I am a fan of TechSmith. We use their Camtasia software for many of our on-demand tutorials and I was impressed to discover their service team frequently monitors Twitter looking for customer questions and concerns to answer.
But when I got an email receipt out of the blue from them this week, when as far as I’d known I hadn’t bought anything in months, it was definitely a WTF?! moment. And it’s one that I fear many subscription-based businesses are causing in their annual customer bases – needlessly.
Charging an annually renewed customer is a tricky business at best. Too often they may have completely forgotten either about the subscription as a whole, or that now is the day it’s going to be renewed. Suddenly their budget has a bigger hole in it than expected. We detail in Insider’s Renewals Optimization Kit the practical steps you should take to ensure great retention. TechSmith broke some basic rules that now probably hurt their retention:
#1. No reference to the renewal in the email
Their generic “you have been charged” email receipt doesn’t explain why the charge has happened or that it’s a previously authorized renewal. It could as easily be for a new sale made that day. In fact, when I got it, I assumed that someone had fraudulently used my account to buy something.
#2. No marketing copy or “gift” in the email
The email baldly states the product purchased and the price — as I said it’s a stripped down receipt. But, best practices in retention are to add a bit of schmoozing into the message. Not, perhaps, an povert sales message, but at least a benefit statement. And popping in some type of gift, such as a free download in ‘thanks for your loyalty’ can go a long way to ameliorating the unexpected charge situation.
#3. Receipt sent after the charge was processed
Processing refunds costs you money — probably a flat fee plus a % of each refund. You know that a certain portion (hopefully small) of all your annual subscribers are going to bail when they get that receipt. It’s a given. So why charge everyone (which costs you money for card processing) and then pay to process those refunds afterwards? Smart recurring billing merchants send an announcement FIRST for annual renewals and then wait for the cancels to come in before they actually process any transactions. Some wait a day, others a week. You have to watch your cencel patterns to know what’s best for you.
TechSmith actually processed the charge before alerting me and now have to reverse it. Not smart.
#4. Make customer service super-easy to access
Well trained service reps can actually save (or cross-sell/upsell) a certain portion of accounts when people call in to cancel. But, perhaps more importantly, they save customer goodwill. If you offer a range of products and services to the same customers, as TechSmith does, you don’t want to leave anyone with a bad taste in their mouth because you lose that future possible sale.
Every barrier you put in front of your customer – even irate ones – and your service team hurts your bottom line. Unfortunately TechSmith requires that customers enter a username and password (which they’re unlikely to recall a year after a purchase) just to get to a form which they then have to fill out and hope that a human being will get back to them. Money falling off the table. Look at it fall….
I feel kinda mean using TechSmith as a poster child for worst practices when so many continuity merchants and subscription services make mistakes that are just as bad. But, if this example helps someone, then it’s worth it.
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