Customer retention

6 Reasons You Should Allow Self-Service Cancellation

June 25, 2020

We’ve all experienced the displeasure of having to make a phone call to cancel a service.

Many businesses put up this kind of barrier in efforts to reduce churn, but this approach is short-sighted.

Not only will roadblocks to cancellation fail to reduce churn, these efforts will put a bad taste in your customer’s mouth.

Here are the top reasons you should allow your customers to cancel directly from your product.

1. Cancellation flows can reduce churn with less hassle

Contrary to conventional thinking, a self-service cancellation process can actually reduce churn. According to Lincoln Murphy of Sixteen Ventures, replacing the need to call in with a self-service cancellation flow produced an “immediate 15% reduction in churn” for one company.

I’ve seen dramatic results introducing Cancel Flows, including an immediate 15% reduction in churn for an email marketing system where the in-app Cancel Flow replaced the need to call in to cancel.

Lincoln Murphy, Two Ways to Reduce SaaS Cancellations

A cancellation flow is a series of UI steps that a user takes to cancel a product. Used correctly, the flow does more than facilitate cancellation: it can collect useful feedback, remind users of the value they’re getting from your product, offer coupons and other incentives, and ultimately help prevent churn.

An effective cancellation flow should include these five components:

Reinforcement of value — What benefit has your customer gained by using your product? Use this section of the cancellation flow to show them. You can offer both personalized information (e.g. the number of contacts added to a CRM) and more generic points (e.g. “world-class customer support”).

Example of value reinforcement in a cancellation flow

Acknowledgements — Canceling a product does have ramifications, and your customer needs to know what they are before canceling. This can be as simple as having them check a box understanding that their data will be deleted or that no refunds will be given for service not used.

Exit survey — The survey component of a cancellation flow helps you gain valuable insights from your customers as to why they are leaving. It should ask two questions: a multiple choice question asking the primary reason for leaving and an open-ended question for additional feedback.

Offers — You can use targeted offers to keep some customers around. Examples include a temporary discount, a plan upgrade or a way to pause an account.

Yes, a cancellation button — Alas, you can’t stop everyone from canceling. At the end of your cancellation flow, make sure there is an obvious option to complete the cancellation. No tricks!

7 Cancellation Flow Examples to Reduce Churn and Grow Your Subscription Business

2. You may be legally required to do so

A California law passed in 2017 requires that any subscription company that accepts a payment online must also allow the consumer the ability to cancel the product online. Specifically:

(c) In addition to the requirements of subdivision (b), a consumer who accepts an automatic renewal or continuous service offer online shall be allowed to terminate the automatic renewal or continuous service exclusively online, which may include a termination email formatted and provided by the business that a consumer can send to the business without additional information.

Even if your business isn’t based in California, the law applies if you have any customers in California. While the law stops short of requiring a cancel button in your app, it still requires self-serve cancellation online via email at a minimum.

CA, NY Among States Cracking Down on Call to Cancel Policies – Here’s How It Affects You

3. It makes you better

The pressure of your customers being able to cancel at any time actually improves your overall experience.

From a product and service perspective, it means needing to be proactive about listening to and acting on feedback from your customers. Product managers need to make sure their roadmaps cover the features and improvements their customers are asking for. This also puts pressure on customer support and success to deliver an amazing experience each time they interact with someone.

No doubt having a cancel button at your customers’ fingertips can be scary, but you’ll be better for it.

4. Use it as an effective selling point

Customers don’t like jumping through cancellation hoops. And this distaste can factor into the buying process. Let’s face it, there’s a lot of competition out there. When prospective customers are shopping around, they’re checking out more than price and features. Something as simple as the words “cancel anytime” can be enough to sway them to try your product first.

Put yourself in the buyer’s shoes. If there are several options with similar prices and features, yet one of them boasts a no-contract, cancel anytime offer while the others don’t, which would you try first?

Be that company.

5. A bad cancellation experience can sour customers from returning

You might think that customers who cancel have a negative view of your product, but many reasons for cancellation, such as temporary life circumstances, have little to do with the utility or perception of your product. A cancellation isn’t always final: many customers may have a need for your product again in the future.

Allowing customers to cancel on their own via a proper cancellation flow gives your users a positive experience at the moment they’re canceling. It’s their last impression of you, and making them jump through hoops to cancel will make them less willing to use your product again in the future.

6. It becomes cost-prohibitive to process cancellations manually

Whether or not you’re there yet, you want to build your business for scale. If you experience moderate or (hopefully) significant growth, the administrative cost of having someone follow up with every cancellation and process it manually will add up. You may even need a full-time person to deal with this.

Many cancellations happen near the date of renewal. Without allowing self-service cancellation that takes effect immediately, you’ll find yourself refunding payments to frustrated customers who were charged for an extra term because of your bureaucratic cancellation process.

Wrapping it up

Treat your customers as you would want to be treated. Nobody enjoys jumping through hoops to cancel gym memberships or cable subscriptions, so don’t make them do that when canceling your product or service.

Instead, create a top-notch cancellation flow that reiterates the value of your product, helps the customer understand what they’re giving up when canceling, captures their feedback, incentivizes them to stay when applicable, and leaves them with a positive, lasting final impression of how you treated them.

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