Why Cancellations Are a Critical Part of the Subscriber Journey

When handled the right way, a positive cancellation experience can actually retain subscribers.

Have you had difficulty canceling a subscription or membership? If so, maybe you can relate to a recent experience I had trying to cancel a magazine subscription with a large U.S.-based publisher. I subscribed to an upscale home design magazine several years ago, and finally realized that I never actually read it. It was a beautiful, glossy magazine with gorgeous covers, and the content was top notch, but it didn’t suit my lifestyle. It probably never did, but I likely subscribed because of a special promotion, like a buy-one-get-one, or a deeply discounted rate.

When I received a postcard from the publisher in early February that the magazine would auto-renew in May, I decided it was time to finally cancel my subscription. I set the postcard reminder on my desk, meaning to cancel it, thinking I had plenty of time. A week later, the magazine charged me for the next year’s subscription, four months before my subscription’s end date. Though the cost was nominal, I was not happy.

An endless loop

I called the number on the postcard and got into an endless queue on their customer service line that allowed me to cancel future auto-renewals, but I could not cancel my subscription or talk to a customer service representative. The recording referred me to the publisher’s website. I went to the website, dug around for a bit, and finally found a mention of cancellation. I was directed to call, but that didn’t work the first time, so I looked for other options

I then tried to use the Contact Us page. Every possible request was available to me (change address, buy gift subscription, change payment method, pause service, etc.) except cancellation. I finally chose Other from the drop-down menu and typed in my request. They then gave me another phone number to call. After about 30 minutes, I was finally able to talk to a real person to cancel my subscription; I received a refund a few days later.

This was such a bad experience that, not only will I never subscribe to this magazine again, but I will not subscribe to any of this publisher’s other consumer magazines. The publisher lost my subscription dollars on more than one magazine. They lost me forever. If the experience had been a seamless one, I would at least look on that publisher more favorably in the future, but not now. Instead, I will remember the frustrating cancellation process, and I will probably tell my friends about it. [To be fair, I am telling you about it, but I’ve chosen not to name them.]

This company publishes hundreds of magazines, or editions of magazines, around the world. While I may represent only one subscriber, imagine how many other subscribers who may have had a similar experience. Hundreds? Thousands? Tens of thousands? The bottom line – this publisher’s cancellation process is bad for business, and it highlights the importance of a seamless cancellation process to all subscription companies.

It isn’t just me or this publisher. At Subscription Insider, we get calls and emails almost every day from subscribers trying to cancel their subscriptions from other subscription companies. Why? Because some companies make their subscriptions very difficult to cancel, and they run the gamut from newspapers and magazines to online services, SaaS and entertainment. No sector seems to be immune. Companies don’t understand, or sometimes forget, that if subscribers have a great experience “leaving” the company, they might come back when they’re ready.

Not just a best practice – it’s the law

An easy mechanism for cancellation is more than just a best practice. Providing an easy mechanism for cancellation is the law in many states, including California, Vermont and New York. And many million-dollar lawsuits have been brought against companies who have violated the rules, intentionally or not, including ABCMouse, AdoreMe, Julep Beauty, eHarmony and Fabletics.

Know the law

In addition, The Restore Online Shoppers’ Confidence Act (ROSCA) requires that all material terms of a transaction be disclosed at the time of the transaction, the merchant must obtain the consumer’s express written consent, and provide a simple mechanism to stop recurring charges, explains Lisa Dubrow, Esq. in an article about the ABCMouse $10 million settlement.

New York passed a law (New York Senate Bill 1475A) that went into effect in February addressing automatic renewals, including cancellations. Subscription companies must disclose a description of their cancellation policy, and they must provide a cost-effective, timely and easy-to-use mechanism for cancellation, including an online method to cancel their subscription.

Vermont passed similar provisions last year as part of Vermont Senate Bill 110. The bill primarily addresses privacy, but it also updates the state’s automatic renewal provisions to match California’s new requirements. The law went into effect in July 2020. The bill states that when automatic renewals are involved, the contract must provide the consumer with a toll-free number, email address, a postal address or another cost-effective, timely and easy-to-use mechanism for canceling the contract.

Importance to the subscriber journey

Each interaction with your subscribers is important to their customer journey…even cancellations. That may sound counterintuitive, but subscription experts tell us that providing a simple, seamless cancellation process can actually improve your retention, not to mention your reputation, with subscribers and former subscribers.

Robert Skrob, president and owner of Membership Services, Inc., explains why a smooth cancellation process is so critical.

“Your cancellation process is the one process that touches every subscriber who intends to cancel their subscription,” Skrob says. “Not every subscriber opens your emails, uses your product or engages in your community. But every member who plans to cancel experiences your cancellation process. That makes this so important.”

Convoluted cancellation processes can also contribute to higher churn.

