Small businesses lost billions of pounds to unexpected contract renewals in 2020
Small businesses lost between £ 3 billion and £ 5.75 billion in vital funds in 2020 because annual contract and subscription services were renewed without their knowledge.
Auto-renewals are a problem for most (60 percent) small businesses. The reason for this is that there seems to be a communication problem between the service providers and the customers. Over a third (37 percent) said they lost money to auto renewal they didn’t know about, and 34 percent didn’t know the services had an ongoing contract when they signed.
Corporate insurance is the most common type of contract that is inadvertently renewed before broadband / WiFi and telephone contracts. Eight out of ten pointed to the needs of companies like insurance, WiFi, or utilities with the least flexible terms. Over three quarters (76 percent) of small businesses have an annual contract so that they can use the service once.
> See also: Small Business Insurance: An Essential Guide
There is great frustration among business owners who believe they are tied to too many contracts and have not little to no leeway for flexibility. Superscript’s study shows that 82 percent of respondents said their current annual contracts and subscriptions are too inflexible. On average, up to half of annual small business subscriptions are completely blocked. 84 percent of companies say they want to change contracts and subscriptions on a monthly basis.
Cameron Shearer, Co-Founder and CEO of Superscript, said: “The pandemic has hit small businesses disproportionately. Many have to count the pennies to survive every day. It therefore doesn’t help that so many of service providers who automatically renew annual subscriptions let the wool pull over their eyes without expressly saying that they will do so. You are losing much needed money unnecessarily, and this is not a sustainable way of doing business.
“For the new normal, we should give small businesses the opportunity to thrive by being flexible enough to work on their terms. Not forcing them into contracts that do not suit them. The future is monthly, bespoke subscriptions that small businesses can change as needed. “
Here’s how to take on a subscription service in your small business