Subscription Cancellation Policies:  Why Ethical Offboarding Beats Retention Badgering

The subscription cancellation policies service businesses use to off-board their clientele should be part of their customer retention strategy, but without resorting to annoying, or dark tactics to keep enrollment numbers up. 

And yet, we find too often that companies are badgering their exiting patrons when they request to stop service, rather than using the “quit” opportunity to create a positive final-interaction that benefits the brand.

A recent episode of John Oliver’s Last Week Tonight featured a segment on Subscriptions, and it put this industry’s cancellation processes on blast…and in the best possible way! 

Businesses that bill for ongoing services as a subscription may have different pitfalls that lead to customer frustration at the exit than goods that are offered as a recurring model. And yet, the presence of manipulative and deceptive practices still shows up all too often throughout any billing model that relies on a base of ongoing clientele.

In true John Oliver fashion, his story has brought the ethics around how to off-board customers into discussion. As providers, we are called to raise the standard for how we do business all around. 

Why some subscription businesses resort to dark tactics to amplify customer retention

There is a clear internal struggle organizations running on recurring revenue models face between reducing churn and keeping their existing customer base enrolled as long as possible.  And trust – the struggle is real.

As a business owner who ran a subscription service for many years, I know first-hand why business owners are tempted to do anything to keep their enrollment numbers stable, because I’ve felt that pain.  For a time in my life, the number of ongoing customers I had at any point was literally a survival metric, because it determined how much income I had to live on as a solo entrepreneur. 

Move that same type of scenario to the enterprise level where you have a staff of people working for your company that want to keep their jobs and grow within the organization, and the survival feeling behind keeping your subscriber numbers trending upwards remains the same.

There is a big ‘however’, though –

The goal of growing a service business should not interfere with the transparency and ease of termination customers experience when they would like to stop. 

In fact, for services (especially), effective offboarding should lead to increased brand loyalty, even after the engagement ends. 

The good news is that there is a way to serve both customer retention efforts and optimal customer service at the same time.  In our article, we outline the common mistakes ongoing service providers make with their offboarding procedures and why this step in the relationship is so important.  We also share 4 best practices for ongoing service terminations that gives owners valuable insights to curb further attrition ethically.

Poor customer off-boarding – when subscription cancellation goes wrong

As an owner, manager, or solo-practitioner of an ongoing service business, you know the cortisol rush that happens when you have a wave of cancellation requests come through that breaks normal trends. 

This attrition can send you into a panic, or a mental rebalancing of your business – at least, that is what a “deluge of quits” (as I called it) would do to me.

“How will I make up this dip in numbers?”

“How many sign-ups will I need to get back the same amount of clients I just lost?”

And on and on the rumination spiral goes. 

This scenario is the churn-related stress of running any type of recurring revenue model business, which very much includes ongoing services. 

Even with the best of services, though, there will come a time in any customer’s journey where they will need to end their engagement and be off-boarded by you, or a member of your team. 

Some businesses do a great job start to finish with the entire engagement, but blow it at the very end with this step.  They fail to manage the service-disengagement in a constructive and ethical way due to their over-eagerness to reduce churn and preserve client retention metrics. 

Customer retention tactics that hurt your brand

A poor off-boarding experience for a customer can be summarized as a process that is overly difficult, or even deceptive, when they are trying to terminate service.  This experience leaves them with a negative perception of either the company, or how the company perceives their value.

John Oliver describes a number of abusive-practice examples employed by subscription businesses that are on the more extreme end with manipulating customers.  His segment includes all realms of the subscription industry, not just professional and personal services. 

Ongoing service businesses are not immune to using some of the same dark tactics he described – whether intentionally, or unintentionally – but the specific strategies will vary between providers of goods on a recurring basis versus a service that fills an ongoing need. 

Service industries are most tempted to apply pushy, or manipulative practices in areas where they believe they can slow, or reduce subscription churn over having a customer forget the subscription is in progress.

