Subscriptions, a word that conjures up all kinds of thoughts for merchants and payment professionals alike. We love to line them up and treat them uniformly, but they never align with our expectations in the end.
As digital merchants, we tend to sell stuff to people, we tend to learn about pasting 'buy' buttons on product pages and measure the outcome via Google's tags so that we can see what conversions we have and how successful we marketed to someone. It becomes our world and some of us even become really really good at selling stuff like that to online consumers. Then we read somewhere about recurring payments, subscriptions and that wonderful ongoing customer revenue it attracts, so we implement new product offers that we sell to consumers as we have before, but now with automated renewals by month or year or whatever.
And boy, is the revenue good! We finally get to enjoy living a less stressed life, not having to worry whether our customers are happy with us. We start to drift from focusing on the customer to focusing on the subscription, and our entire culture changes with that. Until we see BBB customer feedback or bad reviews on Google or elsewhere. Our brand is suddenly under attack and we're all over the place trying to figure out why. Disputes have gone through the roof... Customers seem mad at us... And all too often we respond poorly.
Here's the basics of what I have learnt about controlling subscriptions and their nasty little sting:
- Embrace being a subscription business - if you don't, why should your customer?
- Create USP for that subscription - why would a customer want to remain subscribed to a service with no actual benefits over a one-time purchased product? There has to be ongoing value to the customer for a subscription service to work.
- Onboard the customer - that little 'buy' button would work better if it said 'subscribe' and I almost guarantee that AB testing will show little or no loss in sales if you do change it. Doing that will cause the customer to 'opt into' a subscription when clicking or touching that 'subscribe' CTA (call to action or button or swipe or whatever).
- Explain the sale! - I cannot stress enough that you can avoid a world of dispute pain if you spend time during the first sale explaining that the customer will enter into a relationship with you that requires regular billings for them to maintain the service or product they wish to purchase. Follow up with the customer clicking that 'subscribe' button immediately with information about what they are opting into!
- Manage customer expectations - Too often we hide from the customer what our subscription model really is or what the cost will be for renewals. Tell the customer upfront the details of their subscribed relationship in plain and clear language so that they know exactly what to expect when the first renewal occurs and sell the benefits of it clearly - if you cant explain that you shouldn't be in the subscription business.
- Renewals and secrecy are not friends - Don't build your renewals in secret, iow make sure your customer knows ahead of time and aligned with their expectations, that there will be a renewal payment attempt on their stored payment information. In many countries around the world, renewals requires some sort of billing reminder notice to the customer. Don't send these out to surprise your customers, that never goes well and usually ends up with the billing reminder being the cause of your highest churn, over communicate before, during and after the entire renewal flow.
- Billing reminders as diplomats - the first notice your customer receives from you after that first purchase was done a month or a year ago, should not be the billing reminder. Subscriptions are effectively longer term relationships and so merchants need to learn to over communicate (but not spam) their 'affection' for their subscribers in various marketing and relationship messages / notifications before sending out a billing reminder, or else this will always be a major churn point for any subscription business.
- Messaging is king - which brings me to the little hidden nugget for those merchants battling with subscription churn and high disputes. Messaging is king! In every project I have ever worked on that touched on recurring payments or subscriptions, the lack of proper, clear and warm messaging was the biggest cause of customer churn, bigger than payment failures and often more than lacking or poor products / services. Subscription businesses need strong customer focused teams and processes, so don't hide or complicate your refund policy or hide your returns process or make it onerous for your customer to cancel their subscriptions. They will cause you far more harm that the value of the deal you are set to lose due to an unhappy customer. Regulators are becoming very focused on how subscription companies communicate these issues with their customers and that can cause you even more damage. Lastly, if you attempt to hide, delay or lie about resolutions for customers, you are risking them charging back their payments, putting your business at risk for accepting future payments, and worse, you yourself getting listed on MATCH or similar database banning you altogether.
- Payment failures are collectively the rainbow, not the treasure - in all projects where payment failures and churn have been central to discussions, and rightly so, the plans to reduce them always start with a retention program or team. That's far too late to make meaningful change, as churn in recurring payments or subscription renewals is mostly caused during the first sale, during customer acquisition. So whilst payment failures show you there is a problem, they are in themselves a symptom that will reduce as you focus on the real issues. For example no amount of focus will reduce payment failures without you looking at your sales proposition during acquisition, looking at your customer messaging and engagement, and most importantly looking at your entire subscription value proposition. If you heavily discount a service or product to sell to a new customer, don't expect them to be happy to pay x2 or x3 that when you attempt to renew their subscription a month or year later as they will most likely churn. If you sell them one thing, but attempt to subscribe them to another, they will most likely churn when you attempt to renew that subscription for them.
That's just a quick overview of the business of subscriptions. If you do them right, you will see the benefit for years to come, if you do them wrong your time online may be shorter than you think. Don't panic, help is always at hand where experienced people can come alongside you and help you resolve these issues. The truth is that we want to make it as easy as possible for consumers to buy online, and yet we also learn that we need to make the right choices about what should be smooth and what should be sticky in our user journeys for those consumers.
Reach out in the comments below if you need help or have additional comments to make.
