What Should You Do When a Customer Wants to Cancel Their Subscription?

New data from Simplr shows that customers are more satisfied and more likely to re-subscribe if their cancellation request is handled without explanation.

This article is part of Simplr’s CX Data Science Lab, where we leverage analytics and data science from within the Simplr platform to uncover best practices and trends in customer service interactions.

It’s the customer support message no one likes to see: “please cancel my subscription.”

For subscription business leaders, there’s a natural instinct to salvage every failing customer relationship. Who can blame them? Customer acquisition costs, subscriber churn rates, and customer loyalty – these are all things that have a dramatic impact on revenue. A cancellation request certainly causes concern, but is attempting to save the customer riskier than actually just letting them go? 

At Simplr, our data science team reviews tens of thousands of customer service tickets on behalf of our subscription brand partners. In this article, I’d like to share what we’ve learned about how consumers actually want brands to process cancellations and why it doesn’t mean the relationship is over!

What We Learned About Cancelation Requests

We often see cancellation processes driven by emotion or misguided logic: If a customer wants to stop spending money, we must pull out all the stops to change their mind.  

Luckily, as always, data science gives us a clear, unbiased picture of the situation and the best way forward.   

Here’s what we found on behalf of one of our subscription partners:

1. The less you say, the happier the customer is.  We saw a direct correlation between high Customer Satisfaction Scores (CSAT) and simple, no-explanation-provided cancellations. 

2. Customers are more likely to re-subscribe when their cancellation is processed without explanation.  We found that 15 out of 1240 customers are more likely to re-subscribe if their cancellation is processed without explanation. The number may seem small, but think of the lifetime impact of having these resubscriptions!

Our findings are consistent with best practices associated with other aspects of CX: make it easy for the customer! 

3. There are different intentions behind the “Why am I being charged?” inquiry.  One thing we noticed in this exercise is that customers who write in “why am I being charged?” are coming from two camps: customers who are on the lookout for fraud, and customers who want to cancel.  While the majority of customers do show intent to cancel their subscription after the initial “Why was I charged” question, the actual subscription retention rates are MUCH higher when we give them an explanation without canceling, and give them the opportunity to cancel after they have all the information.

The Data Science Team’s 3 Best Practices for Creating a Cancellation Strategy at Your Subscription Business

The only thing worse than a customer wanting to cancel is a customer who wants to cancel and…  can’t. Remember that customer frustration and neglect have far worse long-term consequences for your business than one simple cancellation.

With that in mind, here are our recommendations for creating an effective cancelation strategy:

1. Make it easy for your customer… always! Customer Effort Score is one of the most compelling chatbot and customer service metrics that we measure here at Simplr. There is a lot of correlation between customer satisfaction scores, customer effort scores, value enhancement scores, and repurchase rates. By making the cancellation process as easy as possible (i.e. no restrictions, no explanations, no convoluted 10-step mazes on your website), you’re more likely to leave a positive lasting impression that could earn you a return customer in the long term. 

2. Never underestimate the impact of customer frustration. Some companies purposefully try to make the process difficult because they’re operating under the assumption that cancellation is the last stop for the customer. These tactics end up making the customer feel frustrated and angry towards your brand and may be inspired to tell others about their negative experience. The economic impact of a bad customer experience has the potential to make a bigger dent in your revenue than one simple cancellation.
   
3. Do the work behind the scenes. Your business should be working to reduce the number of customer cancellations…. Just don’t do it on your customers’ time. Business decisions should be made based on internal metrics and trends.  

As consumers, we see it all the time: companies pressing the customer for feedback, offering dramatic discounts, or, worst of all, making it nearly impossible for the customer to actually process the cancellation. 

Data science is incredibly beneficial for understanding customer behavior, customer support trends, and how best CX strategies can impact revenue.
If you are interested in fully-managed outsourced customer support, talk to Simplr today!