15.03.2023 11:30

How to Lose Customers and Alienate Subscribers

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Not that you’d ever want to do such a thing – but you’d be amazed how many companies lose valuable business every day by getting their subscription management processes wrong. It’s that simple, upsetting subscribers with inaccurate billing or unfulfilled subscription contracts will cause them to reach out to competitors or just cancel their service at the first opportunity.

It’s important to get effective subscription management correct – it’s not just a matter of taking regular payments and providing consistent delivery of goods and services. As with success in many forms of business, it’s all about discipline and procedure; subscription management isn’t a ‘set and forgets’ exercise. So let’s look at the most common problems with subscription management, and the best solutions, in more detail:

Fixed Price, or Pay As You Go

For a start, subscriptions can take two very different forms, whether the service received by the customer is ‘metered’ or of a fixed, recurring nature. The most obvious example of a Pay You Go or metered subscription is a cell phone contract, which doesn’t offer unlimited call minutes, but rather an initial amount of inclusive call time, then a pennies per minute billing thereafter. Clearly, if a subscriber has 300 ‘use them or lose them’ minutes per month on a rolling contract, but in one month uses 400 minutes of airtime, they are going to be billed for 100 extra minutes in that month. The subscription amount thereby varies each time.

This is the same for software in some business applications, for example, a certain number of customer interactions via a ChatBot or a certain number of words processed by an AI like GPT3. So long as the billing is accurate, and crucially that the customer is informed of the amount before they receive the bill, all is well and good. Nobody likes nasty surprises, so it’s sometimes a good idea to prompt users during heavy usage periods with reminders. For example:

Dear [first_name], we noticed that you already used 500 call minutes this month, with two weeks remaining in this billing period. Your bill currently stands today at [$X] and minutes are charged at $0.03 cents each.’

Billing Reminders Used as Incentives

You can always use such warnings as an incentive for the customer to upgrade to a higher package, so when the customer receives a warning that their bill is already at $X, that if they were to take out a monthly subscription of $Y, their current usage pattern would be covered, and they would save money into the bargain.

Fixed Prices don’t Always Mean Fixed Time Periods

Enabling the customer to take ‘payment holidays’ or ‘service fulfillment vacations’ is a great way of allowing wavering subscribers not to cancel, but to put their subs on hold for a month or two. This is common with wine delivery clubs and the like. It’s essential that an easy one or two-click online facility is available for customers to log into their account, and ‘pause’ their payments and deliveries for, say, a maximum of three months over a year. Any good e-commerce platform like Shopify or WooCommerce should have this facility built into its core functionality. Otherwise, if someone has promised themselves a ‘Dry January’ after Christmas, but can’t put their Dolcetto delivery on downtime, they might just decide to cancel and maybe (but only maybe) resubscribe another day.

Dunning and Surveying

Even though that sounds like something a Gold Rush ‘Forty Niner’ might do, dunning and surveying are important strategies in subscription management. Dunning refers to the technique of recovering failed payments from declined credit cards or direct debits that ‘bounced’- without the need for time-consuming manual intervention. Dunning software, or at least that specific facility within a subscription billing wider package, takes a series of predefined automated steps to contact customers with failed payments.

These can take the form of email, SMS, and automated voice calls, encouraging customers to update their payment information; say for example if a credit card expired or the customer changed bank accounts. Clearly, a smooth dunning process is only going to improve customer retention if the reason for the non-payment is merely administrative. If the customer is simply flat broke, there’s little you can do in any event.

Surveying is equally important as dunning and keeping existing customers happy. If a customer cancels their subscription, it’s essential for business intelligence purposes that you find out why. If a customer cancels, an incentive email can be sent with a link to a survey platform such as SurveyMonkey or whatever. The information about why the customer canceled is priceless – was your product or service too expensive? Was your subscription management poor? Inaccurate billing, late shipping, or excessive delivery charges?

Survey links to canceled accounts can also be used as incentives for customer recapture. You can offer a nominal discount on a re-joined subscription (if appropriate) on completion of a survey, and again, a combination of automation and human interaction can decide whether that might be relevant. Obviously, if a wine club subscriber’s survey response indicates that they have cirrhosis of the liver, you wouldn’t want to be offering a discount on a case of Bourbon Whiskey!

To summarize, by ensuring that your subscription management is keeping customers on board, as opposed to hacking them off every month, you only need to follow the golden rules: monitor your customers’ interactions, take timely action to avoid billing surprises, and ensure that rapid responses are made if things go wrong. Remember, dissatisfied customers don’t usually complain, they just go away and don’t return…

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