Unfortunately, the economics of high-churn, low-end recurring revenue products sort of favor these tactics.
Products that sell semi-commodities to very small businesses tend to experience monthly churn on the 4-6% rate, sometimes even higher. These customers can be gone forever, in just a few months.
Assuming you can acquire the customers efficiently, and your reputation is only of partial importance, it makes “sense” to:
- Make it hard to see where to cancel. Or e.g., make you call someone to do it.
- Charge termination fees that may make you think twice about cancelling.
- Try to upsell you to stuff you almost didn’t even know you purchased.
- Don’t send you invoices unless you ask. Getting an invoice for a product you are paying for but don’t need anymore -> cancellations.
- Etc.
It’s yucky. But it makes sense on a spreadsheet where churn is super high. Just adding a few months of close to 100% margin revenue at the end of the customer lifetime can make a huge impact.