For example, some common faux pas services make that lead to a poor final-customer-experience include…

• Badgering an outgoing customer for opportunities to remain enrolled to an excessive degree – sometimes through discounts, promotions, or other offers; not accepting the ‘no’

• Lazy, or slow processing of exit requests to force continued billing (or due to indifference)

• Excessively difficult, or complicated steps needed to terminate service

• ‘How to cancel service’ is not shared with customers transparently and they are unaware of how to find this process

• Service providers and administrators ‘forget’ to pass on cancellation requests internally, preventing a stop to billing

• Long notice periods needed to cancel service, or locked in terms of service that are excessive and non-refundable

• Cancellation-process automation prevents the customer from reaching a human representative when ending their subscription

These exit processes are not all nefarious, but they are consistently insensitive to the client.  No matter a business’s motivation, each faux pas can lead to frustration from your patrons. 

However, there is another common-mistake that falls on the opposite side of the spectrum from the off-boarding boo-boos above.

Some organizations do not gather information about why their customers are stopping at all.  They simply stop their service and do not engage further before completely terminating.

This omission may even come from a good place of not wanting to badger a client into staying enrolled, but it still leaves a bad impression and feeling of devaluation with those who have supported your business.

Whether a company is doing way too much, or too little, with their clients’ off-boarding process, the central need for an ethical and effective system to reduce churn without annoying customers remains constant. 

How a cancellation experience and brand loyalty intertwine

The last experience a customer has with your service before disengaging is the most recent memory they will have of your ‘product’.  Leaving them with a bad experience is a lasting impression that will hurt your brand image, as well as the potential for future business that could come from that individual.

Service businesses often have seasonal, or repeat clients, as well as referral networks that can build your customer roster.  By making the exit process negative, that individual is less likely to recommend you to their friends and family, and they may not want to work with you personally again. 

Even greater than a former client’s individual network and their patronage, you never know the depth of one person’s sphere of influence and who listens to them.  Poor opinions of your brand that become associated with your company’s reputation can be hard to repair. 

Once a service is failing with its clientele, an internal ripple effect – greater than revenue loss – will start to creep in too:  staff attrition.  When your organization’s mission is failing, the providers of the service who give life to your brand are less inclined to believe in the work. 

When your team is experiencing these negative effects, staff turn-over becomes inevitable.  Your internal team needs to feel value in what they do, and brands with a negative image do not attract the best and brightest.

“How do I create a good customer offboarding experience?”

To create an exit process that bolsters customer retention and serves your brand mission, the best strategy is to take a proactive approach.  Have a defined system that prioritizes the ease of cancellation for the customer when they are ready to conclude. 

Every interaction you have outside of your organization – and every client-process – has a brand-level impact and shows the world “who you are”.

There is no quicker reputation-slayer than being known as the service that makes stopping when you are ready difficult.

Ethical customer retention strategies

This system for exiting customers is an example of a positive retention strategy that builds a brand’s image, rather than detracts. 

As you create systems for offboarding clients, the goal should be uncovering how to reduce customer churn ethically as the highest priority.  When you lead with doing what is best for your clientele, you cannot go wrong as a service, and this type of support aligns with the purpose of your engagement – to help with a need they had.

As customer who is exiting also needs to feel supported as they head into the future.  You have an opportunity as they disengage to convey a sense of care by following a few best practices that prioritize the relationship over metrics.

Indeed – putting care and attention into the offboarding process can actually build your business and contribute to growth.

4 Subscription Cancellation Policy Best Practices for Service Businesses

Our 4 strategies for positive customer offboarding are intended to repair frustrating cancellations systems for ongoing service providers. 

Though some concerning tactics companies employ for processing cancellations are intended to help with customer retention, these badgering strategies are actually hurting your brand.

After implementing the best practices we outline here, you will notice an increased synergy with your exiting customers and a positive change in your retention metrics.

Best Practice #1:  How to collect cancellation feedback

When a subscriber reaches out to cancel their ongoing service, learning what led to their decision to cancel does not feel like badgering by itself.  Why they are terminating is important information for you to know as an owner, or executive.

The key is to avoid a delay to processing their request as you wait for their feedback.  Provide the steps to exit to the client upon request, and process any immediate actions that can be completed while requesting more details.

Asking the questions about what the organization could do to improve their experience, or “would you like to try another provider with our company?” are logical and part of good customer service. 

On the customer end, being asked how they felt about your work feels appropriate – and almost expected – even if they do not want to answer.

