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Membership Renewal Billing for Retention

We have had the opportunity over the years to support some very large membership organizations by providing their membership management and MRM software. It has always been a point of fascination the complexities that surround some of these organizations. “Membership, how hard can it be?” is the quip sometimes heard in my office.

Many of our clients have very solid brands with deep market penetration and great renewal rates. A great deal of effort goes into the renewal billing process as a part of an overall retention strategy. We could spend a great deal of energy discussing the entire retention process from branding to salvage; however for the purpose of this post, we are going to focus on the process of renewal billing.

How important can a renewal billing strategy be to maximizing retention? Small shifts in renewal rates for a large membership-based organization can pay huge dividends. By targeting the various types of members and segmenting them appropriately, we have seen organizations maximize renewals within each category. If you simply send a renewal invoice and hope they pay, you are not using the renewal billing process as part of your retention strategy.

Tips on Membership Renewal Billing for Retention

Membership Types

Membership organizations often adopt a number of membership types that can impact the way we bill members at renewal. A few examples include:

  • Honorary and/or Specialty Members (i.e. Board Members, Employees, Preferred, etc.)
  • Trades, Corporate, Group, and Gift Memberships
  • Discounted Members (i.e. first year, students, etc.)

I could continue with this list but hopefully you get the idea. If you are going to use membership categories and/or promotions as a way to drive new membership, you should take that into consideration during renewal billing to avoid high turn-over within these groups. This consideration goes beyond just bill format and pricing. Timing, messaging, and content/promotions can also be very important.

Market Segments and Relationships

Matures, Baby Boomers, Gen-X/Y, Millenials or whatever is coming next often consume a great deal of attention when discussing buying and marketing trends. The differences in these generational groups should be considered in the renewal billing efforts of large and diverse organizations. Note that actual bill delivery (i.e. email vs. postal mail) is usually a matter of member preference.

In addition to the market segment, you should also be aware of the relationship the member has with your organization. How a member interacts with your organization should be taken into consideration. Consider for a moment the member-only web content they consume, the products and/or services they value, and the events they attend. What is the member telling you about your value and how do you leverage that as part of the renewal process?

Auto Renewals and Payment Plans

To drive higher renewal rates I have seen a number of organizations, especially large ones, implement auto renewals and payment plans. These can be very effective components of a renewal strategy but also introduce some complexities that go beyond this particular post. I mention it here as an introduction to the impact that it has on the Touches, Timing, and Messaging section that follows. All the processing that involves charging members and dealing with credit card rejects effectively, will be saved for a later conversation.

Member Credentials

It might seem interesting to some that I include member credentialing in a conversation regarding renewal billing and retention rates. Many feel that by providing a member a new credential with a future expiration date along with a first renewal bill, drives up the retention rate. Of course there is a cost that goes along with this with approach. Many of my clients wait until receiving payment before issuing credentials. Some of my clients will treat different groups of clients differently. An example might be to send member credentials to those member segments that renew at a high rate and hold back other segments, including auto renewal memberships, until after payment is received. This is one area of retention that organizations can’t seem to agree on.

Flexibility and Testing

A very important part of a renewal billing retention strategy is to monitor renewal rates by notice and segment in real time and be flexible with subsequent renewal notices to leverage what is working. In addition, testing within bill notices can be an effective tool for driving renewal rates. We accomplish this through the use of what we call “bill panels.” This is nothing more than a way to segment your members for billing so you can control the messaging, content, and timing and monitor the results between notices.

Touches, Timing, and Messaging

What you say and how you deliver it matters significantly to your members. How many times you ask for payment, and how you ask it can also have a huge impact on renewal rates. Whereas I am not an expert on the message, the renewal billing process defined here can serve as a strategy to drive retention. The messaging is very important but is also uniquely your own.

In addition to content and messaging, the number of notices and how they are delivered matters. It is my belief that you need to put at least four renewal notices with different messaging related to urgency in front of your members before considering the member as lapsed and moving them into a salvage process.

Real-time Billing Dashboard

An important part of this equation is having the ability to monitor payments as they are processed as it relates to the various bill segments. Awareness of your renewal rates by notice and segment as payments are received from your website, call centers, branch offices, lock box, and/or processed in your back office processing center is very important.

Example Renewal Billing Scenario

Let’s take a look at a sample renewal billing process that one of my clients implemented. This is presented as a sample to see how the topics presented above can impact a renewal billing cycle. For this example we will take into consideration all members that expire during the month of June. Prior to this billing all segments must be identified and applied across the expiring members. Of course all of the actual mail-piece design, promotional, and other content consideration must be complete and in place well before the actual billing process begins.

Renewal Bills - 1st Notice

This step is usually done well before the expiration date (often as many as 45 days). This usually also includes auto renewal memberships where we are alerting the member of an upcoming charge to their credit card. Remember, bills are done in segments within each notice which will result in different messaging and content and may or may not include a membership credential as discussed above. These include different types of bills based on membership types (i.e. corporate vs. traditional members) and segment (i.e. 1st year members vs. those that are targeted for a certain promotion). In addition, the way the bill is delivered (email vs. postal mail) is also a consideration.

Auto Renewal Credit Card Processing

Between 1st and 2nd renewal notice processing most of my clients run the auto renewal credit card charges. This allows for the reject notices to go out with the 2nd renewal notices. The actual processing of the cards, number of attempts, and actual timing is not detailed here.

Renewal Bills – 2nd Notice

2nd renewal notices are typically sent just prior to the expiration (maybe 15 days or so). This is used to alert the member that they will be losing service if they don’t respond. Segments also come into play here. You have had an opportunity to monitor the 1st renewal notice responses and can make adjustments prior to second notices by moving members between segments if you so desire.

Renewal Bills – 3rd Notice

For the majority of my clients, 3rd renewal notices are sent very close to the member expiration date. Messaging is tailored to ensure the member understands that member benefits will be lost if they don’t act immediately. Other messaging and content is usually less promotional at this point and more tailored to reinforce the value of membership. Other consideration is given to special membership categories. For instance, for unpaid corporate and gift memberships, many of my clients will send out individual bills to the benefitting member in an attempt to keep the member enrolled.

Renewal Bills – 4th Notice

4th renewal notices are generally sent after the expiration plus a specified grace period as a cancellation notice. Of course the goal of the 4th notice is to encourage the member to submit payment and not allow the membership to lapse. A number of my clients have used bill segmentation to offer discounts or special promotions to high-value members that are included in this group.

Follow-up Calls and/or Thank You Letters and Emails

A number of my clients will trigger a follow-up letter, email, or phone call upon payment. Sometimes this is isolated based on segment but not always. Imagine using the market segment to control the delivery and content of the follow-up thank you message. All this contributes to the perceived value and further deepens the relationship you have with your member.


There are a lot of things to be considered when adopting a renewal billing process focusing on retention. Having the tools in place to support the process is important. In addition, a great deal of intelligence must be applied to effectively segment your member population and develop relevant messaging, content, and promotions.

Richard Spanier
President and CEO

Mr. Spanier has over 30 years of IT and business management and development experience. Mr. Spanier has led large development projects in the telecom, accounting and finance, banking, and membership industries. His recent projects include membership and MRM/CRM software installations for some of the nation’s largest Automobile Clubs, telecom applications for state governments, and asset management applications for the banking industry. Mr. Spanier has a Bachelor of Science degree in Systems Science from the University of West Florida and graduate work in both Systems Analysis and Business Administration.