As we enter the business world it is interesting to look at a purchase relationship from both the perspective of the company and the perspective of the consumer.
Coming from a background in a membership organization, as a retention manager non-the less, I have more than my fair share of experience with a subscription or membership business model. I know very well that the primary revenue of this type of organization comes from the renewals and not new customer acquisition. This bottom-line revenue distribution makes sense when you considers how many marketing dollars it takes to bring on a new customer. You may notice often magazines and other services are steeply discounted for the first year; the renewal is when full price kicks in. We had a policy at my old organization: do as much promotion as you want for new member but never discount on renewals.
From a consumer perspective, however, this becomes problematic. How many of us have seen our cable bill double after the promotional period is over? There are three responses we the consumer can take at this point:
- Cancel the service full-stop
- Cancel the service/subscription and re-up at new member rates
- Never get around to taking action and contribute (albeit grudgingly) to the aforementioned company’s bottom line
There are certainly companies who’s offering meet or exceed my expectations and whose services I am willing to continue to subscribe to. However, I wonder what percent of profits are made from those who, like myself, can’t seem to get around to cancellation in a timely manner and literally pay for our busy lives.
A few examples of my personal late or failed canceled subscriptions include: Bank of America checking account, Netflix membership, HBO/Showtime, Audible from Amazon, and my favorite, the Soccer Channel. I believe part of my resistance is the fear of the hassle, forgetfulness, and again simply a busy schedule. For someone who considers herself good with money I have a hard time understanding the psychology of the failed cancelation.
At first a subscription may seem like the best deal in town, especially with the initial promotions to get you to join. Then life kicks in and many of us are left wondering is it really worth the dollars out?
From the company side, the subscription business model must be working, as new companies pop up every day. My new favorite… ManPack, http://www.manpacks.com/ a subscription service for the ongoing replenishment of men’s socks and underwear. You heard right!
As long as any of these services have your credit card you are locked in until you opt out. As long it is legal for companies to auto-renew your subscription the onus falls on the customer to cancel before the chare occurs.
Perhaps I am among the minority of those who let their subscriptions linger or perhaps it is a part of the human psyche along with lingering returns. How about you, any subscriptions you have been meaning to cancel?Alyssa Thomas
Very good post. I really enjoyed your insight into the "renewal" subscription business.
ReplyDeleteI have to laugh every time I receive a letter in the mail from American Express Publishing. The first few times I was surprised to be getting mail from AMEX when I know I opted for electronic communication only (easier to delete/ignore that way). When I opened the letters, I was wooed by the wonderful opportunities to receive 100's of dollars in gift certificates, or even a free planner set! All I had to do was place a sticker in a box and mail it back. So simple!
Then, I read the fine print to realize that planner I never really wanted would cost me $25 a year without a worry because it will be charged automatically to my credit card. However, it could be mine free if I cancel by 4:39 PM on the first full moon of Autumn (or some crap like that).
I thought of how many people out there probably don't even read the fine print and think they will get something for nothing. I try not to fall victim to these things, but I feel it inevitably always happens due to my "set it and forget it" mentality when it comes to paying bills...
--Andrew Akers
I remember when I went back to school I cancelled all my magazine subscriptions in order to help my own bottom line. For most of these magazine websites, it takes about 10 minutes to just find the “unsubscribe” button – they don’t make it easy. Despite having to go over the river and through the woods to jump through all the “unsubscribe” hurtles, the thing that really pushed my buttons were the immediate onslaught of “we miss you” junk mail.
ReplyDeleteOf all these, Time was the absolute worst offender. For the first month, I got a letter in the mail every other day asking me to renew my subscription. First of all, why would I want to renew – I just cancelled? Then, I got upset thinking about how much of my previous subscription dollars went to postage. All this junk mail can’t be cheap on an aggregate level. Finally, the kicker was when my fiancé, being the gentleman he is, picked up my mail and there was one of those angry red envelopes that said “subscription past due.” How is it past due? I just cancelled it. Finally, I called them to ask if for some reason my cancellation had not gone through and maybe that’s why I was getting these letters only to have the customer service lady confirm that I owed them nothing. So sneaky! Had I not been home, James probably would have paid the bill to do me a favor and really the only favor would have been to Time’s shady marketing department!
I tend to cancel my subscriptions long before companies auto-renew them because I know that I will forget to cancel them at that time. For example I quit my membership at the fitness studio and canceled my magazine subscriptions as soon as I got my acceptance letter from Lisa Bryant which was in March. The good thing about this strategy is taking advantage of the second aspect Alyssa mentioned. Thus if I really want to continue the membership I can re-opt at even better conditions, but I will never be auto-renewed although I don’t want to.
ReplyDeleteYet about two month before I came here, one of the magazines started calling me almost every day to offer me special conditions. I explained to them that I’ll be in the States for the next 5 month and we agreed that they will call me back in January to re-opt my membership. At least that’s what I thought what we had agreed on. However, they obviously have a different calendar and gave me a call every single day. I saved their number (in Germany companies are not allowed to call you “unknown”, they have to present their phone number) so I could ignore the calls. Depending on my mood, I would answer them and tell them for what felt like the hundredth time, that I won’t be there and that they should please please stop calling me. Sometimes they would stop for a few days, before they started calling again. So the offerings at better conditions that I used to like turned out to be a nightmare. I don’t think that I will re-opt, when I come back, even though I originally planned to do so.
Alyssa,
ReplyDeleteAs embarrassing as it is to admit, I also have an issue with not canceling my subscriptions. I have a travel program that charges me every single month and I just watch my money flow out of my account without resistance. I'm sure most people do it for the exact reasons that you have mentioned. For me, it's a time thing as well. But one good thing coming from you blog is that I have found a new motivation to once again take charge and finally get cancellation completed. So for that, I thank you!
Ronald Williamson