After 16,000 comments from the public on “subscription traps” – where consumers are misled into purchasing a subscription or the process to cancel is unclear – the U.S. FTC just announced its final rule that subscriptions need to be as easy to cancel as they are to sign up.
This means when consumers sign up for a new subscription, what they are paying for must be clear, and should they choose to cancel, businesses can no longer direct customers through agents or chatbot. if they purchased it online.
The new rule should go into effect in the next six months, but subscription businesses should already be thinking about how to make cancellation as seamless as possible. After all, Zuora’s Subscribed Institute recently found that 80% of U.S. consumers surveyed value subscription flexibility.
At Zuora, the importance of easy cancellations is nothing new, and a positive subscriber experience should go beyond the ability to cancel. Here’s how Zuora Founder & CEO Tien Tzuo thinks about it and why he says that Click to Cancel is no-brainer:
“Ultimately, the discourse around canceling subscriptions should be about fostering customer loyalty, not giving into fear. The primary focus should be on creating such a stellar product or service experience that customers want to stay. The businesses that see faster growth than their competitors start customer relationships by offering flexibility — in payment methods, service tiers, etc. They allow customers to adjust their arrangements as their needs evolve. And the prospect of canceling, which is inevitable, doesn’t have to be the end.”
How to address the Click-To-Cancel Rule
If the new FTC rule is top of mind for you, there are a few questions to consider as you map out your approach and adhere to it:
- What does your existing cancellation flow look like? Does it need modification?
- Is there any impact on prepaid amounts if a subscription is canceled mid-period?
- Which cancelation approach works best for your business model?
- Cancel immediately and refund unused prepaid amounts
- Cancel on next billing day, no refund
- Cancel upon contract completion
Additionally, it’s important to ensure your company’s churn recovery processes are compliant with the FTC mandate as well.
But you don’t have to figure all of this out alone. Here are some ways Zuora has helped subscription businesses give their end consumers flexibility to manage their subscription choices, self-serve – without relying heavily on engineering teams:
One-Click Cancel
Allow your end users to manage their subscriptions self-serve and cancel it as they desire with a low-code “My Account” customer portal and one-click cancel.
Upsell & Downsell opportunities
One of the most important aspects of delivering a great subscriber experience is to make it self-serve, drastically reducing the number of tickets your support team has to handle.
Using Zuora’s customer portal, you can enable a subscription change with relevant upsell and downsell opportunities for your customer – with maximum flexibility on the products, visuals and messaging you want to display in line with your branding guidelines and without developer involvement.
AI-powered winback offers
Even if a subscriber chooses to cancel, there’s a chance they’ll return at some point (36% of U.S. consumers surveyed say they have canceled and rejoined the same service within a year.) It’s smart to have a winback strategy that allows you to recapture those customers with a discount or special offer.
Zuora’s AI Paywall allows you to maximize your winback rates, and reduce churn by autonomously presenting the right offer and experiences to your churned customers at the right time in their user journey, based on their behaviors and preferences.
What’s Next?
Beyond the ease of meeting recent regulations with Click-to-Cancel, it’s important that businesses empower consumers with the right subscription offers based on how they want to purchase.
This requires thinking ahead and access to deep data, visibility and personalization at scale, along with low-code, best-in-breed technology that can support consumer demands today – rather than reactive, one-off custom development projects for each and every regulatory requirement or subscriber offer.
By presenting the right options, at the right time, to each consumer based on their needs, businesses can reduce churn, grow, and expand their subscriber base.
If you’re interested in learning more ways to help your consumers manage their subscriptions, reach out to a subscription expert today.