In our recent articles on best practice in Membership management, we’ve looked at how to better engage, communicate and add value to your members in order to grow. We know that a retention strategy is just as important to growth as a recruitment / acquisition strategy. We know that it costs less to retain an existing member than to acquire one, so it makes perfect sense to focus on this area for maximum ROI. Even by improving your retention rates by single digit percentage points, it has an exponential upturn on your profitability.
Retention rates are often a key sign of success, along with member churn, affinity and other more operational response rates along the way.
A renewal cycle is the support to ensuring that members find it easy to remain with the membership, and the communication they receive must be accurate, effortless and intuitive to allow them to easily stay. It sounds a simple statement, but this somewhat administrative area of the membership cycle can often be the downfall of a renewal.
It is important to have in place a scaled and planned renewal process that moves away from reactive and chaotic contact when members lapse and churn. Successful member organizations have a specialised team in place to manage renewals, ensuring the approach ties in with an overall engagement strategy for a holistic and consistent contact strategy over the lifecycle.
A best practice renewal cycle must be:
- Relevant and personalized in how a member is being communicated with (preferred channel, targeted messaging per member type, source, risk level etc.)
- Flexible when a member is being communicated with (frequency and time from renewal date)
- Accurate, easy and relevant in billing (amount, membership plan and payment method) – it’s all about convenience
- Able to offer flexibility in grace periods, lapse reinstatement etc.
- Able to offer optimal deals and incentives for existing members including up-sell and cross-sell (move toward a customer loyalty and advocacy program)
- Linked to KPIs to allow you to track the performance and ROI of your retention approach, even by renewal effort (timing, frequency, creative and offer for example) to allow you to test and tweak your engagement
- A two-way communication, with the ability for the member to easily contact service teams or provide feedback on their experience
Let’s deep dive into a few of these areas…
I’ll be using multiple statistics from the Membership Marketing Benchmarking Report from Marketing General Incorporated…
When members are asked to renew
The majority of membership organizations (71%) tend to wait until 3 months before renewal date expiration before they start their renewal efforts. Yet only 8% do this immediately, failing to capitalize on the feel-good factor straight from the start, ask for member expectations and start demonstrating value. Those membership organizations who centre their engagement strategy on customer experience (CX) do this automatically, the renewal process should be a natural extension of your relationship.
On the other end of the spectrum, 47% of associations stop renewal efforts within three months after the expiration date.
So how does this affect renewal rates? Well, associations with lower renewal rates (less than 80%) are more likely to stop renewal efforts after one month.
We see that it is a balance of ensuring the member is aware of their renewal date, that it has lapsed, what benefits they might miss out on and over-contact. It is important that there are points of difference within each renewal effort so that a cadence is built, encouraging the behaviour you want as an organization (i.e. incentivising early bird renewals) But we see that a certain amount of core repetition is key to reinforce the point, providing an end date or cut-off.
Interestingly 18% do not stop contact at all as part of a lapsed member engagement approach.
How members renew and how they are asked to
Email is the most popular method for contacting members to renew their membership, with an average of four emails per renewal series.
However, what garners the most response? The top three channels that generate the best response are email marketing (80%), direct mail (49%) and telephone (45%). Those associations with the higher renewal rates are more likely to see the effectiveness of phone calls.
The key here is to understand the preferred channel(s) of your members, this may start with honouring their source method when segmenting your approach, but this could change through the lifecycle of their membership, so it is important to keep analysing how each member communicates with your organization and what comes more naturally to them. Test and personalize your approach. My colleague Jennifer has previously written about the benefits of marketing automation technologies and processes, and these are very important in a renewals program as well as acquisition; as it allows you to personalize as much as possible.
Offering members the flexibility to choose how they want to renew their memberships is key, they might want to renew automatically, via self-service, or direct with your service team. Choice and clarity is paramount here.
Ways to increase renewal rates – are these in your mix?
Advocacy and the power of consensus
Don’t forget that your own membership are key in continually reminding each other of the benefits of being in your association, so step back into a more lifecycle approach. Remember that ongoing activities such as providing “social proof” from peers and advocates are great at reinforcing the value you provide (and this power of consensus carries more weight than your own messaging!).
Automatic renewals and bill-me options
Although we know that the top reason for members not renewing their membership is “lack of engagement with the organization” (43%), a large proportion at number 4 is “Forgot to renew” at 25%. For IMOs this is higher at 33%.
Modern consumers are now well used to the subscription / streaming services concept, with the likes of Netflix, Amazon Prime, Spotify and so on, and it is perfectly acceptable and often more desirable to offer frictionless renewals of membership.
Yet 30% of associations do not offer any bill-me, automatic credit card renewal, multi-year renewals, lifetime membership or instalment payments. These are all opportunities to remove barriers of renewal and to allow for the “forgetful” member. 22% of associations with a renewal increase include a bill-me option.
Offer your members the flexibility they enjoy elsewhere; do it clearly, honestly and think of the ROI you would enjoy too.
Grace periods post-expiry date
The concept of a grace period, i.e. offering your membership benefits post-expiry, is important; after all, the relationship that you have built up over the lifecycle surely deserves trust and leeway, in the hope of the member coming back for more. But it’s a balance, you need a cut-off defined in order to bring about action and not to risk your overheads spent without ROI. What is an acceptable time period?
The largest proportion of organizations (46%) offer a grace period of 2-3 months, yet 23% do not offer one at all. Associations with a higher first-year member renewal rate are more likely to offer a grace period (85% vs 65%).
Your readiness to offer free trials to recruit new members is much the same risk/reward with grace periods to existing members.
If you think of the investments you have made in recruiting that member and then lose them, only to have to spend the same amount in replacing them with a new one – the figures do not stack up.
Lapsed member activities
On that note, what happens once a member truly lapses, does your organization continue engagement? Again, it’s a balancing act but one that does bear fruit and is more cost-effective than acquisition. 37% of trade associations say they continue indefinitely to contact lapsed members, higher than IMOs at 21%. Decision makers, strategies and budgets change within companies.
76% of associations report that email marketing generates the most reinstated lapsed members – again, think about marketing automation techniques and how you can create a targeted journey for this segment, continually reinforcing the benefits of what they are missing, requesting feedback, refer-a-friend and promoting what’s new.
Overall, I suggest reviewing your holistic membership management program to ensure that you encompass the entire member’s customer experience journey, and that must include a retention strategy, supported by the right resources and processes. Please talk to me about the Membership solution from Prodware that embraces the best practices in renewals and billing.
Article initially published on LinkedIn
