We all have our subscription stories; some are about outsourcing grocery shopping and using the extra time to care for ourselves, while others are about enjoying our favorite streaming services or the hurdles we go through to get out of subscriptions. Regardless of the vantage point, subscriptions have transformed consumer behavior and are here to stay, and consumers want to be in control. At the same time, providers are reluctant to hand over or share control. While providers make it easy to get into recurring payments, many have implemented elaborate and complicated schemes in the name of cancellation policies. Numerous providers even charge early cancellation fees and apply countless tactics to keep customers locked with subscriptions. In such instances, consumers continue to pay for services they do not want. According to a WSJ article, several customers are unaware of how much they spend monthly on subscriptions, some surprisingly spending 3.4 times more than they imagined, while others are off by $400.
Despite the hurdles consumers have to endure to unsubscribe from their subscriptions, many tend to re-subscribe to the same service within 12 months of cancelation. This behavior is widespread among the younger generations and will continue to grow. In a recent research study, Kevin Westcott et al. found out that 25% of US consumers had canceled a streaming service and returned within a short period, with younger generations returning at a much high rate - millennials at 38%, generation Z at 35%, and Generation X at 28%. A similar trend was observed across South America, Europe, and Asia. Cost management, fresh contents, and holiday seasons were among the triggers that pushed consumers to re-subscribe. In my opinion, consumers want to enjoy their subscriptions whenever and wherever they want them. And providers must make the process to subscribe, cancel, and resubscribe as seamless as possible.
The good news is that subscription providers are under pressure to make it easy for customers to cancel just as it is to subscribe. Consumers click to subscribe, so they must be allowed to click to cancel. In another WSJ article, Katie Deighton noted that Federal Trade Commission (FTC) has proposed new rules to regulate providers with deceptive practices designed to lock customers into recurring payments. In response, many companies have complied or are adjusting their cancellation policies to abide by the new rules.
Perhaps the new easy-to-cancel processes would create the need to modify the definition of customer churn (the number of customers who cancel or do not renew their subscriptions) and, thus, lead to a new way of doing business. Cancellations, in this case, would be temporal, and subscriptions are not perpetual. Customer-centric companies could benefit from the subscribe-cancel-resubscribe trend. They can craft flexible price-friendly subscription plans to cater to customers that need month-to-month, three months, six months, or annual services. Additionally, customers should be able to choose the months they need services and the months they don't. In the long run, flexible subscription options would create loyal customers.
Thanks!
Kevin Westcott et al., 2022 Digital media trends, 16th edition: Toward the metaverse, Deloitte Insights, 28 March 2022
Katie Deighton, FTC Proposes Penalizing Firms for Onerous ‘Call-to-Cancel’ Subscriptions, The Wall Street Journal, March 23, 2023
Laura Forman, Your Wallet Is Being Drained by Subscriptions. Wall Street Thanks You, The Wall Street Journal Dec. 9, 2022
Katie Deighton, Subscription Companies Rethink Irksome Cancelation Practices, The Wall Street Journal Dec. 1, 2021