200% Increase in Business Revenue Found Through Uncancelled Subscriptions


Subscription-based models have become a part of our daily life and businesses benefit from people forgetting to cancel their subscription payments. To address this issue, a number of startups have emerged, promising to help people save money by uncovering and canceling forgotten subscriptions. According to a recent report, researchers have now quantified the value of customers’ inattention: it can increase a business’s revenue by up to 200%. Neale Mahoney, an economics professor at Stanford, said: “I knew that people forgot to cancel, but the magnitude and prevalence of this issue was surprising.”

To investigate this further, Mahoney, along with Stanford economics professor Liran Einav and Texas A&M assistant professor of economics Benjamin Klopack, focused on a specific event: card replacement. Using a sizable dataset from a payment system provider, the researchers identified 10 popular subscription services and looked at how often they were renewed during regular times and when card replacement occurred. Renewals sharply decreased when people had to actively decide to resubscribe and enter new payment information, indicating that many opted out.

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