Legislators across the globe are sharpening their focus on subscription commerce. As more and more customers get caught in “subscription traps”, governments are looking at ways to ensure they get a fair experience. This is a key concern for the UK government, who have ruffled some feathers at Disney with their plans for subscription reminders.
Disney pushes back against subscription reminder emails
Research by Citizens Advice in 2022 found that customers unknowingly spent a staggering £500 million on auto-renewing subscriptions in the previous year. They also found that 25% of people had signed up for a subscription “by accident” after forgetting to cancel a free trial. New legislation by the UK government aims to free customers from this particular subscription trap by giving notifications every six months to remind customers that they have an active subscription.
The idea is to allow the subscribers to decide whether to use the product or cancel the subscription entirely. However, while the government believes this would “ensure consumers get a fair deal”, Disney disagrees.
The House of Mouse’s main concern is that these new guidelines could harm their business, leading to pricing increases for its customers. In a submission to the Lords Communications and Digital Committee, Disney said: “The combination of the market imperatives, consumer preferences, our practice of providing timely and clear notice of the recurring fee and the ease of terminating the agreement should obviate the need for mandated renewal notices.”
Put simply, Disney believes the processes they already have in place address the concerns raised by the UK government and further action could be damaging.
The U.S. media giant went on to clarify that they already provide “timely and clear notice” of recurring fees when the customer takes out the subscription. This comes in the form of their two pricing options, which are currently £7.99 per month or £79.90 per year. They argue that because these pricing options come with clear notice of auto-renewal, that’s all a customer needs.
This obviously ignores the human behaviour of forgetting about things after a while, which, as the Citizen’s Advice research shows, is a significant income source for subscription-based products.
It’s understandable that Disney would be concerned about their bottom line with these new laws, especially as precedents are being set for similar laws across the globe. Reminder emails will allow subscribers to cut back on spending, which given the current economic climate, is something many can’t afford to turn down. However, subscription reminder emails aren’t their only point of contention.
The Digital Markets, Competition and Consumers Bill seeks to introduce a 14-day cooling-off period for digital subscription services. This law isn’t a new concept, with most contracts (including mobile, broadband, and energy) already bound by the same regulations. Disney is worried that expanding cooling-off periods into the digital subscription space will help customers “game the system”.
Disney+ has already removed its free trial option to avoid customers signing up, watching content, and cancelling before making a payment. The concern is that the cooling-off period would enable customers to return to this way of using Disney+, and the company has warned of price increases to combat any revenue loss.
Why subscription businesses should welcome regulation
While Disney is understandably concerned about the new regulations, subscribers are set to receive a much higher level of protection against insidious subscription commerce practices. By leaning into the new legislation, subscription businesses can provide a much better customer experience, leading to better customer satisfaction and more word-of-mouth marketing, leading to even more new subscribers.
Easy cancellation and subscription reminder emails should be common practice for any good subscription commerce business. This is especially true for upcoming renewals, pricing plan changes and so on.
Let’s quickly look at some ways to improve the subscriber experience and get ahead of upcoming regulations.
Best practices for great subscriber experience
- Let subscribers cancel easily online: There are already laws in some countries that require businesses to allow their subscribers to cancel online easily. They aim to stop predatory practices such as small, easy-to-miss links for cancellation compared to giant inviting buttons to keep your subscription. If you make your cancellation process as easy as signing up, you’ll be on the right track to customer satisfaction and keeping ahead of regulations.
- Ask for the reason they're cancelling: It’s always helpful to find out why your subscribers choose to cancel their subscriptions. Simply offering a list of cancellation reasons can help you understand why they’re leaving you. This insight then allows you to identify areas for improvement.
- Create custom cancellation flows and offers to give cancelling subscribers more options: Not every customer is cancelling because they’re unhappy with the product. Sometimes they’ll cancel due to financial issues. Sometimes they just realise they’re not using your subscription to its full potential. Offering a custom cancellation flow allows you to offer a more personalised product, whether a discount or a different plan with more suitable features for that customer. Just don’t make things too complicated, and ensure it’s always clear and easy to cancel.
- Give confirmation: If you don’t provide confirmation of cancellation, subscribers may worry that their subscription is still active. Not knowing where their subscription stands could lead subscribers to choose a competitor in the future.
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And if you’re struggling to keep up with new regulations or need a helping hand building a perfect cancellation and retention experience, Limio is here to help. Get in touch to learn how Limio can help you create the best subscriber experience quickly and easily.