Oops, I did it again – the five words driving millions in subscription revenue

Inattention can be costly – especially when it comes to subscriptions.

A group of economists recently published a working paper in which they studied ten major subscription services across entertainment, security, retail goods, and newspapers. They found every👏 single👏 service benefited from subscriber inattention – some saw a revenue uplift of ~14% when compared to a fully attentive customer, while others saw gains of 200%+.

Behind the data: To quantify how much inattention is costing consumers, the researchers honed in on one specific negative life event – losing a credit card. The idea being: this occurrence almost forces consumers to take a closer look at where their money is going – and actively update payment information for the subscriptions they want to keep.

• In the average month, the major subscription services studied by the researchers lost 2% of their customers.
• In the months of card replacement, they lost 8%.

Other data also indicates that consumers are spending more than they think. A 2021 study asked thousands of Americans to guess how much they spent each month on subscriptions. The average response was $62… but when given extra time to think, that response increased to $96. The real amount being spent on average? $273.

👀 Looking ahead… Requiring an active choice about a subscription every six months (ex: want to keep it or nah?) would cut excess payments from inertia in half, per the researchers.

And regulation is trending in that direction. The FTC recently proposed a new rule that would require most companies to provide annual subscription reminders.