It is when an administrator is continuing to offer alternatives, or pushing for answers when a customer is not engaging in the dialogue that it becomes an annoying experience.  This is why it is so important to not delay the processing of a request to cancel if this action has been clearly requested. 

In many cases, I would have a terse first-request from parents of music students who wanted to cancel to end their service.  But when I answered back with confirmation of their request and asking for feedback, I would often get a much more positive response back.

Most of the time, their feedback expressed great satisfaction with the lessons experience.  But when a concern came up, we had the opportunity to lend support in that moment and truly receive their feedback from a place of interest on our end – not as a ploy to hold out the cancellation action on our side. 

Best Practice #2:  Present ways for the customer to stay 

Always offer options to continue the service, but do not apply pressure to stay.  in my experience, I found that families of music students wanting to unenroll had a 15-20% chance to reschedule with another instructor if I put NO pressure on the option to stay, but presented alternative teachers and schedules if they wanted to do so.

Remember that your customers who are canceling may not be forth-coming with the reason, and with services, a number of logistical elements could be coming into play.  It could be the client’s schedule that will not allow the service to continue, budget, or other factors.  Get to know why your customers are stopping and provide solutions – if they want them.

I found giving an “option 1 – stop and proceed with cancellation immediately” and an “option 2 – continue with a change that is detailed” led to customers feeling fully served as they exited and that they were aware of all paths forward.

Best Practice #3:  Promote transparency and ease with cancellations 

Be transparent and forth-right with your cancellation policy.  This is an obvious suggestion, but one worth mentioning! 

Make sure your customers know how to cancel and can find this information easily on your site, app, or in their client literature.  Also, your customers should not be locked into an excessively long notice period, or term, they cannot cancel without facing a dramatic penalty. 

For example – if you provide a weekly service, requiring more than a month-to-month contract period is excessive.

Companies that care about making profit off the (sometimes short) amount of extra time these strategies buy them are those that have poor customer retention rates overall.

Through these “subscription extending practices”, businesses are sacrificing relationships that lead to sustained income for a small, short-term gain.  This is both deceptive AND not profitable.  Don’t do this.

Best Practice #4:  Refine your operations and systems based on customer feedback 

The information and reviews of your service received directly from clients as they are offboarding are the most valuable insights for your future success.

Wise business owners know that addressing feedback with their teams (that is within reason) will make their service stronger and a better offering for their base.  These owners take the negatives and work towards corrections so they are presenting the best product, as well as learning constantly. 

Last music school example, I promise!  With the feedback we received from parents about lessons as th ey were exiting, we implemented internal systems for the negative comments, or areas we could improve when they came up.

As a first step, we would always follow up with the teacher to gather their perspective so we understood the full relationship and concern being described. 

If we found it was actionable information and a change needed to be made within our processes as a school, or for the teacher providing the service, we would log this information in the family and teacher’s notes (for future reference).  If the solution was related to an individual teacher, we would schedule a follow up call, or meeting to workshop the concern.

Though this 360 solution for managing a cancellation took time up front, the time saved in the long-run was well-worth the investment.  Over time, our systems were very streamlined, and many routine upsets were mitigated proactively. 

This process left our customers with a fantastic service that both they – and our teaching team – benefited from mutually.

How to process customer cancellations ethically – in conclusion

Processing customer cancellations should be an easy experience for the outgoing client that leaves them feeling supported and valued.  They should NOT feel that they are unimportant to your organization now that they are not paying you – nor should they feel deceived, or that they are not allowed to stop when they are ready.

As service providers, we use ongoing billing and subscription models frequently to make accounting easy for recurring services, or to ensure all our clientele can be covered by our staff, or capacity.  Within this, though, we are not immune to the concerns around subscription churn that lead to poor decisions for customers in exchange for securing our company’s income base. 

As leaders and service providers, we are called to operate by a higher standard for our organizations and our communities. 

There is a positive benefit to customer-first cancellation practices for our businesses too:  we have the ability to build an impactful and sustainable revenue stream by being the best at caring for our customers.   Isn’t that how everyone wins?

Are you running an ongoing service business and facing the struggles of subscriber churn, or low customer retention?  Get advice, strategy, and guidance on the systems that have the biggest impact on your business day to day. 

Book a discovery call with AstroCat to learn how we can help!