they've overspent again and won't be able to afford their rent at the end of the month.' See the difference? One is a bland demographic; the other is an emotional nightmare. Your entire advertising strategy needs to be built around solving that nightmare.

Once you know the nightmare, you can figure out where these people hang out online. What podcasts do they listen to? What YouTubers do they watch? What specific blogs or newsletters about personal finance do they read? Are they in certain subreddits or Facebook groups? This is the intelligence that builds a real targeting strategy. Targeting "people interested in Finance" on Meta is useless. It's too broad. But targeting people who follow specific financial influencers, use competing apps, or read certain publications? Now you're getting somewhere. You are showing your ads to an audience that is already pre-qualified because they are actively trying to solve the problem your product is built for.

This brings me to how the ad platforms actually work. You might be actively telling Facebook to find you the worst possible users without even realising it.

You are probably paying to find non-customers...

Here's a hard truth about platforms like Meta. If you run a campaign with an objective like "Reach" or "Brand Awareness," you're giving the algorithm a very specific instruction: "Find me the most eyeballs for the cheapest price." And the algorithm is brilliant at doing exactly what you ask. It goes out and finds all the users in your broad audience who are least likely to click, engage, or buy anything. Why? Because their attention is cheap. No other advertiser wants them. You are literally paying the most powerful advertising machine in the world to find people who will never be your customers.

Even if you're using a "Traffic" objective, you're just optimising for clicks, not for quality. You get people who will happily click an ad but have no intention of paying. This is likely a huge contributor to your problem. The best kind of awareness for a business like yours is a customer who pays, loves the product, and tells their friends. That only happens if you optimise for conversions from day one.

You need to set your campaign objective to optimise for a conversion event, like a lead or a sale (or in your case, a trial that leads to a real subscription). When you do this, you tell the algorithm: "Go find me people who look and act like the people who actually complete this goal." The system then gets smarter over time, learning who your real customers are and finding more of them. It costs more per click, sure, but the quality of the user is night and day. You're fishing in a pool of potential buyers, not a sea of cheap clicks.

This is why getting your audience targeting right is so important. A good conversion campaign needs good data to learn from. I've seen so many accounts where people are just testing random audiences that have no connection to their actual customer. Here's how I'd usually priortise audiences for a B2C account, assuming you're starting to get some data.

By structuring your campaigns this way, you create a system. The ToFu campaigns find new, high-potential users. The Retargeting campaigns convert the ones who didn't sign up on their first visit. This approach focuses your ad spend on quality, not just quantity, which should dramatically reduce the number of low-quality trial signups you're getting.

I'd say you need to know what a good customer is actually worth...

This might seem like a strange detour, but it's central to fixing your issue. Right now you're probably focused on getting the lowest cost per trial signup possible. That's the wrong metric. The real question is: "How much can I afford to spend to acquire a high-quality customer who will stick around?" The answer is found in their Lifetime Value (LTV).

Calculating this gives you your North Star. It tells you how much you can really afford to spend on ads and still be profitable. It frees you from the trap of chasing cheap, low-qualety leads. Let's run through a quick, hypothetical example for a B2C SaaS like yours.

Suddenly, paying £10, £15, or even £20 for a high-quality trial signup who is very likely to convert and stick around doesn't seem so expensive, does it? It looks like a bargain compared to paying £2 for a signup who was never going to pay you anyway. This is the maths that allows you to scale aggressively and intelligently. It shifts your entire mindset from "cost reduction" to "value investment". You stop asking "How cheap can I get a signup?" and start asking "How do I find more people worth £120?"

You probably should rebuild your offer and funnel...

Now we get to the offer itself. The $1 trial. I know it seems like a good idea – low barrier to entry, gets a commitment, qualifies them. But in reality, it's often the worst of all worlds. It's just enough friction to annoy real customers, but not enough to deter the freebie-seekers who have a burner card ready. It's the source of your "insufficient_funds" problem.

Here’s what I’d strongly recommend you test: A completely free trial, with no credit card required upfront.

I know it sounds scary. You're thinking "But people will just use it and leave!" Some will. But the people who are genuinely interested and get value from your product during the trial are now Product Qualified Leads (PQLs). They've seen it work. They've solved a small piece of their problem. The sale then becomes a natural next step, not a battle. You're asking them to pay to continue receiving value they've already experienced, which is a much easier conversation.

I've seen this transform SaaS businesses. I remember one campaign we worked on for a medical job matching SaaS. Their CPA was around £100 per user. They were trying to get people to sign up for a paid plan directly. We switched the strategy completely. We changed the offer to a free profile creation, no strings attached. We focused the ads on getting them to take that one simple step. Their Cost Per Acquisition dropped from £100 to just £7. Of course, not all of them upgraded, but enough did to make the economics massively favourable. We've seen similar results with other software clients, for example, one achieved 5082 software trials at $7 each just by making the offer frictionless.

When you have a free trial, your ad copy can also become much more powerful. You're not selling a subscription anymore; you're selling a solution to their immediate problem. You can use a simple but effective framework like Before-After-Bridge.

Before: Paint a picture of their current pain. "Staring at a messy bank statement, wondering where all your money went again?"

After: Show them the ideal future. "Imagine opening an app and seeing exactly where every pound is going, feeling in complete control of your finances."

Bridge: Introduce your product as the way to get there. "Our app is the bridge. Start your free 7-day trial today (no card required) and see exactly where you can start saving."

This kind of messaging, combined with a frictionless offer and the right targeting, is how you attract people who are serious about solving their problem, not just serious about getting a $1 deal.

This is the main advice I have for you:

This is a lot to take in, I know. It's a big shift from just running ads to building a proper customer acquisition system. To make it clearer, here is a summary of the steps I believe you need to take to fix this problem for good.

Implementing all of this is a significant undertaking. It requires a deep understanding of audience psychology, ad platform mechanics, and funnel strategy. It’s not just about flicking a few switches in your ads manager; it’s about fundamentally rethinking how you attract and convert customers.

This is where expert help can make a huge difference. An experienced hand can help you navigate this process much faster, avoid costly mistakes, and build a scalable acquisition engine that brings in profitable customers month after month. We've done this for dozens of SaaS companies, helping them cut acquisition costs and scale their revenue.

If you'd like to discuss this in more detail, we offer a free, no-obligation initial consultation where we can take a closer look at your specific situation and map out a concrete plan of action for you. It might be a really valuable 20 minutes for your business.

Hope this helps give you a clearer path forward!

Regards,

Team @ Lukas Holschuh