Managing Subscriber Churn During The Downturn

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The disruptive force of the COVID-19 pandemic generated 17 million U.S. unemployment claims by mid-April, with the unemployment rate hovering near 15 percent — the highest since WWII. Record-setting workforce displacement and sluggish government response has left tens of millions of people virtually without funds and having to decide between wants and needs.

In the inaugural Consumer Subscription Retail Services Report: Using Pause Features To Curb Subscription Cancellation edition, a collaboration with PYMNTS, we gauged consumer response to the COVID-19 cash crunch, specifically “the power of pause” and other inventive features to prevent account cancellations, putting consumers at ease with compassionate flexibility.


Major cities worldwide continue on lockdown, so streaming media, box services and other subscription favorites have never been more important to subscribers. It’s a watershed moment in customer experience and retention where decisive action is needed. As the report states, “Providers have a choice when these [crises] inevitably arise: They can either require their customers to cancel for good or allow their customers to put their services on hold temporarily.”

“The demand for pause features like these is far greater than one might imagine,

PYMNTS’ research found that over 14 million subscribers would use pause and similarly helpful features if offered, adding that “… the presence of such options might even prevent subscribers from canceling subscriptions altogether.”

 

The Deciding Factor: Value

Customer retention at this time will be decided by perceptions of value, as consumers and companies review subscriptions for cost, utility, usage and other factors that add up to value. Putting aside the roughly 25 percent of “serial subscribers” who sign up fully intending to cancel from the outset, the other 75 percent of consumers want to retain the experiences they prize.

For this reason, subscription services must formulate and field value options quickly.

“Offering pause features, which allow consumers to temporarily suspend their subscription services and reactivate them without having to reenter their user information, can be a counterintuitive but effective way for providers to safeguard their bottom lines.

As new research found, “This could allow subscription service providers to retain an estimated 9.5 million users who would otherwise be at risk for churn, which is a foundational challenge for the subscription business model.”

Prime users of subscription services are the “bridge millennials” who are established in careers and subscribe to financial, media, fitness and education at the highest rates. As subscription merchants emerge from the COVID-19 disruption other cohorts will grow in importance, and each has nuances when it comes to what they subscribe to, and how to keep them engaged.

In the Consumer Subscription Retail Services Report: Using Pause Features To Curb Subscription Cancellation the research shows that “… 85.2 percent of Gen Z subscribe to at least one streaming service, while 43 percent subscribe to at least one gaming service. The likelihood of subscribing to these two types of services decreases among older age groups. Many millennials and bridge millennials have streaming subscriptions, for example — 80.5 percent and 79.9 per- cent, respectively — but only 45.3 percent of baby boomers do.”

Piggybacking, Other Challenges Remain

Payments in the subscription sector is also explored in the new Consumer Subscription Retail Services Report, including the widespread issue of “piggybacking” where several people use a single streaming TV login, for example, although it’s not the family Netflix account that leads.

“Education and training subscription users are the most likely to say either that their employer pays for their subscriptions (at 10.7 percent), that their subscriptions are free (9.4 percent) or that they obtain their services through another route (6.7 percent),” the report states.

And second only to the churn in streaming TV subscriptions are the retail-related, and that’s going to be an area of intense focus as the COVID-19 recovery gets underway. 

The report states that, “13.9 percent of all respondents who have canceled at least one service ended one of [the retail] type. This means that 8.1 million consumers canceled at least one consumer retail subscription during the past six months.”

Wrap Up 

We are living in uncertain times and no one can predict how long it will last and how consumers will react. As the report illustrates, showing empathy and offering flexibility of access to your services is especially important. 

 

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