Consumers are oversubscribed, but can effectively be nudged to monitor their finances:
In a new paper that was just published in the Proceedings of the National Academy of Sciences (PNAS), Anna Paley and associate professor of marketing Niels van de Ven found that people have more subscriptions than they realize. The researchers also discovered that once people become aware of the number of paid services they are subscribed to, they are inclined to cancel the subscriptions they no longer want or need. This suggests that a lack of overview is one of the biggest challenges people face when it comes to managing their subscriptions well.
“Once people have a clear sense of where their money is going, they can take better control of their financial health,” says Paley, adding that she also finally canceled some of her own subscriptions while conducting the research. But creating a clear overview of subscriptions can be a cumbersome task, Paley and Van de Ven say, especially for people who aren’t naturally good at organizing their finances (and who might actually benefit most).
In a large field experiment in collaboration with a major Dutch bank, the researchers examined how nudges can help consumers gain more insight into their monthly subscription fees. Paley and Van de Ven tested the effectiveness of different types of nudges, which took the form of pop-up messages that alerted users about a new feature in the bank’s mobile app providing an overview of monthly subscription charges.
Interestingly, some of these nudges were “crowdsourced”—they were created and evaluated by people from the Dutch population. These crowd-generated nudges proved to be highly effective, leading to 63,000 additional bank customers checking their monthly subscription costs.
“As more and more businesses are switching to subscription services, it becomes increasingly important to help consumers monitor their finances. Creating easy-to-access overviews and nudging people towards using them will really help them save money, and prevent people from falling into the subscription trap,” Niels van de Ven says. (In the subscription economy, 2023, paras. 4-8)
With the subscription economy increasing rapidly, one could assume this means consumers have a positive relationship with them as they keep subscribing more. This article offers the perspective that consumers are, instead, oversubscribed.
It mentioned a study that partnered with a bank to test how to better manage subscriptions through notifications. It worked effectively, and seeing this play out in a bank really connected with my topic at hand, but it still brought up some questions. It concluded that the nudges caused a lot of people to check their subscriptions, but did anyone use the opportunity to actually manage or cancel them? Were there unnecessary subscriptions that people just weren’t ready to part with? If so, how can designers make it easier to identify these subscriptions?
Reflecting on some of my research into the psychology of consumer habits, how can I balance the awareness of spending without creating decision fatigue? If part of my scope is to help consumers save more money, how can this be done without sacrificing the services they enjoy?
References
In the subscription economy, research finds that most of us are oversubscribed. Tilburg University. (2023, October 24). https://www.tilburguniversity.edu/magazine/subscription-economy-research-finds-most-us-are-oversubscribed
