A successful subscription company makes an effort to forge a lifetime relationship with its customers — but ultimately all relationships end. Companies have long known that managing the cancellation experience is a key component of future revenue. However, as subscription services become a more common part of life, customers are trending savvy about tracking and ending their subscriptions as a part of household management.
Some consumers are exploring tools and services to simplify the chore of keeping track of their subscriptions:
(Source: L.E.K., via Statista)
Although banks came in last on that particular poll, Forrester Research continues to push the idea that banks should offer subscription management tools. For example, consider the service offered by Goldman Sachs Bank, ClarityMoney. The service not only helps customers track expenses as part of their budget, but advertises its power in helping them cancel unwanted subscriptions.
According to Statista research, a quarter or more of subscribers have cancelled magazine, newspaper, and video subscriptions when money is tight.
Given this reality, here are four do’s and don’t’s for subscription companies hoping to deal successfully with today’s clever cancellers.
Don’t make it too hard to leave.
— Do treat customers the way you would like to be treated.
The primary issue is whether to make the cancellation process difficult (high-friction) or easy (low-friction). A case study in what not to do comes from singer and fashion designer Rihanna, who automatically enrolls shoppers visiting her clothing “Savage X Fenty” site in a $50 monthly buyers’ club. Those who join by accident have no low-friction exit to quit online. “You can’t cancel a monthly membership on the Savage X Fenty website or in the customer support chat window. You can only cancel over the phone,” according to a Vox report that goes into great detail on the ways Riahanna’s site treats — or mistreats, the news site contends — customers.
Callie Willows at Membership Guys details the downside:
- Removing any functionality that lets people do it themselves, making it hard to find a point of contact, and giving people the runaround when they do eventually find someone to call or email. There’s so little point in adopting this approach, in which you’re essentially hoping that you can frustrate someone into submission and then maybe they’ll forget that they were going to cancel.
At Customer Think, Jeremy Watkin has an interesting take on how to balance high versus low friction approaches.
Speaking of what’s important to stakeholders, it’s important to think about the business case for low-friction versus high-friction. Some factors …
- The cost of acquiring new customers to replace the ones that leave.
- How much has that customer spent over the course of their life with your company?
- The cost of those interactions or typical cost per contact for a cancellation call.
- Success rate in customer retention efforts by offering discounts or credits.
As I think through these factors, the biggest concern for my boss were those high-value customers where value far exceeded the costs of supporting them. While I absolutely think a low-friction cancellation experience would have saved time and money, a safeguard to try to retain and restore our high-value clients was an important consideration.
On the other hand, don’t make it too easy to leave.
— Do give them a chance to reconsider, and an incentive to stay or come back.
Because so many subscription firms use high-friction interactions when customers try to cancel, customers have been trained to expect it. So when a company uses very low friction interactions, it can take customers by surprise — and leave a bad taste in their mouths. In fact, some subscribers use cancellation as a negotiating tactic to bargain for better terms; when a company calls the bluff and actually cancels the service, the customer gets mad.
According to Terrel Transtrum at ServiceQuest, the key to the cancellation request is finding out what the customer really wants and needs:
- Canceling might not be the best solution to their REAL problem. Sometimes, the true request is to fix a problem, and the request to cancel is actually the means that the person is using to get something fixed. You can’t fix their problem until you know what it is.
Don’t ignore cancelling customers.
— Do ask them why they are dropping their subscription.
If there is a justification for requiring a phone call to unsubscribe, it is for the opportunity to ask customers why they quit. Yes, their complaint may offer you a chance to solve the problem with a solution that retains the subscription. But in addition, collecting data on why subscribers quit can help you make your offering more attractive to all your customers.
For example, consider these reasons given by customers quitting streaming services:
(Source: Limelight Networks, via Statista)
Data like these offer actionable pathways back into customer favor. Even though the cost may be the primary driver of unsubscribes, Maja Majewski, writing at Medium, explains the value of actually knowing:
- There are many reasons a customer might cancel their paid subscription. Perhaps it was a fit issue. If that’s the case, that’s valuable insight for your sales and marketing teams to qualify leads better. Perhaps it was a pricing issue. Maybe your team can strengthen your user onboarding and help customers realize the full ROI of your product. It’s dangerous to ignore opportunities for retention when your business model depends on it.
Don’t spam customers who have cancelled.
— Do reach out gently to salvage what you can of your relationship with the departing customer.
While overwhelming a departing customer with email or other contacts cannot help, a gentle, understated outreach can pave the way for referrals or regaining a customer’s business. The value of a personal touch is invaluable here. Consider what Close.io. CEO Steli Efti told Kate Harvey of Chargify:
- “Get your churned customer on the phone. Only do email as a last resort. Having a real conversation with your departing customer is integral to learning something meaningful from the exercise. It’s all about going deeper, asking questions, and coming to a real, detailed understanding of your customer.”
The benefits of engaging a cancelling customer go beyond motivation data, though. Experience Investigator Jeannie Walters wrote about two services she cancelled — one high friction, one low. The high-friction company told her that she had not cancelled completely; her response: “I was informed I ‘didn’t complete the cancelation process’ on my end. Anyone can see this is total and utter bull pucky. In fact, many reviews online show this. Customers aren’t stupid. We know you’re trying to make it painful to cancel.” The high friction company (food box service Try The World) earned ill will and bad press.
The low-friction service (Julep) made cancellation easy and even sent a personal note. Walters writes: “I’d have no problem signing up again as a customer with Julep, who I’ll also gladly recommend to others.”
From online reviews to word of mouth referrals, ex-subscribers can offer great value. Or, if they go away mad, they can hurt the bottom line by more dollars than they ever brought in as paying subscribers. Managing expectations for a stress-free cancellation process just makes sense — especially for subscription companies.