Your Cancellation Process is Hurting Your Business

Companies who depend on monthly or annual subscriptions need to understand they should have their cancellation process be as simple, easy, and clear as their sign up process. I have dealt with many companies who make the sign up process simple but, for the lack of a better word, screw you over when you go to cancel. When you talk to their billing, they hide behind a cancellation clause posted somewhere that is written in a gobbledygook legal language.

One example, I recently had a trial account for a online community building software with ning.com that ended up charging my credit card $600 after the trial ended. I ended up calling and emailing their billing department before I got it refunded.  They still left a bad taste in my mouth even because I had to jump through hoops to get it taken care of.

Another example is the national workout facility, Gold’s Gym. I honestly don’t understand why people still sign new member contracts with them. I have had several, and I mean several, friends who had horrible experiences with the billing aspect of their gym membership.

But enough with examples, here are three reasons to why you should make your cancelation process as simple, easy, and quick as your sign up process:

 1. Branding experience

I have heard horror story after horror story of billing issues. I have had coworkers and friends who have all been victims of this problem. Since I have listened to so many negative experiences, I would never get a membership at Gold’s Gym. It doesn’t matter what price or offer they advertise, I don’t trust them to be open and upfront about what is going to happen over the lifetime of my membership.

2. Open your eyes

The reason why people cancel a subscription is because they don’t find value in it anymore. Businesses with a high turn over rate (i.e. cellphones, gyms, or cable/internet provider) need to focus on why people want to cancel their contract. Their service or product obviously isn’t meeting expectations.

3. Short term customer VS Loyal Customer

Most contract or subscription based companies focus heavily on renewals. Instead, they should worry about creating loyal customers. Loyal customers stick around and get your back during tough financial times. A loyal customer brings new customers to your product or company by talking you up to friends and family.

A short term customer is someone who had a bad (or a lack of a good) experience because they didn’t get taken care of in a way they felt was fair, or don’t find value in your product or service. This makes them not only cancel the subscription or contract but they may also talk bad about your business. This causes future prospects to not even consider doing business with you.

In conclusion, you can’t make everyone happy. Since you can’t make everyone happy, you might as well make the cancellation process as painless as possible. There are so many long-term negative consequences that come from making the cancellation process a hassle.  In a nutshell, your customer is going to cancel whether it’s a simple and easy process or a long and difficult one unless you give them incentive not to cancel.

 

Mike Alder is a University of Utah business marketing student and marketing specialist at Lendio. Passionate about entrepreneurship, small businesses, and inbound marketing. Mike shows his passion by sharing stories of successful entrepreneurs and companies with small business owners on the Lendio blog. He makes these big success stories easy-to-apply in simple and easy to read language for the everyday small business owner and entrepreneur.

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