In the subscription economy, research finds that most of us are oversubscribed
How many subscriptions do you have? A large study by Anna Paley and Niels van de Ven from Tilburg University shows that you probably have more than you realize, and that you’re spending a lot more money on subscription services than you think. The researchers found a new way of nudging people towards better insight into their finances, which proves to be highly effective in helping the oversubscribed cut down on their monthly subscription charges.
In the subscription economy, you get to enjoy unlimited access to television series, the gym, the cinema, software, books, music, games and pretty much any other service thinkable—all for a relatively small monthly fee. Although subscription services are convenient, it's easy to lose sight of the memberships you have.
“Subscription services that are based on automatic renewals make it particularly difficult to manage your finances,” says Anna Paley, assistant professor of marketing at Tilburg University. “As a result, people have trouble keeping track of their subscriptions and are often oversubscribed – they have more subscriptions than they actually want.”
Lack of overview
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 cancelled 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.
Anna PaleyAssistant professor of marketing, Tilburg School of Economics and Management (TiSEM)
"Once people have a clear sense of where their money is going, they can take better control of their financial health."
Niels van de VenAssociate professor of marketing, Tilburg School of Economics and Management (TiSEM)
"Creating easy-to-access overviews, and nudging people towards using them, can prevent consumers from falling into the subscription trap."
Note for the press
The scientific paper Crowdsourcing as a Tool for Creating Effective Nudges: An Example for Financial Oversubscription, published in the Proceedings of the National Academy of Sciences, can be accessed here. For more information or interview requests, please contact Niels van de Ven (firstname.lastname@example.org), or get in touch with TiSEM's science communicator Laura van Gelder (email@example.com).