Marketing Pulse Blog

3 Big Reasons Why Consumers Cancel Their Subscriptions

Written by
Zlata Faerman

Remember when “cord-cutting” was the biggest challenge to hit consumership? Through the first decade of the 2000s, so-called “cord-cutters” favored tailored over-the-top (OTT) services over traditional cable options. Sparking the original cancel culture of sorts, they made their choices known by unsubscribing from their cable services.

Traditional cable didn’t exactly fall by the wayside, though. Consumer demand shifted the industry, and media providers forged new paths. 

Subscriptions soon reigned supreme, way beyond media services. Birchbox, for example, set the retail world abuzz with luxe beauty and grooming samples delivered in a welcoming, sophisticated package. And, they were far from alone. Subscription businesses grew 300% from 2012 to 2018, about five times faster than S&P 500 companies. 

Subscription Saturation

Today, you can find a subscription for nearly any product category and interest vertical. Meal kits. Shoes. Fair-trade coffee. Leggings. Razors. If you can think of it, you can probably subscribe to it. 

But heavy is the head that wears the crown. Subscriptions are the new “mainstream,” but they face their own modern challenges. Customers’ fleeting attention spans and increasing expectations make loyalty a scarce commodity. Understanding some of the dynamics driving cancellations can help brands shape an experience that will foster long-lasting relationships and growth.  

Top 3 Reasons Why Customers Cancel Subscriptions

Here’s where subscription services miss the mark most for consumers. 

1. “Money”

In a recent survey, Nieman Lab, a unit of Harvard University’s Neiman Foundation for Journalism, set out to ask consumers directly: Why did you cancel your subscription? 

The study spoke to 500 participants, many of whom shared colorful anecdotes detailing their reasons for leaving. The focus of this study was specific to media cancellations, but the responses point to common themes in sales objections. Among them: 31% said “money” was the driving factor for leaving. But that doesn’t tell the whole story. 

In a separate survey by McKinsey on the same topic, McKinsey researchers also determined that money was the leading factor behind subscription cancellation. However, they labeled their option more specifically. It wasn’t simply cost, but rather “value for the price,” a key distinction. (Because it’s not really the money.) 

Most consumers who say they cancel subscriptions because of “money” don’t feel they’re getting a good deal. The Nieman Lab report did indicate some cancellations were because of hardships during the pandemic. But by and large, the “money” objection was not tied to the finite costs of the service but rather the lack of perceived value. 

2. Dissatisfied with the content, experience, or brand values.

In a crowded marketplace with lots of options, consumers will not stick around for less-than-stellar experiences. If the service or product fails to meet expectations or is in other ways inferior to competitive offerings, today’s consumers will not hesitate to leave a brand or switch to a competitor. 

A newer development in this same vein is the fact that many consumers — especially those in younger generations — tie their shopping and brand loyalty (or lack thereof) to their personal values. When brands fail to live up to these expectations, be it because of environmental concerns, political positions or other social responsibilities, the modern consumer is very willing to leave. 

3. The free trial ends.

For many platforms and brands, a free trial offer is an incredibly effective way to attract new users. It offers users an opportunity to use the product or service under the premise that they cancel for free within a window of time. Unfortunately, the honey pot isn’t always sweet enough to keep all the new recruits. Like clockwork, many users disappear at the end of the trial period, canceling their service before it technically even begins. 

Building a Better Subscription Offering

The good news is, all three of these reasons fall squarely within the user experience — meaning brands still have a great deal of control in shaping the outcomes. Here are three specific ways you can shape your experience to better meet the needs of today’s fickle shoppers. 

  1. Pair enticing sign-up discounts with tiered pricing options and excellent experiences. Discounts and other pricing benefits help drive new acquisitions and sign-ups, but price alone is not enough to keep customers. Build new experiences to keep customers engaged beyond the discount period. Vary the experience with new offerings, reminding them frequently of your brand’s value proposition. When it comes time to close the deal post-trial, offering tiered pricing can help customers compartmentalize this value, applying it to their own situations. As with any campaign, be sure to actively re-evaluate these initiatives and frequently gauge effectiveness. 
  2. Focus on the journey. To avoid high churn rates, pay close attention to your complete user journey. Like any brand experience, a subscription service should constantly delight users, sprinkling in positive interactions at every given touchpoint. Birchbox does it with monthly high-quality beauty products, luxurious packaging, and monthly home deliveries. Meal-kit providers like Hello Fresh do it with rich app experiences, high-quality ingredients, easy-to-use instructions, and replicable recipes. 
  3. Foster relationships. From surveys to written testimonials, take full advantage of any opportunity you have to engage with your end-user. Collect frequent data points from their user experience to help you understand how they are interacting with your brand at every level. Check in frequently, reminding customers of your value proposition throughout their free trial and once they become engaged users. Staying top of mind not only helps you build value in your brand and experience, but it also helps create a community of patrons and brand ambassadors. 

Ultimately, to build a high-performing subscription service, brands must focus on creating a high-performing brand experience. If you need help improving your brand experience, building a subscription model, or just re-evaluating your current marketing approach, the performance branding experts at WITHIN can help.

Featured image by Markus Winkler on Unsplash.

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Written by
Zlata Faerman

Zlata is a full-time publicist, part-time writer, and round-the-clock ambassador to wit and humor. As a publicist for over 15 years, she helps launch products with creative ideas and garner press coverage that drives reputation and sales. She also contributes to a variety of lifestyle publications in the areas of food, parenting, health, beauty, marketing, travel, and home. When she’s not crafting kitchen concoctions for her food blog @lifeandthymez, Zlata can be found spending time with her family, having #zlatathoughts, and fantasizing about being a Real Housewife of New Jersey.

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