Subscription services grew in popularity during the past two years as consumers looked to expand their entertainment options. Because so many subscriptions payments are recurring and automated, declined payments are a frequent problem. Subscribers who have had declined payments tend to become more dissatisfied with the experience, but there are steps subscription providers can take to limit some of the erosion to their customer base that may occur.
In Optimizing Subscription Payments: How Providers Can Take The Sting Out Of Payment Declines, a collaboration with FlexPay, PYMNTS examines the types of subscriptions that have fueled the market’s growth and the payment methods that are used to pay for subscription services. The report evaluates the steps subscription providers take when subscriber payments declines occur and how the disruption and the providers’ response to it affects their subscriber base. We surveyed 2,195 consumers in the United States from July 8 through July 16 to measure their use of subscription services and their views about how subscription providers manage the payments process, particularly when there is a problem with the payment.
PYMNTS’ research finds that consumers tend to be satisfied with the services they subscribe to, but part of that satisfaction depends upon a seamless payment process. Twenty-seven percent of the consumers subscribed to a broad range of services said they experienced declined payment for a subscription within the past year, and more than one-quarter of those customers terminated their subscriptions or switched services.
PYMNTS’ research indicates that subscription providers have key opportunities to keep their relationships with customers strong, even in the face of declined payments. Of subscribers who suffered from payment declines and payment-related issues within the past 18 months who say these issues improved, 73% report being highly satisfied with their subscriptions.
The subscriber’s decision to continue with or terminate the account depends upon how the subscription provider notifies them. This finding suggests that there is an opportunity for subscription providers to reduce customer churn by alerting customers when there is a declined payment. Subscription providers appear to cause the least disruption to their subscriber base when they simply require subscribers to update their payment information. Most of the time, subscribers will respond with the update and continue with the service, although a portion of them will abandon the subscription.
To learn more about how declined electronic payments can erode subscription providers’ customer bases and how they can take action to prevent this, download the report.