Media Subscriptions Account for Half of All Churn by Cash-Strapped Consumers

As consumers reprioritize their bill payments, PYMNTS data shows digital media subscriptions are often skipped.

The Context

Payment issues are a major problem for subscription businesses, accounting for almost half of all churn, as FlexPay CEO Darryl Hicks told PYMNTS’ Karen Webster in an interview.

“If you look at where the churn is coming from in your book … typically 48% of the churn is coming from failed payments,” he said. “We see that a lot of merchants think churn is happening in customer service or [because] people are dissatisfied with the product or service. But if they’re not focused on the failed payments, they’re missing 48% of the problem.”

These issues not only hurt subscription services’ revenue but also can negatively impact their relationships with their customers if they are not communicated.

“Failed payments are not only a revenue problem but also a branding problem,” sticky.io CEO Brian Bogosian told Webster in an interview. “Customer experience is at the core of brand loyalty. Imagine suddenly getting disconnected from YouTube Live because of a single, accidental failed payment and being unable to watch NBA star Stephen Curry make his famous three-pointer in real time. Customers who want hassle-free subscriptions don’t want to think about payments, especially failed ones that cause disconnection and headaches.”

Now, PYMNTS data reveals that, when it comes to skipped or incomplete payments, digital media subscription services have the most to worry about.

By the Numbers

Research from PYMNTS’ study “The One-Stop Bill Pay Playbook: Drivers of Consumers’ Bill Payment Priorities,” a collaboration with Mastercard which drew from a survey of more than 2,100 consumers in December, found that 30% of digital media subscribers had made at least one partial payment or skipped at least one payment in the previous year.

This share is greater than said the same of any other kind of subscription, meaning that paying digital media bills in full is a lower priority than paying those of retail subscriptions, streaming subscriptions or membership subscriptions.

Notably, however, this does not translate to consumers being more likely to cancel those digital media subscriptions than other kinds. Streaming subscriptions are the most likely to be canceled when consumers look to cut down on monthly bills.