I’m having foot surgery in the next few days. For eight weeks I won’t be allowed to put weight on that foot. I didn’t want to pay two months of gym fees for nothing. So after about a year as a member, I finally read the terms properly.
Freezing the membership was the easy part, and it saves me about €80. Then I checked when my minimum term ends. The first year runs out at the end of November. The deadline to cancel was the end of October. Miss it, and the membership renews automatically for another six months. At my monthly fee, that’s around €240. I’m not planning to leave. But for the first time I wondered: if I wanted to, when would anyone tell me?
Only the company knows when the exit window is. Sooner or later, the customer forgets. Most of us do.
Anyone who spends time in the mountains knows what a weather window is. A few hours when you can go up and get back down. You check the forecast every day, because nobody will bring that window to your door. Miss it, and you wait for the next one.
A fixed-term contract has a window, but no forecast. The date sits in terms nobody reads when they sign. And people don’t leave on the contract’s schedule. They leave when they move, change jobs or get a diagnosis. That’s when the customer finds out the window has closed. The next one is six months away, at the full monthly fee. The contract was fair all along. The customer leaves anyway, just with a bad taste in their mouth.
I asked ten people in my office: do you know when the minimum term on your gym or phone contract ends? Two did. Both had signed less than three months earlier.
If you run a business on fixed-term contracts, you’ve probably got it all in place: terms your lawyers are happy with, a stable customer base, predictable revenue. Something still slips through. Take some illustrative numbers: 20,000 members, a fifth leave every year, half of them outside the window. That’s 2,000 people a year who find out about the deadline too late. If a better exit experience won back just one in ten, at €480 a year that would mean €96,000 in annual revenue. I’m not saying it would happen. I’m saying it’s worth measuring.
B2B is no different. Except that an angry customer with a software licence or maintenance contract doesn’t leave alone. You lose them as a reference too.
Elsewhere, this had to be written into law. In Sweden, a company must send a written reminder at least a month before the last day to cancel, or the customer can still cancel despite the missed deadline. In Germany, contracts signed since March 2022 may only renew automatically if customers can cancel with one month’s notice, gyms included. If companies sent the reminder on their own, nobody would have had to make it law.
The fix is simple, but not easy. Thirty days before the deadline, tell the customer when they have to decide, how to cancel and what they’ve had from you during the term. But first, check where that date actually lives. If it’s only in the contract or in accounting, marketing can’t see it, so it can’t tell anyone. Before you send anything, measure one more thing: your forgetting rate. That’s the share of cancellation requests that arrive outside the window. Every one of those requests is a customer who wanted to leave and couldn’t. You already have the data.
I know what you’re going to say: a reminder will increase cancellations. Since 2020, UK telecoms providers have had to remind customers before their minimum term ends. Among broadband customers, the share who took action at the end of their minimum term rose from 47% to 62%. The number of out-of-contract customers fell by 1.3 million, mostly because they signed a new deal with the same provider, not because they left. The customers a reminder does take away had, in my view, already decided to leave. You haven’t lost them. You just see them sooner.
Companies put everything into bringing customers in: the introductory price, the offer, the welcome. Letting them out is left to a registered letter. A customer who was kept informed can come back. An angry one tells the story at every dinner where the conversation turns to gyms.
In eight weeks, I’ll be back on my feet and checking the mountain forecast again. That one is public. I found my gym’s window a few days before the deadline, and only because my foot forced me to read the terms. Your customers don’t have that foot. A company that tells me in time when I can leave gives me one more reason to stay.
igor.pauletic@frodx.com
P.S. My gym isn’t doing anything wrong. It does what almost every provider with fixed-term contracts does, which is why I’m not naming it.
More on how to shape the customer experience from signing up to leaving.