Is your cancellation experience putting your business at risk?3 min readReading Time: 2 minutes
In the early days of building digital businesses, designers turned to some unpleasant tactics to drive revenue and improve retention. Thankfully, the governing bodies that protect customers from nefarious practices have closed in, with legal restrictions and landmark court cases. In the past 2 years their focus has shifted to subscription companies and in particular their customer cancellation experiences.
In 2020 children’s online learning platform ABCmouse was ordered to pay $10 million in fines and legal fees for “misleading consumers”. The FTC alleges ABCmouse failed to provide customers with a simple way to stop their subscription, despite promising “Easy Cancellation” at sign up.
“ABCmouse didn’t clearly tell parents that their subscriptions would renew automatically, and then the company made it very difficult for them to cancel,”Andrew Smith, Director of the FTC’s Bureau of Consumer Protection.
It’s not just SaaS businesses that have come under close scrutiny. Content subscription companies are also under the spotlight. Sky TV was issued with multiple warnings and is currently locked in a dispute with regulation body Ofcom regarding their lack of a clear and fair cancellation process.
Without a carefully considered cancellation experience your business is not just at risk of reputational damages by upsetting customers, but it’s also at risk of financial damages from cracking down on ‘dark patterns’ and poor customer services.
How to avoid the legal risks of a poor customer cancellation experience
In order to reduce the risk of legal action and improve your customer experience you can follow these steps.
- Remove manual steps If your customers are able to start their subscription online without any intervention from your team, then their exit should be equally automated. Making customers follow manual steps (ie. emailing or calling your team) can add a disproportionate level of friction for your cancellation flow.
- Automate your cancellation processing If your team are manually processing cancellations through your payment systems, the risk of human error is significantly greater, opening you up to greater risk of legal action. By using a cancellation system like Upzelo you can reduce risk and operational overhead.
- Don’t try to ‘confirm shame’ users to into staying Using persuasive or compelling language and offers is an effective way to reduce customer churn, however resorting to bullying tactics will increase the risk to your business. The term confirmshaming was coined to describe the act of guilting the user into opting into something. For example labelling a button “No thanks, I hate saving money”.
- Target offers appropriately Making customers offers to stay subscribed can be a highly effective tactic to reduce churn, however this not always appropriate to customers circumstances and should be applied in a targeted way. For example a customer cancelling their pet food subscription due to their pet passing away may not respond positively to a 10% discount.
How Upzelo can help
We have built Upzelo around the belief that there is a smarter way to build cancellation experience. By using customer data and no-code editors you can not only create beautiful cancellation flows but save more of your customers.