As a global economic downturn looms, non-essential subscriptions could be on the chopping block for many households.
During Wednesday’s INMA Webinar, Paul Roberts, head of payments and billing for the subscription billing company Aptitude Software, joined Erica Katsambis, vice president/sales, partnerships and solutions at subscription management company Minna Technologies, to offer INMA members tips for reducing churn during these times of economic uncertainty.
Roberts started the conversation by pointing out that some of the challenges news publishers are facing now are annual events, such as the post-holiday time when people tend to reassess their subscriptions and cut back on spending. Other factors affecting churn include economic uncertainty and people making a conscious choice to turn off the stream of bad news — such as the war in Ukraine.
“Despite all of these things going on, one of the key drivers [shown] in the data is around quality and that the experience is still very important to customers out there in the market,” he said, likening the desired experience to the pet food subscription model: It provides recurring, consistent revenue for the company and centres around something the purchaser holds dear — their pet. And, importantly, there’s an element of personalisation.
“That’s a good example of where … if the consumer sees that as an important subscription in their life, they will continue to spend money on it and actually spend high amounts of money on those types of things,” he said. “And that’s where it’s important for you as publishers as well to make the most of that. How can you make sure that your content and the offering that you are giving to your customer base really is the quality and experience they’re driving for?”
Roberts added that this provides publishers with the opportunity to look for other ways they can broaden the consumers’ experience — perhaps through events, puzzles, games, etc. — to make the news consumption experience more personal and valuable to them.
There are many people who are trying to control costs but aren’t ready to cancel — and that provides another opportunity for publishers, Roberts said: “It’s important to look at that aspect and how you can work with that,” he said.
That could include allowing them to hit “pause” on their subscription and come back later so companies don’t lose them completely. “Then they’re willing to come back because they’ve got that flexibility when they’re ready. It’s always key to consider that within your lifecycle, within your channels.”
While looking at their direct channels, such as their Web site, apps, e-mail communications or texting, Roberts suggested looking at some of the indirect channels available and making sure they’re being used to their fullest. This could include an in-app store, an Apple or Google Play store, or banking apps.
“And. of course, it’s also important to consider the payment methods that are driving some of these because they all have different impacts on customers and their behaviours, and [you need to know] what you can do to optimise those things.”
Today, publishers are dealing with two types of churn: voluntary and involuntary.
- Voluntary churn occurs when customers make a conscious decision to cancel, either immediately or at the end of their current subscription period.
- Involuntary churn, Roberts said, “usually has something to do with the underlying payment mechanism underneath, whether that’s being that you’ve got insufficient funds in on your bank card, or your card has expired, or it’s some other decline or failure reason that’s causing that.”
Preventing voluntary churn
Voluntary churn requires a different approach because there’s a different mindset behind it. There are two ways to manage it—directly and indirectly — and the type of customer will determine which method is best suited for that situation.
When it comes to managing voluntary churn directly, news publishers can use several tactics that could help change the customer’s mind. For example, exit surveys can be useful in identifying where customers’ needs are not being met and can also help news media companies shape an offer that might attract them back.
Fixing involuntary churn
News publishers should look at how payment is being declined to determine the next steps, he said. A payment declined due to insufficient funds isn’t always a permanent decline, whilst an expired or blocked card is less likely to be successful. Since all involuntary churn is not created equal, it’s important to have different mechanisms in place to deal with different reasons for involuntary churn.
“And then around customer engagement, it’s all about utilising your self-care messaging, e-mail communications, and also making sure that you are tailoring those messages depending upon the circumstances,” Roberts said. “For insufficient funds, the messaging to your customer would be different than it would be if their card had expired. You want them to take action to replace their expired card; insufficient funds is slightly different.”
A final step in managing involuntary churn is around optimising the processing function, Roberts said: “This is a combination of knowledge, experience, and utilising the right partners,” he said.
“It’s making sure you’re using your right merchant category code for your service if you’ve got card processing, analysing the declines that you’re getting within the marketplace and making sure you’re not getting false declines, making sure transactions are flagged correctly, and that you understand those decline reasons so you know how to react to them and what to do next.”
All these things, he said, are important in ensuring renewals are optimised and payment rates “are as high as possible in terms of acceptance.”
When it comes to indirectly preventing involuntary churn, there are two key methods, Katsambis said: app stores and banking apps.
While app stores like Google Play and Apple are elevating their subscription management capabilities, such as having clearer cancel and resubscribe buttons and introducing “pause” offers, they still lag behind subscription billing platform providers like Aptitude, which specialises in subscription businesses.
Bank apps have become an active player in cancellations, with one in five consumers cancelling that way. In markets like the United Kingdom and United States, when a cancellation request is made, a block is placed on that bank card.
“So it’s not actually a true cancellation, and those blocks are on average about 13 months long, which is a very long time period when you think about how we use subscription management today,” Katsambis said.
To work around that, Minna developed a block solution and is working with Aptitude to deploy it. The industries most affected by it are publishing, streaming, and gaming, she said.
As consumer behaviour changes, more users want to be able to better manage their subscriptions. Among those who cancel, Katsambis said 25% want to return to their subscription, and 80% of that group want to do so in as little as three months.