Why ‘click to cancel’ is a no-brainer

“Can I speak to your manager?” has taken on a whole new meaning. Are they asking for the store manager? Their state lawmaker? Governor? Member of Congress? President of the United States?

Yes.

Consumers have had it with the shady tactics of bad actors who quickly and gladly accept new subscribers but make it all but impossible for them to end the relationship. Now, the matter’s reached the desk of President Joe Biden. His administration is pushing for a new Federal Trade Commission rule that would make canceling subscriptions as easy as it was for consumers to sign up for them. Meanwhile, California, often the first mover, already signed into law their own rules that carry the same effect, albeit on a relatively smaller scale.

This might sound like a nightmare for companies that live and die by recurring revenue, but it’s actually a boon for businesses.

Walk with me.

We talk a lot about being customer-centric. That means prioritizing the needs of the customers in all that a business does. This sounds obvious, but in practice many businesses get it wrong. Traditionally, companies operated under a supply-driven business model, selling a limited set of prices and packages, like offering only monthly and annual subscription options. In that era, consumers just took what was offered to them. But today's consumers are no longer passive participants; they run the market. Consumers actively seek out businesses that align with their values and needs, driving a shift towards new ongoing relationships, including free trials, freemium with ads, usage-based pricing, among others that sit beside traditional subscriptions.

The beauty of pay-as-you-go models, in particular, is that they force vendors to continuously earn the customer's business. In the old model, once the product was sold, the transaction was largely complete. This often led to a “buyer beware” scenario, where vendors had little incentive to address customer concerns post-purchase. In contrast, recurring relationships foster a dynamic where vendors must consistently deliver value to retain their customers. In the software sector, which has experienced one of the largest shifts to pay-as-you-go models, satisfaction with SaaS solutions is much better than they used to be when they were sold as one-time purchases.

What does this all have to do with canceling subscriptions? Friction. The type of relationship companies have with their customers is just as important as being able to change the terms of that relationship — or end it — without friction.

There’s a reason you don’t need to call or mail someone paperwork to start a subscription. Businesses take names, phone numbers, credit card information, addresses, and emails online to make subscribing as seamless as possible. It’s quick and easy. Very mindful. Very modern business.

Then, when a customer wants to cancel: some companies take them back to the Dark Ages. Speak to a representative. Send an email request. Fill out a form. Confirm the cancellation. This sequence is no longer about the customer but, wrongly, just about keeping the money flowing. The last thing any of us should do is make canceling subscriptions difficult. You’re already dealing with a disgruntled customer. Remember what I said about them?

At that point in the relationship, it shouldn’t be about asking how you can stop them. Instead, we should be asking how we got here, how do we prevent someone from wanting to churn in the first place. While many companies prioritize customer satisfaction and make cancellation easy (think Netflix), there are always a few bad apples who rely on deceptive practices and consumer inertia to maintain their subscriber base. These companies tarnish the reputation of the entire industry. That's where regulation can play a crucial role in leveling the playing field and protecting consumers. But regulator or no, making it straightforward to cancel is good for the industry because it forces every company to ask these hard questions and pay attention to the customer.

You might learn that customers don’t like being stuck in a month-to-month or annual subscription. You might discover that offering a pause option actually may be an alternative they value, something 78% of respondents to a Zuora consumer survey said they want. That’s the beauty of having a customer-centric and future-proof approach to monetization.

Ultimately, the discourse around canceling subscriptions should be about fostering customer loyalty, not giving into fear. The primary focus should be on creating such a stellar product or service experience that customers want to stay. The businesses that see faster growth than their competitors start customer relationships by offering flexibility — in payment methods, service tiers, etc. They allow customers to adjust their arrangements as their needs evolve. And the prospect of canceling, which is inevitable, doesn’t have to be the end.?

With a diversified monetization strategy and old-fashioned good service, a customer canceling one service can be an opportunity to offer them something else that better fits their needs. In the end, if they still want to leave, the power of a positive cancellation experience — one that’s smooth and respectful — actually enhances brand reputation and could even turn that churn into a future win-back opportunity.

*******************

Like what you read? You can sign up for the Subscribed Weekly - delivered to your inbox every Saturday - here: https://www.zuora.com/subscribed, bringing together the brightest minds and renowned experts to keep you informed, educated and inspired about today's growing #SubscriptionEconomy!

Disclosure: These opinions expressed are mine, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.