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A pet peeve of mine is when subscription businesses make it high friction to cancel. 1/
Netflix in particular has a dynamic that I think of as “consumption subscription” - people will churn and re-start continuously. If you have the data at scale on this, you can predict it and focus on new user growth 2/
Relying fundamentally on subscription breakage/projection bias (eg physical gyms) or making me call to cancel when I can sign up in 3 clicks (I’m looking at you, mealkit delivery) isn’t exactly customer-first 3/
Same goes for b2b SaaS that doesn’t have real implementation/switching costs but pushes customers to 2 or 3y contracts 4/
Much SaaS should be sold on an annual or 3Y contract — because it requires commitment, integration, change management to get to successful broad use of a product, so short commercial timelines don’t make sense for the customer either 5/
But there is signal and fearlessness as @km says above, in betting that exposure to your product will itself be valuable to your customers, vs. contractual lock-in. 6/
As a SaaS company, you need to clearly decide if you’re prioritizing new customer adds vs overall ARR, as well as being intellectually honest as rob how robust usage/business value is — and what, if any, land-and-expand dynamic you have 7/
Of course, any subscription/consumption-with-minimum-commitment startup must also evaluate the very real benefits of upfront annual-or-longer cash collection, and customer commitments in a land grab market. /8
It takes strong financial and analytical discipline to fully understand the GTM cost vs. customer value if - you build customer value over time (land and expand) or you regularly re-engage churned customers (Netflix) 9/
But the days of not building a “cancel” button, or of “3 year strategic enterprise contracts” dominating are over. Consumers and customers are increasingly savvy — and the better aligned your business is with customer happiness and value, the more robust your business. 10/ (fin)
