Several years ago I sold my house to a friend. I did all the normal things you do when selling your home—from switching the water and gas to my friend to canceling services like cable.
When my wife and I bought our new home, we did all the normal things you do when buying a home. We turned on the water and gas and ordered cable. We also ordered home security but canceled it six months later.
For whatever reason, I kept getting billed by the security company. Even when I called them to make sure that we’d canceled the service, they would confirm. And then still bill me.
The bigger problem was that getting them on the phone (the only way to cancel my account) would take 45-90 minutes of being on hold. I almost never had that kind of patience.
And so they billed and billed.
I know the value of recurring revenue and auto-renewals. I’ve been building hosted SaaS software forever and we worship at the altar of recurring revenue and auto-renewals.
But sometimes things go wrong. Like when you’re getting billed for a service you’re not using.
WordPress plugins and auto-renewals
If you’ve recently purchased an extension for WooCommerce recently, you’ve likely noticed that they’ve turned on auto-renewals.
The logic is pretty clear—make it easy for store owners to keep their software updated and safe by making sure their licenses don’t lapse, while also enhancing the renewal rate by shifting from manual to automatic billing.
I get it. And I approve. I want to be clear about that.
This isn’t where I go on a rant about why WordPress plugins and auto-renewals are a bad thing. I think they can be great.
Are you in compliance?
I’m not against auto-renewals. But I do want to make sure that you’re doing things the right way.
Do any of these sound familiar?
And every state has potentially their own laws to deal with automatic subscription renewals. California has the California Business and Professions Code, Section 17600 and New York has S.B. 40.
In the case of California’s laws, the rules focus on disclosure of the renewal and how you present those details when a buyer is making a buying decision. New York’s laws stipulate that a customer has to consent to being charged for the renewal.
Unfortunately, if none of these rules sound familiar to you, and you’re just putting a system together to collect recurring revenue in the easiest way possible, you might be opening yourself up to legal issues.
Let me take this moment to let you all know that I’m not a lawyer.
My suggestion for folks pursuing auto-renewals
You didn’t think I’d leave you on such a down note, right? Well, there’s good news. Here it is.
People don’t mind paying a renewal fee for products they like and are using.
The problem never comes from the products I like and use. For example, Netflix can keep charging me forever. I won’t complain.
But the same can’t be said for every theme or plugin out there. I may have bought and used your software for a month or two after I purchased it. Then I uninstalled it—but you have no way of knowing.
And a year later, there comes my notice that I’ve been charged.
What makes people mad is the auto-renewal fees for products they don’t like or aren’t using.
I know I’m stating the obvious. But there’s a simple way to get past all this.
Communicate with your buyers.
That’s really how simple it is.
- Day 1: Send them the receipt and thank you.
- Day 3. Follow up to see if they have questions.
- Day 5: Give them tips on how to use their purchase.
- Day 30: Collect feedback on how it’s going
- Day 90: Give them updates on new features
- Day 120: Check-in to see if they have questions or feedback
- Day 180: Send a tutorial on advance uses of your product
- Day 300: Check-in to see if they’ll write a review / testimonial
- Day 330: Remind them of upcoming renewal (and ways to undo it)
When you’ve been in that much contact, it won’t surprise you that people won’t complain about your renewal. Or they’ll complain on day 30 or 120 and tell you they’re leaving, which should trigger taking them off the auto-renewal plan.
And here’s the crazy part—you don’t have to hahandwritehese notes. You could do it with ConvertKit or another system for autoresponders.
In the end, I got all my money back
Some of you may wonder what happened with my security company charges. Well, I’ve told you before, I married way up. My wife waited on the phone forever. When she finally got on with them, she put them thru an inquisition. And when it was all done, we found out they were charging me for my old home that I had sold—more than 18 months before.
But my wife is a master negotiator: so she got me all my money back.