What do the following have in common?
Prime, Netflix, Bed,Bath &
Pueblo Traders, Gamestop,
The Coffee Club, Hoyts Rewards, QFF,
Plus, Sam’s Club, Uber,
and not to forget gym memberships.
They all provide some variation of a fee-based membership subscription (one-off or ongoing) for a set of exclusive benefits for members who pay to access or participate in the benefits provided.
Some are loyalty / rewards programs with subscription levels and some are pure paid membership programs.
The popularity of subscription-based models is rising and the benefits to business are clear:
- Revenue: Upfront and renewal revenue provide some predictive and sustained cash flow
- Reason to relate: Ongoing reason to communicate with subscribed members
- Retention cost: Retaining existing subscribed members tend to be at a lower cost than acquiring new members
- Referrals: New members generated from existing members who are enjoying the benefits
- Business intelligence incrementally improves: Member behaviour insights accrue based on activity and interaction with the benefits provided
However, hidden behind all these benefits to business is a silent challenge that their members are facing.
Subscription guilt is real
Subscription guilt is the feeling a subscriber has when they buy-in to a subscription program and don’t access or utilise enough of the benefits offered to meet or exceed what they pay. In other words – the value exchange is unbalanced.
For the first time in the ongoing customer loyalty and loyalty program research study – For Love or Money 2019, we explored the reality of ‘subscription guilt’ within loyalty programs.
The study reveals that 30% of members who participate in loyalty programs with a subscription have ‘felt guilty for not using or accessing enough of the benefits offered through that subscription’.
This increases for different generational cohorts, with 35% and 38% of Millennials and Generation X respectively indicating the feeling of ‘subscription guilt’.
Women aged between 18 and 45yo are even more lilkely to experience ‘subscription guilt’ with 46% indicating they have felt guilty for not using or accessing enough of the benefits offered through that subscription.
What’s the impact of ‘subscription guilt’?
For those brands and programs with any type of subscription offering, the insight into the hidden feeling of ‘subscription guilt’, provides an opportunity to be pro-active to reduce or remove the guilt-factor.
‘Subscription guilt’ – ignore it or be proactive?
Eventually members realise the value exchange is unbalanced and they will vote with a couple of clicks and cancel.
The approach of ‘set and forget’ or even ‘let sleeping dogs lie’ might seem in the best interests of the business (let the revenue come in). However, over the longer term more members will leave and never return.
A proactive approach should provide more opportunity to ‘rescue’ members over the longer term.
Do the numbers. Ignore and let members go. Be proactive and rescue a % of members from the total who would have cancelled with the following:
- Remind members of the benefits the subscription provides
- Use social proof to highlight how other members are benefitting
- Provide an option of a lower tier or reduced level of subscription
- Be upfront and suggest members cancel their subscription if they feel they are not benefiting and see if the act of offering to remove them actually motivates them to stay (FOMO kicks in). Conduct a test to prove this hypothesis.
Whether you choose to ignore the issue or be proactive, knowing that there are a % of members who experience ‘subscription guilt’ (up to 30% of them) provides you with the basis for a business case to take action or let these members fade away.
The choice is yours.
Have a happy loyalty day!