While browsing through my YouTube subscriptions the other day, like so many digital media consumers, I ran across a thought-provoking video from Hank Green on the popular Vlogbrothers channel. It made me think about the difference between Netflix (NFLX -0.78%) and Sirius XM Satellite Radio (SIRI +0.00%), though he didn't mention either of these companies.
Hank's point was that companies that offer subscription services should make it simple for customers to cancel the service and perhaps come back later. As polar opposites on the spectrum of cancellation ease, my thoughts immediately jumped to media-streaming veterans Sirius XM and Netflix.
NASDAQ: NFLX
Key Data Points
Canceling Netflix subscriptions? Easy!
Let's start with a user-friendly way to do things.
Netflix makes it easy to cancel subscriptions at any time -- no questions asked. They even sort of brag about it in their official long-term business plan:
We are a relief from the complexity and frustration that embody most [Multichannel Video Programming Distributor] relationships with their customers. We strive to be extremely straightforward. There is no better example of this than our no-hassle online cancellation. Members can leave when they want and come back when they want.
And it is indeed quite easy. Open your Netflix account settings on your favorite streaming platform -- phone, tablet, smart TV, web browser. Below the subscription plan selection and payment method, you'll find a highlighted button that reads "Cancel Membership." Click or tap on that, and Netflix gives you four choices on the next page:
- Finish cancellation
- Pause for one month
- Change to a lower-priced plan
- No change, just stick around
I think it's important to note that the first and most obvious option is to leave the service. Other alternatives exist, but Netflix isn't pushing them very hard.
If you cancel your service, Netflix hangs on to your viewing history, recommendations, ratings, and gameplay history (including saved games) for 10 months in case you change your mind. This is a low-stress approach to account cancellation. You're free to leave any time you like, welcome back whenever that feels right, and maybe you'll tell your family and friends about Netflix's no-hassle experience.
NASDAQ: SIRI
Key Data Points
Canceling Sirius XM subscriptions? Good luck!
If Netflix makes cancellations easy, how hard can it be to drop a Sirius XM subscription?
Well, it's a discouraging process with many steps.
First, you must know how you signed up for your Sirius XM service in the first place. If that was done through the Sirius XM app of your Apple iPhone or Android phone, you need to use that system's app store to cancel your service. Other third-party resellers include Roku and T-Mobile, each with its own unique cancel process.
The company's instructions say nothing about services that come along with purchasing a car. That might count as a direct Sirius XM agreement, or maybe not. Again, it's up to you to figure out where to go and who to talk to.
Maybe you were lucky enough to start your service or a free trial directly through Sirius XM, with or without a car dealer involved in the process. In that case, you're in luck -- the company offers a phone line and a link that should get the job done. Keep in mind that the online option is pretty new, if it even works. Forty-six states filed and settled a class action lawsuit to change Sirius XM's cancellation process in 2014, and subscribers were still complaining about exorbitant wait times and obtuse menu systems in 2023.
That matches my personal experience. The company offered free trials to its web-based radio service back in the lockdown part of the COVID-19 crisis, and I took them up on the offer. But I found myself using that option very rarely, and I ran into a maze of phone menus and long wait times. The minimal enjoyment I got from that trial was not worth the hassle of getting out.
I'm not likely to give Sirius XM another try because I found it too frustrating to end a simple free trial -- six years after the company was ordered to avoid "harassing or abusive" treatment of cancellation requests.
Image source: Getty Images.
Customer service quality -- a sign of deeper differences
Sirius XM's difficult cancellation process may result in a few more months of service payments from clients on their way out, but at the cost of losing their affinity for the brand. I'm not alone in my frustration, as evidenced by multiple lawsuits filed by many states with support from hundreds of thousands of disgruntled ex-subscribers.
The Netflix approach is so much healthier. Sometimes people need to leave for a variety of reasons. Netflix lets them go and hopes to win them back someday with more and better exclusive content. "Members can leave when they want and come back when they want," and the company's customer service reps won't try to change your mind on the phone.
I have actually canceled my Netflix service once but came back when the fledgling digital streaming portfolio started to look interesting. Leaving was easy, even back in the days of red DVD mailer envelopes, and so was renewing the subscription. Netflix still had my viewing history on file, along with my lengthy DVD queue. No sweat.
I can imagine plenty of Netflix subscribers bouncing in and out along with the seasons of their favorite Netflix Original shows. It's the company's job to keep those unstable subscriptions coming back and perhaps stop their cancellations because they find something new to watch.
Customer service policies are not the whole story, but Netflix's more user-friendly strategy is a big winner. That stock has soared 906% over the last decade, while Sirius investors were left with a zero percent total return over the same period -- including reinvested dividend payouts. In business terms, Sirius XM's revenues more than doubled thanks to the Pandora buyout in 2019, while Netflix posted a 600% sales increase.
I know which stock I'd rather own and which company deserves my business. The two effects are closely related.
And I think Hank Green would nod in agreement. A great user experience matters, even when subscribers are trying to walk away.
