Why Making it Easier for Subscribers to Cancel is a Winning Subscription Strategy

I recently came across an article titled “Subscriptions are hard to cancel and easy to forget by design” by Nerdwallet that throws some shade on certain aspects of subscriptions. The piece discusses how consumers often face hurdles when trying to end subscriptions, leading to what’s known as subscription fatigue. According to a 2022 study by brand insights agency C+R Research, 42% of consumers have unknowingly continued paying for services they no longer use. The article introduces the Click to Cancel rule proposed by the Federal Trade Commission in March 2023. This rule aims to simplify the cancellation process, making it as easy as signing up and requiring companies to send annual reminders before automatic renewals. Similar regulations are already in place in California, Colorado, New York, several other states, and countries in the EMEA region.

While these rules and regulations are a step in the right direction, they raise the question: Why aren’t companies already implementing such practices? Just as there are “black hat tactics” in search engine optimization, some players in the subscription industry rely on subscribers forgetting about auto-renewals to boost revenue. This is not the way.

This post explores the importance of making subscription cancellations straightforward and how the experience contributes to customer loyalty. By sharing real-life examples of brands that excel in this area, we’ll explore how this strategy aids customer retention and fosters loyalty.

The subscription journey  

When individuals sign up for a subscription, numerous factors come into play. They may be sampling a product or service for the first time, enticed by discounts or the option to try before committing. Alternatively, they could be long-time users seeking the convenience of regular monthly deliveries without the hassle of reordering. It could be a compelling new show exclusive to a streaming service, akin to Disney+ captivating audiences with Taylor Swift’s The Eras Tour movie. While we lack a crystal ball to discover subscribers’ motivations, we do have insights into the common reasons for their eventual cancellations. According to 2024 Chargebee Retention benchmark stats, the reasons include:

• Pricing (31%): The leading cause of cancellations is pricing, significantly affected by rising global inflation. This sensitivity has pushed the percentage from the usual 20% to an unusual high of 31%, indicating a heightened concern over costs among consumers and businesses.
• Not enough time (16%): This reason often reflects a perceived lack of value, suggesting that the product or service needs to be more compelling to justify the time investment from users.
• Missing features (15%): A substantial number of cancellations occur because the subscriber believes the product lacks specific features they find essential, pointing to potential areas for product enhancement or education about what features are available.
• No longer needed (15%): Many users feel that the service or product no longer aligns with their needs or circumstances.
• Integration issues (8%): Challenges in integrating the product with other tools or systems also lead to cancellations, though it affects a smaller segment of the user base.

Consumers want value and flexibility from subscriptions  

During the pandemic, many companies began offering the ability to pause a subscription, which led to a decrease in voluntary churn. According to research from PYMNTS, 51.7 percent of consumers—approximately 14.2 million people—who are likely to cancel their current subscriptions would use pause features if they were available. This could lead to as many as 9.5 million subscribers keeping their subscriptions.

Offering flexibility from the start can boost both customer acquisition and retention. Condé Nast, renowned for titles like Vogue, Wired, and The New Yorker, has influenced cultural narratives for decades. But even top publishers must adapt to the digital landscape. For Condé Nast, the challenge was not only attracting but keeping subscribers who appreciate its content. They strategically shifted the narrative, emphasizing the inherent value of subscription content over discounts or gifts.

“Today’s subscribers demand trust, transparency, and rich benefits. We’re focusing on clear communication of subscription terms—explicit renewal policies and the freedom to cancel anytime,” Adam Lifshitz, Senior Product Director of Subscriptions, told us. Condé Nast is also granting subscribers even greater flexibility when it comes to their subscription plans to continue the positive momentum. Lifshitz explains, “We now offer more manageable subscription options, such as shorter, monthly intervals, as opposed to the traditional annual commitment. This allows subscribers to opt-out after a few months rather than being tied to a full year’s subscription upfront. We found that even though they are not tied to a long commitment, they tend to stay as long, allowing us to keep healthy retention rates, with more subscribers through the door.” Condé Nast honed its retention strategies, reducing churn and cultivating a more loyal and engaged readership. Its success is marked by improved retention rates and a strengthened financial performance.

Make canceling easy 

Understanding why consumers cancel is crucial. Consumers today are faced with a myriad of options regarding how and where they allocate their funds. Take, for example, the choice of viewing movies – whether at a traditional cinema, streaming on Netflix, or through various other online platforms. The rise of subscription-based services has led consumers to become increasingly mindful of the number of subscriptions they maintain.
In addition, with life upheavals like workforce cuts, remote work, and inflation, many are reevaluating their finances. As subscription-based companies, our goal should be to provide immediate value, fostering appreciation and gratitude. Additionally, we should provide flexibility from the start, whether that means shorter subscription terms, the ability to pause, or something else. If a subscriber needs to cancel, make the process seamless. Treat cancellations like sign-ups; remove barriers. This ensures a positive experience, increasing the likelihood of them returning. We’ve seen companies win back up to 10 percent of their canceled subscribers which can be significant. Certainly, this fluctuates depending on the industry and multiple factors; however, the essence lies in crafting a positive experience. Doing so increases the chances of rekindling interest from your lapsed subscribers down the road.

Pret A Manger (Pret) has been dedicated to serving freshly made food and organic coffee. Today, Pret is a globally recognized brand boasting a network of over 700 shops in 16 markets on three continents, with more than 9,000 workers across the globe. In 2020, Pret launched a paid loyalty subscription offer – a first of its kind for high-street food-to-go shops in the UK. The coffee subscription was an instant success. Initially launched in the UK, it expanded with subsequent launches in France and the US. As the subscription became a big hit with customers, Pret embarked on a journey to further elevate and future-proof its offering, evolving the Coffee Subscription into Club Pret.

Explains Balint Bertok, Global Head of Subscriptions at Pret A Manger. “However, with great success and growth came churn and the need to optimize previously blanket discounts.” Pret decided to put its most loyal customers at the heart of its subscriptions and provide value to them at every turn. By better understanding its customers’ wants and needs, it can be more proactive – rewarding them at the right time, reminding them that they can pause their subscriptions rather than cancel, or resolving any payment issues quickly and easily.

Conclusion 

Understanding consumer behavior and addressing key reasons for cancellations are vital for subscription-based businesses to thrive. Companies like Condé Nast and Pret A Manger have successfully improved retention rates and customer loyalty by offering value, flexibility, and easy cancellation processes. Adapting to evolving consumer needs, providing clear communication, and enhancing subscription options have proven essential in reducing churn and sustaining financial performance. Moving forward, prioritizing customer experience, proactive engagement, and personalized rewards will be crucial in retaining subscribers and ensuring long-term success.

By Kim Courvoisier.

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