The reality of upgrades and downgrades

When a customer chooses to upgrade a subscription and pay more for their service, brands are simply delighted. On the flip side, if a subscriber downgrades, brands fear they are missing out… financially.

What if we told you that upgrading can actually be damaging to your brand and affect customer lifetime value, and downgrading can help to protect revenue and customer loyalty? Would you be surprised? In our recent study, we revealed the true reality of what upgrading and downgrading means consumers, and it’s not as black and white as it seems.

Negative Upgrades and Clinging Behaviour

Subscribers may choose to upgrade because they simply love the service and want to get closer to it. In a relationship, that’s like giving something up for the other person but expecting wonderful things in return. Unfortunately, sometimes this emotional sacrifice is not recognised by brands.

Upgrading due to dissatisfaction is very different from upgrading due to satisfaction. If a subscriber isn’t getting enough from a service, like wanting to remove ads or pay more for an exclusive film, they may feel they need to make additional sacrifices to get what they want – this is a form of clinging. People cling because they aren’t getting what need, but are holding out hope that they will. These clingers though tend to deep down hold ample resentment and annoyance, especially if it was unclear from the start that they would need to upgrade, or may more to get what they wanted from a service. They may accept this behaviour for a short while, but at some point may start to avoid using the service and ultimately leave.

Proactive Downgrades and Brand Reputation

Although most brands don’t love when a subscriber downgrades, for consumers this is sometimes financial reality. Nobody wants to miss out on a great service but other monthly household bills sometimes come in the way and they have no choice but to spend less of their OTT services. Brands that give customers the option to pay less are looked upon more favourably in tough times, especially compared to those that there is no choice other than to cancel.

OTT brands that proactively work to spot absent consumers and offer them an alternative, such as a downgrade, can save them from cancellation altogether later down the line. Delivering a good customer experience involves making downgrading an easy process, such as a one-button click option in an app, removing negative feelings and annoyance for customers… whilst building trust.

To find out more about the positives and negatives of upgrading and downgrading, and a range of tips and advice on how to improve customer experience, download our paper.