Subscribers Don’t Have Control Over Their Subscriptions. Or Do They?

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Subscription POV #26

By Morten Suhr Hansen

At the beginning of April, the Competition and Consumer Board presented the news that many Danes don’t have control over their subscriptions. The dramatic news that was shared by a wide array of Danish news media, builds on two surveys that paint a picture that consumers have a hard time keeping track of their subscriptions and therefore, end up paying for subscriptions that they don’t use.

All in all two very interesting surveys that the Board should be commended on, however, the conclusion seems to be presented a bit sharply, if you ask me. I will get back to why, but first, let’s have a look at the surveys since they both contain some interesting perspectives.

The natural experiment shows that more subscribers churn when they are asked to review the subscription

The first survey is a natural experiment. Here, the Competition and Consumer Board has gained access to the data of a card provider that handles automatic card payments for different subscription services. Payments from a total of 117.000 subscribers made within the period of 2015 to 2018 have been examined to check if there is more churn in cases, where a withdrawal was not possible and where the subscriber, therefore, needs to update their card information. Unsurprisingly, the survey finds that in the month when the consumer needs to update card information, the probability of cancellation is raised by 70%.

Københavns havn

This means that subscribers use this natural occasion to evaluate whether it is a subscription that should be continued. It’s a problem and risk that most subscription companies are aware of and in my book, it is too easy to conclude that it is because consumers don’t keep track of their subscriptions. More likely, it’s a symptom of consumers evaluating a purchase, when they get the chance. You can still be happy about a subscription that you used to have and at the same time, have doubts about the continued value it delivers.

The weakness of this survey is, simultaneously, that you analyze data that is 4-7 years old, and even though 117.000 subscribers sound like a lot, it is just one-fifth of the collected number of subscribers of TV2 PLAY or a fraction of the number of subscriptions that Danish households have in total.

When asked directly, most subscribers have a good overview of their subscriptions

Most likely, the Competition Board is aware of the weakness, so they’ve chosen to back up the initial survey with a questionnaire, asking 1200 Danes about their attitude to subscriptions. Surprisingly, a quite different picture appears. This survey shows that 22% of respondents have experienced paying for a subscription that they didn’t use or that they didn’t get enough value out of. This means that 78% of subscribers don’t have that experience and we must remember that Danish households, in general, have around 17 subscriptions.

People biking over bridge in Copenhagen

This leads me to the completely opposite conclusion: Danes actually have a really good understanding of their subscriptions and if they don’t deliver value, they are canceled quickly. This also matches the picture that we see in our customers. The Danes have become talented subscription buyers and the challenge to retain customers as a subscription business has never been larger.

It all points to a misleading conclusion about subscriptions

It’s natural that the Consumer & Competition Board chases the consumer angle on the growing subscription economy, but the great challenge is that the sharp angle makes the institution draw a misleading conclusion, in my opinion. The main point becomes that because consumers aren’t actively asked to evaluate their subscriptions and because some consumers fail to keep track of their subscriptions, it means that subscription companies generally charge too high prices and that they don’t need to develop and innovate in the same way as non-subscription companies.

I do not reach the same conclusion and nothing could be further from the reality of the subscription world that I am part of every day. It might have been true for the old ‘Subscription 1.0’ companies that stuck with their binding periods, bad service, and high prices. Primarily because customers had nowhere else to go. But in 2022, where we are now (not in 2015-2018), the competition for subscribers is tough. This is what we see in our subscription customers and it is what we tell companies that want to move into the subscription model: If you cannot deliver a razor-sharp product at an attractive price and constantly keep innovation, you have no chance of succeeding.

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