Is the ‘forever transaction’ business model ethical? | Robbie Kellman Baxter | Big Think

People ask me all the time if forever transaction business models are ethical. I think the reason they ask me is because they're dealing with subscription fatigue right now. A lot of people are really frustrated with subscription business models for a few reasons.

The first reason is what I call product market fit. In other words, a lot of companies build subscription models that aren't very good business models, requiring you to subscribe in order to access something that you only need one time, for example. Or bundling in a lot of stuff that you don't want and then requiring you to pay for it. So a lot of people feel like, "Hey, I used to love this product and now I have to subscribe to it and I have to pay more and I'm not getting what I really need." That's the first problem that creates, and that creates a lack of trust between the individual and companies.

The second thing is what I call subscription overwhelm, which leads to subscription guilt. They say something like this: "I love this business model, I love this subscription, it's really great, except I never use it and so I feel like I'm wasting money." You know, the magazines are piling up on my coffee table, and it makes me feel bad when I walk by it. Or, you know, there's this organization, ClassPass, which has a subscription to be able to go to any gym you want and take different kinds of fitness classes, and I'm not using my credits and then I'm wasting them.

So then what ends up happening is the customer feels guilty and they cancel. So in some ways, you're like, "Well, that's not really the fault of the business because our business has great value and the customer told me it's not my fault." But ultimately that customer canceled, so it is your fault, and it is your responsibility to figure out how to fix that.

The third reason for this whole kind of subscription fatigue is the easiest to fix but the most evil, I think, the most unethical, which is hiding the cancel button. A lot of subscription businesses make it really easy to—it's kind of like the Hotel California: you can check out anytime you like, but you can never leave. And they'll make you only cancel on Tuesdays by phone, in person, with a physical letter. That does extend your subscription maybe for a month or two, but it creates a lot of, you know, I guess the opposite of goodwill—a lot of mistrust, a lot of resentment.

When it ultimately eats into your brand equity, the way I feel is it's ultimately unethical. And you know, who wants to work at a place that makes, you know, that builds revenue by charging people for things that they don't want and which they could cancel?

So when it comes to ethics and building out a forever transaction, there's a pretty weighty obligation on the part of the business owner, the business leader, to create a model that is trustworthy. So that the consumer can take off their consumer hat, put on a member hat, stop looking for alternatives, and stop worrying about whether they're being treated fairly.

I have to say that not only is this ethical good behavior, it's also good business. Because when you have a customer who feels like a member, who's stopped looking for alternatives, who's stopped comparing your offering with other people's offerings, and who has agreed to pay you on an automatic schedule, you have kind of achieved the, let's say, the holy grail of business models.