Consumer inertia

Behavioral Insights Germany and Saudi Arabia

The use of auto-renewals in free-trial offers, which seek to lure us into entering a long term subscription, has been exploding recently. But are these offers really successful in changing our subscription behaviors? Or are we gradually becoming suspicious and eventually immune toward them?

Using a large-scale RCT with a European newspaper, Miller, Sahni, and Strulov-Shlain investigated these questions by comparing various auto-renewal and auto-cancellation offers. Their findings suggest that consumers are indeed receptive to auto-renewal offers: signing up for an auto-renewal offer led to a seven times higher tendency of continuing a subscription after the free-trial period than auto-cancellation contracts.

However, a large part of consumers seem to be aware of their susceptibility to an undesired auto-renewal: 24%-36% of the potential subscribers avoided the auto-renewal offer completely and around 9% of the consumers were deterred from engaging with the newspaper entirely. These results caution that potentially exploitative offers can harshly backfire for companies in the long run, potentially causing irreparable damage to consumer trust.

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