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Vindicia in the News

Curation models fight back against subscription fatigue

May 25, 2021 | By PYMNTS.com

As the U.S. emerges from the COVID-19 pandemic, some of the businesses who profited from the stay-at-home economy during its grasp now have to ask an inconvenient question: What do we do now? Every company that found a successful subscription model during the past year has to ask that question. After all, one survey showed that online video subscriptions topped one billion last year. As we emerge from the pandemic, subscription fatigue may be setting in.

Sharath Dorbala, CEO of Vindicia, told PYMNTS that as consumers take stock of the tons of things they signed up for — the meal delivery kits, the movie services — they may start pruning things back a bit.

And as he told PYMNTS, for subscription providers, retention is a discipline, not an event. Retention requires discipline for these firms, said Dorbala, who likened the approach to growing a bamboo tree — the seeds are planted, but it takes a long time of nurturing and watering the sapling before the tree is sturdy and tall.

“You really want to go beyond a financial relationship and make it a lifestyle, a companion relationship,” said Dorbala. Mindshare leads to wallet share. Against that backdrop, the April Subscription Tracker finds that 51 percent of streaming service consumers who signed up during the pandemic say they are likely to keep those services. The other 49 percent, of course, represent a challenge. Firms will have to scramble, said Dorbala, in a bid to craft and fine-tune their strategies to prevent cancellations.

It’s also becoming important to stanch the impact of involuntary churn, he said, which happens when users’ credit card payments fail. To get there, other subscription sectors can learn churn management strategies by examining what’s happening with streaming content providers — and quality and quantity of content choice, along with tiers of plan pricing, are helping buoy subscriptions.

The Burden Of Potential

As he told PYMNTS, we’ve barely scratched the surface of the subscription model’s potential in eCommerce. And as he noted, “subscription is nothing but an extension of eCommerce — and what we’re going to see” is the emergence of retailers embracing the subscription model. Within the next few years, he said, a majority of retailers will have a subscription model up and running even if they don’t tie that option into every product they sell.

Some of that pivot is already in evidence, even for big-ticket items, as Volvo and Audi have subscriptions for their vehicles. It may be the case that down the line, said Dorbala, automakers offer subscriptions for content delivered directly into screens housed by the cars and trucks themselves (taking a page from Peloton and others). But none of it works without long-term engagement strategies in place, without understanding why consumers may want to cancel.

The most pervasive challenge that has set in, said Dorbala, is “subscription fatigue.” There are so many competing firms within a certain vertical (say, streaming movies) that a typical consumer might question whether he or she needs subscriptions to so many platforms. The ability to pause the subscription, he said, is an important option, because it allows a viewer, for example, to digest all the binge-watching that they’ve undertaken.

“Just pause,” he said. “Explore, come back and they will give you a new option.” Putting that new option on the table means that companies need to be proactive, to have the subscription intelligence (driven by data and analytics) to understand how subscribers have been logging in and using services.

Consider the gym that has a customer who’s not been on-site using the equipment for two months. That gym could proactively reach out to the member and ask if all is OK, if they are satisfied with the equipment, or ask for feedback as to how the experience can be improved. In the meantime, that same establishment is reminding the individual that the subscription remains in place and is ready to be used.

A proactive approach toward subscription management is strategically important, said Dorbala, but so is making it relatively easy to cancel subscriptions outright.

“People do feel cheated if you make it excessively difficult for them to cancel, especially if they are debating whether they really need the services,” said Dorbala. Reacquiring those customers need not be a heavy lift, he said, as there’s a wealth of information that has been gleaned about those subscribers, such as the access they’ve had, the offerings they’ve used most frequently — and so reaching out with a new offer can be done in a personalized way.

And that’s the way to reach out to the 49 percent of folks who, having signed up for subscriptions in the midst of the pandemic, are on the fence about continuing.  According to Dorbala, 63 percent of those consumers expect to see some level of personalization in their interactions with providers.

“Curation becomes very important,” he said, in a landscape where the ultimate commoditization has been the auto-renew, the auto-replenish, where the same goods or content is delivered over and over (and, noted Dorbala, auto-renew leads to subscription fatigue).

Curation means that providers must really know their customers. Subscription firms can use data to come up with better products while giving users the transparency that they will not be selling their data to other parties. The curation approach can pay dividends, as happy users spill over onto social media (and social media becomes a way to reach consumers with suggestions), which serves as an alternative way to monetize data.

Battling Involuntary Churn

As so many transactions are done via CNP, online, involuntary churn is becoming an issue, said Dorbala. Simply put, inactive involuntary churn occurs when cards are declined when payments do not go through. The lack of standardization in the payments industry (in terms of rails and other infrastructure) is at least partly to blame, and Dorbala told PYMNTS that roughly 15 percent of transactions fail as credentials are not updated — and the subscription goes dark (but not because the customer doesn’t want the service).

Firms need sophisticated algorithms that actually understand how to take this data on payment credentials, verify them and make sure that payments can go through, he said. He said that Vindicia’s Retain can analyze and help resolve failed transactions, tied to 15 years of data and billions of data points.

“These are the kinds of strategies that businesses need to explore so that they don’t lose a subscriber,” he told PYMNTS, “but they also give them some time, give them some space — and ultimately help retain them.”

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