Wednesday, December 21, 2011

Automatic Renewals: Benefits and Hazards

Most people are familiar with companies that automatically renew memberships for services. The BBB is intimately familiar with it as we, because it generates a considerable amount of complaints when customers don't want the service anymore and are told that they were enrolled in another year of service. Most people think that companies have these policies only so that companies can keep customers, whether customers want to stay or not. This isn't always true... It's often true, but not always.

One of my favorite examples of automatic renewal is XBox Live. XBox live has high value. Users can stream Netflix and Hulu, watch music videos and play multiplayer games with their friends via the internet among other things. It's pretty much a must have for Xbox 360 owners. I don't want my subscription to run out, that's for sure. Microsoft does almost everything right regarding the automatic renewal. The user is prompted when 'e signs up for Xbox Live, asking about auto-renewal. Within a month of the auto-renewal date, the subscriber is again greeted with a prompt, asking if 'e would like to auto-renew the subscription. It's very nice of Microsoft to ask right before the subscription expires if the person would like to auto-renew, but the prompt doesn't give the user the option to review his payment method. If a subscriber hasn't purchased any Microsoft points any time in the past year (i.e. me), it's difficult to remember which card is on the account. I'm unsure if I really want to auto-renew when I don't know which account will be charged. It would have been better if it had an ask me later option like Adobe updates. It's a minor complaint and it's the only hiccup in the process. The subscriber is also sent an email about the renewal and a receipt via email. This is how auto-renewal should be handled, by keeping the subscriber perpetually updated.

For a long time, Weight Watchers received numerous complaints about its automatic renewal system. In an effort to curb these complaints while keeping their automatic renewal system, their site changed multiple times to make the auto-renew feature more obvious. I watched as they moved their disclaimer about the automatic renewal all over the page. At one point it was boldfaced and in red print above their sign-up section. Now, it is in bold black print, next to all capital letters that say "PLEASE NOTE," followed by an explanation of the renewal. It is also boldfaced in the subscriber agreement. The Weight Watchers online membership apparently allows users access to etools that help trend eating habits and plan diets. They rarely get complaints over their auto-renewal nowadays. However, the benefit of automatic renewal for a set of tools is not immediately apparent.  For automatic-renewal to be valuable to the customer, it has to prevent the termination of a service. When a customer has to log in and use the site, auto-renewal is, I suppose, a handy bonus if one does not want to do monthly accounting, but it doesn't really prevent the termination of a service. If the service expires, the next time a person needs to use those tools, he or she can renew at that time with no loss of needed service.

Netflix, Hulu, Gamefly and many others have automatic renewal services because their services are themselves automated. Netflix and Gamefly have queues that discontinue if payment isn't made. Hulu will throw all Hulu+ videos out of a subscriber's queue (or prevent the subscriber from watching them. Same thing.). Trash service is also a valuable to have auto-renewed.

Complaints and consumer backlash start when they don't feel the service warrants automatic renewal. It gets worse if the company doesn't do a good job of updating the customers on the status of their renewals. Customers will feel slighted or cheated. If you are a business contemplating auto-renew services, take these things into account. It's very difficult to win back a customer who feels wronged, and even harder when you cannot justify the use of a service that cost them money. Customers need to be aware of what they agree to before signing up. So many people who filed complaints against Weight Watchers had click "I agree" right near where it explicitly mentioned the automatic renewal. Be aware of these types of things.

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