Episode 9 - Mastering the Cancel Journey

Welcome to the ninth episode of the Retention Blueprint. This newsletter promises to transform your retention impact in just 5 minutes per week, providing digestible retention content that adds value every time. This episode focuses on the subscriber cancellation journey. 

What drives the decision to cancel 

The decision to commence a cancellation is driven by a multitude of factors, some of which are outside the control of the brand because they are driven by factors relating to the individual subscriber's life. In some instances, the decision to cancel may evoke strong emotions if customers feel the brand has not kept its promise. However, it is often simply the case that the customer no longer feels that they need the subscription at this time, and while they may not think so at that present moment, the customer’s opinion can change once they have lost access to the service or, as their situation changes. 

Irrespective of the rationale, it is crucial to handle the cancel journey with caution to safeguard the likelihood of the customer returning in the future and to prevent any negative impact on overall growth due to the negative sentiment a very bad experience can create (and the associated impact this can have on past customers actively encouraging others not to take the service). 

Handling the cancellation journey carefully is extremely important because of the concept of primacy and recency. Irrespective of industry or brand, we have a tendency to recall our experiences at the start of a relationship and to recall our most recent experiences, while the bits in the middle are remembered less (based on extensive experimentation into memory by German psychologist Hermann Ebbinghaus).  

Two polar opposite approaches to cancellation management 

Despite the need to manage cancellation carefully, brands are doing themselves a disservice if they make the cancellation process too easy and do not offer content that encourages customers to re-evaluate their decisions. I did a teardown of the Netflix cancel journey on LinkedIn this week; see the post here. In Netflix’s case, the cancellation journey is 

• Too simple - 3 clicks

• The information architecture doesn’t clearly display alternative options in a way that encourages exploration 

• Lacks any genuine attempt to make the user ponder their decision or create loss aversion 

• Lacks any genuine attempts to save the customer 

Please refer to the LinkedIn post for screenshots of how they have got it wrong. Spotify adopts a similar approach, which is also sub-optimal from a customer retention perspective. 

On the other end of the scale, many telcos in various markets around the world poorly handle the cancellation process, being extremely obstructive, leading to customer frustration and negative sentiment.

Examples of bad practices include providing very limited information on how to cancel on digital platforms or forcing customers to wait for long periods to speak to call centre agents or chat with agents who can progress their cancellation request. 

Telcos are exceptional, though at implementing effective, highly targeted offer strategies based on customer lifetime value, and this is an area that is extremely effective for churn reduction, particularly if the offer is tied to a longer-term commitment. 

Overall, while being obstructive does reduce churn in the short term (because customers give up), when customers finally do cancel, it creates poor sentiment that results in negative word of mouth and a more firm reluctance to ever return. 

The Optimum Balance

Brands that do well in the cancellation journey

• Make customers ponder their decision e.g. by highlighting what the customer will miss or by outlining the value the customer has received since subscribing 

• Ensure it is not too easy, but not too hard - they allow customers to cancel digitally but with multiple steps 

• Offer alternative solutions e.g. freemium offer, the ability to pause the subscription or access to a lower tier plan in a clear, coherent way that allows customers to evaluate alternative options to stay 

• Provide an option of mutually beneficial value e.g. a discount on extended terms   

• Use non-final language e.g. using words like stop auto-renewal vs cancel  

Great cancellation journeys find a balance between avoiding any negative sentiment that might make the customer reluctant to return in the future and ensuring that the customer ponders their decision. 

Brands that do this well in this area are Amazon Prime and LinkedIn. Amazon Prime includes multiple steps, offers to stay, and highlights benefits lost and previous usage. Overall, they don't make it too easy while also allowing customers to cancel digitally. LinkedIn is similar; while the process to cancel a LinkedIn premium subscription is short  (3 steps), they offer alternative tiers, highlight benefits lost and follow up with short-term discounts (e.g. 1-2 months at a reduced price). While the Linkedin cancellation process is slightly simpler than Amazon's, Linkedin does a brilliant job of making customers ponder their decision. Both are examples of what I call fair friction, doing enough to prompt reconsideration without damaging the relationship long term. 

Final Thoughts

Mastering the cancellation journey is pivotal for subscription businesses aiming to balance customer retention with brand reputation. To reduce churn without harming future re-subscriptions or referrals, ensure you highlight the value lost, offer alternatives (including discounts on longer terms if appropriate), and create fair friction. Find the balance between ensuring the cancellation process is not too easy or too hard, and prompt reconsideration without being excessively obstructive. 

Following this approach will mean you can create a cancellation journey that not only retains more customers but also preserves the potential for future win-back and avoids any negative sentiment.