Fear Not: Why the FTC's New "Click to Cancel" Rule Could Be Great News for your PMO
Canceling a subscription can sometimes feel like pulling teeth. We've all been stuck on hold, lost in endless automated menus, or bounced between departments just to stop a service we no longer need. These headaches have made some folks think twice about signing up for recurring contributions, like becoming sustainers or Passport donors.
But here's some exciting news: the Federal Trade Commission (FTC) has proposed a new "Click to Cancel" rule! You might be surprised that I say "exciting," especially since many PMOs (Public Media Organizations) are nervous about the potential impact of this rule—if they're even aware of it. PMOs are concerned because this rule aims to make canceling subscriptions, or ongoing payments, as easy as signing up. It also requires organizations to send annual reminders before automatic renewals.
Now, you might be wondering whether this rule will apply to nonprofits like PMOs. The truth is, we don't know for sure yet, and CDP is not taking a position on its legal application. But here's the thing: it doesn't really matter. Regardless of whether the rule applies, we believe that embracing its principles is the right move.
By adopting these donor-friendly approaches, you can build greater trust with your supporters. They'll appreciate the transparency and may be more inclined to become sustainers or Passport donors knowing they have full control. This shift isn't something to fear—it's an opportunity to strengthen relationships with your members and potentially enhance donor retention.
A Win-Win Situation
You may still be thinking, "Won't making it easier to cancel hurt the organization?" Surprisingly, data demonstrates the opposite might be true!
Data Shows Easier Cancellation Can Improve Retention
Our donation form/portal partner, Jackson River Springboard, has data that reflects when organizations offer an easy online cancellation option, fewer people actually choose to cancel. It sounds wild, but when donors know they can opt out anytime without a hassle, they feel more comfortable sticking around.
But that's not all. Many for-profit businesses have reported that after implementing options that give customers more control, they're more likely to retain subscribers. For example, OrderGroove, a subscription management company, found that companies allowing customers to skip a month saw significant increases in retention rates. In fact, some saw retention improve by as much as 135%. While skipping a month isn't the same as canceling, it's another data point indicating that giving greater control to customers or donors helps improve retention and lifetime value (LTV).
For mission-driven organizations like PMOs, this effect could be even stronger because of the personal connection and shared values with our supporters.
Early Action
Thankfully CDP has already been proactive in this area. Even before the FTC proposed the "Click to Cancel" rule, we began collaborating with an interested PMO to test an easy cancellation process through our donor portals. We're excited about this ongoing project and are committed to sharing our findings with you. In fact, we might have valuable data to report even before the FTC requires full implementation of the new rule, allowing potential insight into the near future impact.
Building Trust and Confidence
By embracing the "Click to Cancel" approach, you are building trust with the donor. You are telling your donor that your organization understands that life happens—circumstances change, and sometimes they need to adjust their support. Knowing that they can easily manage their contributions gives them peace of mind – making it easier to hang on to donating as long as possible.
We're Here to Support You
As we collect more insights from our partner PMO experiences with implementing easy cancellation processes, we'll keep you updated on the results and best practices. We believe together we can utilize those best practices, to make things more straightforward and donor-friendly, ensuring that supporting your mission remains as seamless and positive as possible for your members.