Subscription fatigue is commonly understood to refer to the feelings of overwhelm and frustration that consumers may experience when managing multiple subscriptions, which can lead to them cancelling their subscriptions. When the topic is covered in the media, it is usually in relation to entertainment streaming platforms, but it can also apply to a range of other services, including FMCG, and there is anecdotal evidence that subscription fatigue exists in the B2B world too.
There has been plenty of research into subscription fatigue over the past few years. According to one study, 72% of subscription consumers believe there are too many subscription services. There are currently more than 300 video streaming services in the US alone, so this is understandable. Another survey found that 33% of consumers don’t want to take on any more subscriptions, with a further 10% saying they would only subscribe to another service if they cancelled one of their existing ones first.
I was keen to understand Aria’s customers’ experiences of subscription fatigue and the steps they are taking to prevent it, so I interviewed a selection of our customers from a range of regions and industries, including publishing, transport, and financial services. Some of these businesses focus solely on the B2C market, while others also focus on the SMB and enterprise B2B markets.
The results were not what I expected – not one of the businesses I interviewed said that subscription fatigue is a reason for churn among their customers. In fact, they all reported low rates of churn, and had a strong understanding of the factors that would increase churn (more on this shortly).
Low-value, poorly fitting subscriptions cause subscription fatigue
I realized that my understanding of subscription fatigue wasn’t right. While managing a large number of subscriptions can result in subscribers feeling overwhelmed and frustrated, which can lead to them cancelling their subscriptions, they don’t just cancel them at random; it is the subscriptions that are a poor fit or are perceived to be less valuable that are the first to go.
But this is no different from a non-subscription product or service – if it adds value, customers will retain it. If it doesn’t, they won’t. Providers that blame subscription fatigue for their churn rates are missing an opportunity to identify what it is about their service that makes customers churn.
Common causes of churn
Aria’s customers’ experiences
As stated earlier, the customers I interviewed reported low churn rates, but – as with all businesses – they do experience some churn. Those that serve the B2C and SMB markets explained that churn is most likely to occur when:
- The product is no longer perceived to be valuable or relevant
- The customer has derived all the value from the product (for example, if customers use the product to achieve a particular goal, they may churn when they have achieved that goal)
- Prices increase beyond what customers are willing to pay
- The customer encounters a payment issue, such as their credit card being declined (also known as involuntary churn)
For those that serve the enterprise B2B market, the top reasons for churn are:
- A competitor offering a product that is a better fit
- A change to the renewal terms that don’t suit the customer (for example, increased prices or a change to the contract)
Other reasons for churn
There are many other reasons for churn that the Aria customers I interviewed have successfully avoided. Unclear pricing and unexpected charges are one such reason, as are subscription offerings that are difficult to manage. If customers struggle to make simple changes to their subscriptions, even just updating their address or billing details, or have issues accessing the account across multiple devices, they are likely to become frustrated.
For providers that have long since solved these issues and whose offerings are more mature, a lack of flexibility may be contributing to their churn rate. Increasingly, customers expect to be able to personalize their experience by selecting the services they value the most, rather than being tied-in to pre-defined bundles. They want to be able to make changes to these bundles at will, and they want to do it themselves, via self-serve capabilities, rather than having to contact a call center.
There are additional reasons for churn in the enterprise world. A difficult onboarding can result in a negative perception of the provider, as can problems with integrating the new service with the existing tech stack. Customers may find that they have overlapping services, or that they are paying for services they don’t use. They may also have limited insight into their usage. For customers managing multiple subscriptions with different billing cycles and renewal dates, it is understandable that the subscriptions that add the least value, are inflexible and cause the most friction will be the first to go when they rationalize their tech estate.
How subscription providers can minimize churn
The most effective way of minimizing churn is to ensure your subscriptions remain valuable to customers, even as their interests and requirements change. If it is possible to derive all the value from your service, extend the offer so that it can help customers to meet a new goal. At the very least, allow them to pause their subscription or move to a free version so that you can retain them for future upsell.
Price-conscious consumers may churn if the cost rises above a particular threshold, but reducing prices is rarely the only option. Offer a little extra with your price increase, such as a slightly higher capacity, or an additional service. Increasingly, and especially with younger consumers, offering more payment options can be an effective retention strategy. This includes accepting more payment methods, allowing customers to adjust their billing intervals, and offering more subscription models. Rather than only offering simple, flat-fee subscriptions, consider also offering consumption-based models, which enable users to pay only for what they use. These models give customers more visibility into the value of the product, while giving you the opportunity to proactively target those who under-utilize the service with a lower recurring fee, making it less likely that they will churn.
Learn more about the benefits of consumption-based subscriptions
Finally, ensure the subscription is easy to manage. Some customers still prefer to speak to a human in a call center, but the younger demographic prefers self-service. Cater to both, but with the latter, ensure your self-serve portal is intuitive so that users can achieve their desired goal with the least amount of effort.
From within your self-serve portal, customers should be able to make changes to their subscriptions – such as moving products in or out of a bundle – as and when they want. Make it obvious how much these changes will cost, and let users query their bill from within the bill.
Of course, this is easier said than done – providing users with the flexibility and personalization they expect is dependent on having a graceful technology ecosystem, underpinned by sophisticated billing capabilities. How Aria can help
The future of subscription management
According to Bango, 78% of consumers want an app that manages all of their subscriptions in one place, and 77% would like to pay for all of their subscription services via one monthly bill. There are already several apps available that can do the former, and it won’t be long until the latter becomes an option. Time will tell if this ability causes churn rates to increase (as it will be easier for customers to cancel their plans) or decrease (as subscription management will be less frustrating). However, one thing we can be sure of is that subscriptions that are perceived to offer little value will always be at risk of cancellation.