Subscription creep is a growing phenomenon impacting subscribers across the globe. It is up to ethical and forward-looking subscription businesses to arrest this trend before it gets out of hand.
Subscription creep is a relatively new term in the lexicon of the subscription industry. That’s because subscriptions becoming ubiquitous is a fairly recent phenomenon. Right from entertainment to fashion, and from gaming to even cars – there is now a subscription service out there for everyone.
And that’s what makes it a double-edged sword. While subscription services make life extremely easy for customers through auto-renewals and a superior customer experience compared with traditional businesses, customers can sometimes end up stretching their budgets to fuel their subscriptions without even realising it. It is only when they scan their credit card statements that the bill shock really hits them!
What is subscription creep?
Subscription creep refers to those recurring monthly fees for unused subscription services that can add up over time. These recurring charges may not seem much to begin with but modest increments every month lead to a lot of wasted subscription dollars. For instance, $30 may appear to be a small amount but just three similarly priced subscriptions can total more than $1,000 per year. Little wonder that most money management websites now have dedicated sections for customers to help them stem this phenomenon
Inertia is often a leading cause of subscription creep. Customers are not wired to actively manage their subscriptions which results in wasted expenditure towards these services (I have been guilty of this too!). Many people hold on to 2-3 entertainment subscriptions even when they do not do justice to each of them.
In fact, a report
last year highlighted the fact that American consumers vastly underestimate the amount they spend on subscription services. When people made an educated guess about their subscription spending, they arrived at an average of $111 per month. It turns out that they were actually spending more than double the amount, $237, on subscription services.
Another big reason is free trials. While these are great for testing out a service before buying, most customers provide their credit card details only to forget about the service in a few days. The free trial ends up becoming a recurring billing plan at the end of the trial and customers become unwitting subscribers. Mastercard recently rolled out new rules
that require subscription businesses dealing with physical goods to notify customers before billing them after a free trial.
And then of course there are the sneaky subscription tactics
employed by some new businesses. Apps like these have raked in as much as $14.3 million from unsuspecting consumers, using a mixture of misleading sales tactics, unclear terms and conditions and unethical billing practices to fleece customers.
Five ways for businesses to tackle subscription creep
While one may argue that it is for customers to ensure that they perform regular subscription audits and reassess their subscription budgets, we believe that subscription businesses also need to do their bit. With customers already struggling from subscription fatigue
, it doesn’t augur well for the industry when reports about subscription creep start making the headlines.
So, here’s what businesses need to do to stop subscription creep:
- Ditch deceptive subscription tactics – We have said it before, and we reiterate – deceptive subscription tactics are a breach of customer trust. Businesses employing such sneaky tactics are eventually found out by customers. Worse, they may also be setting themselves up for regulatory actions. Don’t abuse the trust subscribers place in your business. Successful subscription businesses have their eye on the long-term providing customers with a transparent and superior subscription experience.
- Free trials are good, but be transparent – Anything that enhances the subscription experience should be encouraged, but free trials are one of the leading causes of subscription creep. Businesses should self-regulate and ensure that they get subscriber approval before billing them at the end of a free trial. If a customer really loves your products/services, they will subscribe. If not, he/she wasn’t meant to be your customer in the first place!
- Use a robust recurring billing platform – A good recurring billing system not only helps you manage your subscriptions with ease, but also comes with built-in checks and balances that benefit the end consumer. They are compliant with legal and accounting standards and help offer detailed invoices to subscribers and much needed transparency.
- Use organic growth tactics – Good companies don’t rely on customer inertia to grow their business. Instead, they focus on adding value to consumers. Value can be offered in multiple ways – pricing, loyalty discounts or by throwing in an odd surprise. Keep it exciting for subscribers and your business will grow.
- Build relationships with subscribers – The best subscription businesses like Netflix have a loyal subscriber base. They have earned it after years of offering continuous value to their subscribers. Subscription creep is a classic example of a ‘failed’ relationship with subscribers. Focus on building a superior customer experience, especially around pricing, and they will gladly spend their subscription dollars on your business.