In the subscription economy, 'first impressions' matter most
Aug 13, 2021 | By PYMNTS.com
You know the drill. The streaming media bundle, the weekly grocery deliveries, the monthly meal kit plans. They’ve all offered comfort and convenience amid the pandemic, and in many cases, we simply "set ‘em and forget ‘em."
That is, until the automatic renewal kicks in.
Ioana Dayagi Stamate, head of product at Vindicia, told PYMNTS that subscription-focused firms need to fine-tune their processes and transparency to keep consumers and regulators informed while striving to minimize any friction.
The conversation came against the backdrop of findings in the PYMNTS subscription tracker, which showed that automatic renewals have gained the attention of regulators seeking to enforce state and federal consumer protection laws. Add to that the fact that as many as 40 percent of new subscribers plan to cancel those same subscriptions within 90 days.
Indecisive consumers and rising regulatory scrutiny have combined to create a combustible mix.
Transparency Is Key
But as Stamate explained, regulators are looking to address deceptive marketing practices, where firms do not disclose information or don't have policies in place to prevent customers from canceling without pre-notification.
“It’s important to be transparent with the customers at all times, about account changes and whether you are keeping their payment methods on record or not, or if it’s a one-time purchase.” With some degree of proactivity, she said, these companies can gain explicit consent from their subscribers, with direct questions such as, “Do you want us to save this card for future use — or not?”
Strong onboarding procedures with minimal friction are key goals, Stamate said. After all, she said, “first impressions are hard to change — not only in the dating world — it’s true in the subscription world, too.” She noted that an effective onboarding process means the firm collects information from the subscriber that can facilitate a personalization or profile setup, seamless and trusted payment, and a secure login.
For the subscription firms themselves, she said, keeping in step with (changing) rules and regulations as companies design their subscription offerings means choosing providers (Vindicia among them) that will help them abide by the most up-to-date payments mandates tied to PCI, data security, PSD2 and standard terms and services.
The overarching principle, said Stamate, is that the customer should have full control over their choices, extending right into the refund, return and exchange policies.
That level of proactivity and constant dialogue with subscribers can help businesses make a dent in cancellations and churn. Fine-tuning the offerings themselves — and anticipating what specific content or services the user will need and will actually consume — will also help those metrics.
Stamate noted that free trials of a month or less — and even payments for initial subscriptions as short as seven days — can give consumers a better sense of what they are getting. This trend of “mini-period subscriptions,” along with “pause” features on longer subscriptions, can help fine-tune companies’ efforts without losing too many subscribers in the meantime.
With those protocols in place, said Stamate, companies can keep the relationships that massed — in huge bursts of activity, onto platforms and other subscription conduits — sticky. Disney is a prime example. Executives at that company have said churn would decline as subscriptions became “tenured.” Bundling can prove valuable here, said Stamate, as new content comes on board for the same price.
“You’re already there and you’re in the ecosystem,” she said of the users, so it becomes relatively easier to keep those customers in place rather than going out to find new subscribers to replace them. The pandemic may have made subscribers of us all — and companies that are looking for fixed streams of income will need to have flexible, reliable models in place to keep their subscribers locked in over the long-term horizon.