High membership retention rates. Early renewals. The lure of these possible coups is so great you might be tempted to consider “creative” ways to boost them. As enticing as this may be, however, you should avoid arbitrarily manipulating your various business models without conducting thorough research to determine if your actions will truly benefit your members and your association.
Here are five renewal “booby traps” and how to avoid being snared by their potential:
There is temptation by organizations to bundle more and more products and services into the membership “package” to raise renewal rates. Offers like, “Get 15 months’ membership for the price of 12” or, “Receive our latest research report for free with your 12-month renewal” are not uncommon.
While this is a valid tactic when bundling products with other products for upsell, it can be a slippery slope when bundling products in your membership price, because these value-added propositions have a cost associated with them. They may carry admin costs, research costs, opportunity costs, and/or material costs – all of which cut into your revenue. So, if you decide to go this route, make sure you’re not giving away the farm.
And, think about how this approach will impact you next year and the year after. Don’t be surprised if members start to ask, “What have you done for me lately?” Be careful not to de-value your membership with too many trappings.
- Price Manipulating
The seduction to lower renewal prices to increase membership rolls is huge, but will this move really boost your bottom line? How many more memberships will you need to renew to make up for the slashed price? And, what message will this send your members?
If a price reduction is justified – for example, if you’ve implemented efficiencies in your processes or staffing and want to pass along the savings – you need to clearly define and communicate this justification to members.
- Pricing Structure
Some associations have adopted a pay-as-you-go, a la carte, or “freemium” pricing model to boost membership. This is a logical business model in which you give away your memberships, then offer value-added products and services at premium prices. Associations that have diverse non-dues revenue streams, like advertising, event registration, grant distribution, continuing education, etc., may have success with this model.
In fact, Robbie Kellman Baxter – author of “The Membership Economy” and keynote speaker at last week’s AICPA & CPA/SEA Interchange 2015 – talks about the freemium approach being part of the shifting economic model of membership.
So, while this type of pricing structure has validity, you need to make sure your entire organization is fully aligned. And, you’ll also want to protect your members’ investments by ensuring their overall payout doesn’t far exceed typical annual membership dues. Remember, from the members’ perspective (spending $24.49 here and $59.99 there) active participation in your association can quickly and easily go from free to very, very expensive.
- Cookie-Cutter Communications
Conveying the same message, through the same channels, with the same cadence to your entire member audience is tempting – because that’s the way you’ve always done it. Or because, quite frankly, it’s easy. But, if you’re approaching renewals this way, you’re really missing some opportunities to engage differently with your various demographics.
Today’s sophisticated association management systems provide robust member profiles and enable you to score individual’s engagement levels. These features give you a comprehensive view of constituents, allow you to slice and dice your database in meaningful ways, and help you target your communications and enhance retention.
- Same-Old, Same-Old Collection Methods
Are you sending out 60,000 paper invoices via snail mail year after year? You could increase your retention rates and speed up the renewal process merely by offering more convenient invoicing methods. Consider implementing a self-service renewal option on your website, or offering auto-renewals.
The real value here is it will likely help you get a high renewal rate from a single appeal. This not only lowers your costs, it also improves your cash flow, enhances your financial planning, and builds value for your membership.
A high return on early renewals demonstrates strong member retention and a healthy association.