With Netflix announcing their decision to close the accounts of inactive customers, should other subscription businesses reconsider how they deal with “zombie accounts” who pay their fees but don’t engage with a service? Is the decision a strictly moral choice, or is there a financial benefit behind it too?
“You know that sinking feeling when you realise you signed up for something but haven’t used it in ages?”
This is how Netflix Director of Product Innovation, Eddy Wu, made the unusual declaration earlier this year that the streaming giant would proceed with closing the accounts of inactive subscribers
. Customers who hadn’t used the platform in 12 months were prompted (by notification or email) to reaffirm their subscriptions or face their account vanishing, although anyone who wished to sign up again within 10 months would find their account details and preferences retained.
Netflix stated that these inactive accounts represent less than 1% of its user base – nonetheless still hundreds of thousands of customers – but with the recent COVID-fuelled rise in subscribers
, losing these customers seems unlikely to put a dent in the company coffers.
This bold move by Netflix has called into question the issue of just what subscription businesses should do with “zombie accounts” – those who have stopped engaging with a service, but still pay for it on a recurring basis. Though customer retention is a hot topic, customers who are forking out every month for nothing material in return raises more ethical considerations about business practices, and how much time and effort should companies put into rekindling the relationship versus keeping schtum and collecting their dues.
According to a survey by Natwest, £25 billion a year
is spent in the UK alone on inactive subscriptions. Gym memberships are the most neglected services (naturally), with 12% going unused, whilst 10% of Brits are paying for one or more streaming services that are forgotten about. It turns out no service may be immune, with everything from insurance policies to subscription boxes eventually falling into disuse by customers.
Netflix’s decision flies in the face of industry convention, which seems to stress making signing up to services easy, while making opting out infinitely more difficult; The New York Times
is one of many businesses that still force subscribers to call up
in order to cancel their subscription, while members of US-based gym chain LA Fitness must print out a form, fill it in and mail it to head office
in order to escape.
But does making your service difficult to wriggle out of actually help you retain customers?
In 2014, a phone call between a Comcast customer service representative and tech journalist Ryan Block, as he tried to cancel his service, went viral, with the employee aggressively interrogating Block
for 18 minutes (eight of which were recorded) in an attempt to resuscitate the contract.
If not placing outright barriers in their way, many more companies make use of so-called “dark patterns
” to dissuade customers from taking undesired actions. These nefarious tactics
take many forms that you’ve no doubt encountered – from obscuring unsubscribe buttons to language alternating between chiding and persuading you to reconsider. The trammel net
method is one such (borrowing a fishing term), in which services welcome customers into a scheme with open arms, but purposefully hide the option to unsubscribe among multiple sub-menus and obscuring UI choices.
It should go without saying that a frustrated customer trapped in a subscription plan may look better on a balance sheet than a lost customer, but will incur a much greater cost to your company brand in the long term.
A strategy to re-sell your service to lapsed customers is required to coax them back into regular use; after all, it usually costs much less to retain a customer than it does to acquire a new one, and a customer who is already signed up to your service is easier to market to than a prospective one – they’ve already put money down. Some cadence of contact to remind them what they’re missing out on, or even just to remind them that your service exists can make a difference. Having a timely strategy in place is key though – you wouldn’t want inactive customers to assume you’re trying to fleece them before they get their first piece of correspondence reminding them that you exist.
Would the loss of revenue from zombie accounts have a noticeable impact on your business? It’s all very well and good for Netflix to so casually drop fewer than 1% of its subscribers, but other services might not be able to accept such a loss. What percentage of your customers do the zombie cohort represent?
This may lead you to even asking; is there anything to be gained by offloading these paying customers, even if they aren’t actively using your service? No matter how many reminder notifications and offers you send, a certain percentage of once active subscribers may never engage with your service again, and past a certain point, your energies would better be spent on your active customers.
The matter may ultimately be a moral one for companies to factor into their strategies and brand positioning; does your business want
to be known for charging customers for a service they don’t use? Making it as easy to leave your service as it is to join is crucial to maintaining cordial customer relations, and even former customers can be evangelists for your business, based on their experience, so burning bridges must be avoided at all costs. Having experienced a clean break from your service, the door will always remain open for former customers to come back into the fold.