Australia has a ‘Subscription Creep’ problem

Australia has a ‘Subscription Creep’ problem
Australian consumers are spending billions of dollars on unused subscription services, mirroring a growing trend across the globe. While subscription businesses aren’t necessarily complaining, subscription creep stands against the very ethos of the industry. 

Subscription creep – a phenomenon which refers to the recurring fees for unused subscription services that snowball over time – is a growing problem for subscribers across the globe. The ease of setting up recurring payments through credit cards, improved user experience across subscription apps and a general inertia around managing subscriptions have led to customers wasting money on unused or forgotten services.

Australia engulfed by subscription creep

Australia is one of the hottest centres for the subscription industry in the APAC region. Australians collectively have 56.7 million subscriptions with each person having 3 subscriptions costing on average about AU$40 per month. The most popular services include global subscription giants Netflix and Spotify, along with Australia’s own Foxtel and Stan. Australians spend AU$112 million per month on Netflix alone.

However, according to a new report, Australians are wasting a whopping AU$3.9 billion every year on unused subscription services. Three in five Aussies continue to pay for services or subscriptions they have forgotten about, while almost 50% have never cancelled unused subscriptions. It is estimated that up to 60% of Australian subscribers are paying for online services they no longer use or have never used.

The report says that recurring subscriptions can often be hard to detect in the bank or credit card statements making it difficult to assess the transaction and cancel it. In addition, many of these subscriptions are billed from other countries making it harder to pinpoint the service the customers are wasting their money on.

The responsibility also lies with subscription businesses

Sure, subscription businesses won’t mind billions of dollars in recurring revenue with subscriptions that are forgotten or unused by their customers. Some may even argue that it is the customer’s responsibility to be vigilant about his/her spend. However, they need to ask themselves a single question – Is this what a subscription experience is all about?

The subscription industry prides itself on delivering a customer experience that has been ignored by traditional businesses. Free trials, payment flexibility and tiered pricing plans have all contributed to customers embracing the subscription model. But when the same advantages become a trap for consumers, one starts to wonder whether subscription businesses are indeed different from legacy businesses that have been known to blindly chase revenues.

We have already highlighted the sneaky subscription tactics used by many services on the iOS App Store. These apps have resorted to tactics such as converting free trials to costly paid subscription plans in a short time or have simply made it harder to cancel subscriptions. The recent case involving US-based lingerie retailer Adore Me which deceptively enrolled buyers into subscription programs by default instead of them explicitly opting in is another example of a black hat subscription strategy.

In an environment where customers are already plagued by subscription fatigue, it is time to arrest the growing trend of subscription creep. The more customer-oriented businesses can reverse the trend by taking the first step and sending reminders to their dormant subscribers to begin using their service or even entice them with offers for them to continue using their service.

Subscription businesses, by way of a recurring billing arrangement, have a great opportunity to build relationships with their subscribers. They should ensure that they do not breach this customer trust. The future leaders of the subscription industry will be built on top of customer relationships and not short-term revenues!

Also read: Five ways for businesses to tackle subscription creep