Consumers are Rethinking Their Relationship to Subscriptions

⇨ Ever-changing customer behavior and interests and market conditions make cancellations a reality. Know and be prepared for what’s forthcoming through intelligent analytics (predictive, machine learning-based).

⇨ Subscription changes should be easy for the customer, and highly automated for you.

⇨ Think about avoiding most of the process to begin with by relying on opt-in/out options.

Subscriptions

Per The Wall Street Journal article published on April 12, 2023, consumers are rethinking their relationship to subscriptions, even more so now that that budgets are getting a lot tighter than in 2022.

That means subscriptions are being renegotiated, altered, combined, and eventually canceled.

• Does your subscription billing software allow that to be done easily and efficiently?
• Are there analytics to predict likely changes? Can your financials adjust accordingly?
• Are there automation options to optimize the cancellation?
• Can you even design an opt-in (automatic opt-out) process to streamline changes?

According to a Credit Karma survey referenced in the article, about a third of respondents said their biggest financial mistake last year was paying for services they never used.

Anticipating Changes or Cancellations

Changes and cancellations are certainly something that can be made transparent via analytics. They should be brought forward for decision-making and supported with some additional predictive data—is the customer really going to leave? Can we still do something about it? Or, in the worst case, are they leaving with high certainty? This should then also be reflected in your forward-looking financials, right?

The Cancellation Process

What about the cancellation process itself? For the customers, it should be easy. In the end, it is bad customer service not to be an easy company to work with—even for departing customers, as they might become back one day. And just because not every customer will leave, this does not mean the process should not be optimized and automated for those that will stay. Are your cancellation processes easy for you? For the customer? Is it automated?

Smart Cancellations and Renewals

A simpler breakup or renewal might be a selective opt-in (automatic opt-out if not renewed). Should you change the process in its entirety? Why does the customer have to initiate it and go with you through the various back-and-fourths of a cancellation? If you can opt out, why can’t you opt in? Would it not be a good idea to streamline the process?

Conclusion

Changes (alterations, cancellations, consolidation, renewals at different terms, and cancellations) to customer contracts are a reality in the subscription economy.

Due to COVID-19, we got an accelerated jumpstart in the mass adoption of subscriptions. Now, with the initial hype gone and the reality hitting, people are reviewing their spending, even more so in a time of high inflation and economic adjustments.

It is best to be prepared and smart about how to run your processes. Subscription billing is not going away; it will grow and become even more prevalent. However, your maturity level dealing with it and executing the related customer-facing and internal process will make the difference between you making money or losing it.

Stay tuned for an in-depth conversation with Heidi Zhao, Global Solution Manager for the SAP BRIM product, to get her take on the changes in the subscription economy and consumption patterns, and how the SAP product already provides corresponding capabilities to stay ahead.