ARTICLE

How to Retain Customers under the FTC Click-to-Cancel Rule

Retention of customers has always been on the agenda for subscription companies. However, since the introduction of the FTC Click-to-Cancel Rule, companies have done things differently. Intended to make a cancellation as easy as a subscription, this rule aims to enhance consumer rights through simplicity and transparency. While this regulation protects consumers, it is a challenge for businesses that previously had to employ clunky cancellation processes or eleventh-hour retention tactics. These challenges, however, offer businesses the chance to employ more robust, more effective retention tactics.

What Is the FTC Click-to-Cancel Rule?

The FTC Click-to-Cancel Rule requires that businesses offering recurring subscriptions make their cancellations simple. This is, for instance, a one-click or direct link cancellation and not forcing customers to jump through hoops such as calling customer support or navigating through a maze of forms to cancel. Businesses must also obtain clear consent before displaying any upsell offers during the process of cancellation.

While these changes might seem to be limited to companies, they also provide the foundation for companies to streamline their customer engagement practices and focus on retention based on genuine value and trust.

Focus on Delivering Value

To keep customers in light of these new regulations, companies must make sure they’re providing stable value through their products. Clients are less inclined to unsubscribe when they believe they’re gaining something from it. Periodic updates, upgrades, and feature enhancements can solidify the value of a product or service. For instance, subscription services can roll out new features or benefits that cater to changing customer demands, and it’s hard for users to justify unsubscribing.

Spreading this value is equally critical. Email campaigns, in-app notifications, and direct messages can remind customers of the value they’re receiving. Advertising updates or new features remind customers why they initially subscribed and keep them engaged over the long haul.

Improve the Customer Experience

A seamless customer experience is critical to reduce churn and retain customers. A bad experience is often a prime cancellation reason, and, therefore, businesses must nip things in the bud before they become big. This begins with a seamless onboarding process where customers are promptly shown how to properly leverage the service.

Active customer service also kicks in. Firms can take advantage of live chat or AI helpers to deliver immediate support, reducing customer frustration and increasing satisfaction. Even small gestures, such as answering queries promptly or effectively resolving issues, can do a lot to keep a customer subscribed.

Use Strategic Incentives

Incentives, while regulated at present at the time of the cancellation, remain a potent retention device when used tactically. Instead of relying on customers to initiate the cancellation process, firms can issue targeted incentives throughout different stages of the subscription life cycle. Businesses, for instance, can offer rewards to loyal customers with exclusive discounts or exclusive access to new features. Rewards schemes whereby users can accumulate rewards over the long term can also foster an intimate bond between the customer and the firm.

Also, offering value-added promotions, such as subscription discounts or free upgrades for annual schemes, can encourage customers to renew or extend their subscriptions. Incentives perform effectively if they come across as genuine and personalized based on the interests or behavior of the customer.

Use Data to Avoid Churn

Insights based on data can be a game-changer in terms of retention. By analyzing customer behavior, businesses are able to identify trends indicating dissatisfaction or cancellation likelihood. Reduced usage, payment misses, or poor reviews, for example, are all potential indicators of churn. To collect this data, make sure you utilize churn reduction platforms such as Churn Solution.

Once such trends are set, firms can be proactive by sending the customer a customized message or providing to remedy some issues. Periodic surveys and asking customers to give feedback are also excellent ways to find out what is needed and how one can be provided. 

Streamline the Cancellation Process

It might sound contradictory, but simplifying the cancellation process can ultimately build customer trust and loyalty. Customers who feel trapped by a complicated process are more likely to leave a negative impression of the brand, reducing the possibility of future returns.

A transparent and open cancellation policy demonstrates that a business values customers’ independence and respects their decisions. Sometimes, this transparency even goes so far as to be able to overturn customers’ cancellations, especially when they are being presented with a summary of the value that they will be forfeiting by exiting.

Retention and Compliance Are Joined at the Hip

The FTC Click-to-Cancel Rule is a call to arms for companies to prioritize customer satisfaction and disclosure. It may appear daunting to retain customers without the application of restrictive practices, but this transition offers an opportunity for companies to build more authentic, stronger relationships with their subscribers.

Through the adoption of value consistency in delivery, improvement in customer experience, incentives aligned to strategy, and application of data, firms can keep their customers under the new legislation and develop loyalty and trust. The remedy lies in transforming retention from being something acted on reactively into something active that happens consciously so as to make the customer valued and well taken care of every step along the way in the subscription.