“Negative cancellation experiences can accelerate a company’s demise. Shockingly, the number of possible subscribers has a ceiling. If you are systematically pissing them off, you’ll accelerate the speed with which people hate you,” Skrob says.

How to use cancellations to improve retention

On the flip side, a positive cancellation experience can improve customer retention.

“For many of the subscribers who cancel today, they are saying, ‘not now.’ Being gracious in all phases of the relationship builds trust,” Skrob explains. “Higher trust leads to future purchases, referrals and subscribers who come back when they have a need for your product again.”

Brightback, a company that automates customer retention for subscription businesses, suggests six strategies for subscriber retention in a blog post by Carl Nightingale, head of product. The goal of each strategy is to solve the subscriber’s needs while extending their lifetime value with your company.

“At the moment of cancel, subscribers can be retained. By offering relevant solutions in the moment, subscription companies can save double digits of subscribers before they cancel,” Nightingale writes.

  1. Discounts. Whether percentage or dollar based, a discount may help you retain a subscriber who is price sensitive. Nightingale suggests testing different discount levels, but Brightback’s experience finds that the sweet spot tends to be between 15% and 30%.
  2. Pauses. These are a very popular way to retain subscribers for direct-to-consumer and business-to-business subscriptions. A pause allows a subscriber to suspend payments for a set period of time without canceling the subscription entirely. I did this recently with a wine subscription. My wine rack was full, and my budget didn’t allow for a $60-a-month subscription at that time, but I loved it. The rep I talked to put the subscription on pause for three months, so I could reconsider. It turned out to be the perfect solution, and I have resumed my subscription.
  3. Plan changes. Sometimes your subscriber is not using your product because they are not signed up for the product that solves their problem. Subscription companies can address this through upgrades, downgrades, term changes, or switching to another bundle.
  4. Extensions. To retain a subscriber, companies can try extending the subscription or adding a free month to give the subscriber more time to experience the value of your product or service.
  5. Support and training. Though not as successful as incentive-based offers, Nightingale says that support and training can help a subscriber better understand how to use your product or service, so they can use it as intended and experience the value of their purchase.
  6. Subscriber feedback. Getting feedback from subscribers on why they want to cancel is a valuable learning tool for your subscription company, even if you ultimately lose their business. You can’t fix or change problems you aren’t aware of.

“The key to a successful offer strategy is to give up just enough to retain subscribers while optimizing for incremental LTV. If you’re just starting out with building your cancel experience, these six offer categories are a great framework to build upon. If you’ve been saving customers at the point of cancel already, consider streamlining your strategy into offer categories so you can get a true measure of performance,” says Nightingale.

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On his website RobertSkrob.com, Skrob shares an example of a subscription company that gets cancellation right: streaming music and audio service Spotify. He said the company makes it easy, including sending out an extensive exit survey to find out (a) why a subscriber is canceling, (b) if they would recommend Spotify, and (c) how likely they are to rejoin in the future. This survey provides Spotify with information on how to win back that subscriber – and how to retain others in the future.

Skrob has also worked with companies to design win-back campaigns based on the results of an exit survey. For example, if the subscriber said the subscription was too expensive, the company sends them a video and a “win-back follow-up sequence” based on price and value, and sometimes with a lower-priced offer.

If the member indicates service was an issue, the win-back campaign is directed to the support team who will then call canceled members to see if they can resolve the issue. In many cases, they are able to win back the subscriber.

“Erecting a barrier between your member and that subscription cancellation button may make you feel better, but if your subscriber wants to cancel, he’s going to find that button. And if you make it difficult on them, they’re going to be angry, and you’ll lose any opportunity you had to win back a long-term subscriber,” Skrob explains. “While your member cancellation process must be easy to initiate, you should engineer it to win back your customers. Incorporate an exit survey and use that information to create a win-back follow-up process based on each answer.”

How to test and improve your cancellation processes

Wonder if you are handling cancellations positively or negatively? Ask subscribers and those who cancel for feedback. Skrob suggests that you test your processes by including an automated confirmation email along with a survey. If your process is unsatisfactory, your freshly canceled subscribers will tell you about it. You can also collect feedback from current subscribers.

To improve your company’s cancellation process, Skrob recommends that you establish trust with subscribers by ensuring that the process allows subscribers to follow through with their cancellation request. In other words, make it easy for them to cancel. Don’t make them jump through hoops. After establishing that trust, Skrob said companies can use the opportunity to offer additional products or services.

Bottom line

There is no avoiding the fact that every subscription company will not be able to retain every subscriber. However, each step in the subscription journey plays a role in subscriber retention and lifetime value. One area of focus should be how your company handles cancellations to ensure they are following the law and best practices to retain the business whenever possible. If the subscriber still wants to leave, let them go graciously and learn from the experience.

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