Netflix is going to start automatically canceling inactive accounts & why it makes sense
While millions of cable subscribers are paying for live sports they’re not receiving, Netflix announced that it’s notifying customers who haven’t watched anything for 12 months since signing up whether they want to continue with their subscription. If those subscribers don’t confirm, Netflix will automatically cancel their subscription, keeping favorites, profiles, and account details for 10 months. In the event, someone decides to reactive their account, they can pick up exactly where they left off.
The approach makes sense on various fronts. First of all, goodwill goes a long way. While several subscription services (inside and out of video) embrace inactive subscribers that have long forgotten they’re paying for a service they’re not using, Netflix is putting the customer first, potentially saving people some hard-earned cash.
Second, nudging inactive customers just might be what it takes for Netflix to successfully convert them into active users, which increases the chances they’ll stick around in the long-term. Additionally, by eliminating inactive users, either by cancellation or conversion, Netflix should be able to report an increased percentage of active users.
If you do right by the customer, you’ll never go wrong. And the companies that have the confidence to make it easy to leave, are the ones you won’t.
Lately, I’ve been harping on this idea that media companies need to think more like software companies and where software companies generally excel are with “free trial end reminders”.
We wanted to give you a heads up that your subscription is up for renewal on May 22, 2020.
Thanks for using our product."
Today, a majority of streaming services don’t give users notice when their trail is ending, instead, they simply switch them from free to paid and charge their credit card.
Years back, this was the case at Netflix and their customer service team noticed that they were spending millions per year responding to calls from people demanding their money back. Netflix knew they needed to do something about it.
At the time, the percentage of trail users that converted to paid accounts was 90%. Netflix decided to run a test, sending a reminder that customers’ free-trail was about to end, approximately three days before expiration.
Many customers were appreciative but canceled anyway. After the test, the conversion rate dropped to 85% and the company determined that if they rolled out the feature, they would lose about $50 million.
Former Netflix VP of Product Management Gibson Biddle raised the question, “Should we roll the free trial reminder out to everyone even if we know you’ll lose so much money?.”
In the end, Netflix was able to delight the customer by having the right ethics and doing the right thing, which ultimately built trust in their brand.