Tips on Renewal for Member Retention

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Renewal Strategies for Retaining Members

Your Messaging, Touch Frequency and even how you Segment your Members can Increase Retention Rates

Membership Management

Membership Renewal Strategies for Retaining Members

A carefully executed membership renewal process with segmentation, multiple touches and individualized messaging can result in increased retention rates.

We have had the opportunity over the years to support some very large membership organizations by providing their membership management and relationship management software. It has always been fascinating how complex the processes that surround some of these organizations are and the renewal process is no exception. “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 process as a part of an overall retention strategy. How important can your renewal 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 process as part of your retention strategy.

Membership Types

Membership organizations often adopt many membership types that can impact the way you interact with 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.)

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

Market Segments and Relationships

Matures, Baby Boomers, Gen-X/Y, Millennials and 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 efforts of large and diverse organizations. Actual message delivery (i.e. email vs. postal mail) should be 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 messaging?

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 document. 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 and retention rates. I have been involved in a lot of conversations to this regard. Many feel that by providing members a new credential with a future expiration date along with a first renewal notice, drives up the retention rate. Of course there is a cost that goes along with this approach. Many of our clients wait until receiving payment before issuing credentials. Some of our 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 processed. This is one area of retention that our clients can’t seem to agree on.

Flexibility and Testing

A very important part of a renewal and 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 renewal 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 renewal 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 can also have a huge impact on renewal rates. Whereas I am not an expert on the message, the renewal process defined in this document 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. Some organizations prompt members for renewal with every touch, including monthly magazine subscriptions.

Real-time Billing/Renewal Dashboard

An important part of this equation is having the ability to monitor payments as they are processed as it relates to the various renewal segments and notices. 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 Scenario – Subscription Model

Let’s look at a sample renewal process that one of our large subscription driven clients implemented using MemberzPlus. To do this we need to understand a few key components to their strategy.

Multiple Terms

Offering members options regarding terms can be an effective way of retaining members who might be feeling squeezed by the economy or questioning their commitment to your association. One of our clients offers 1-year, 2-year, 3-year, and 5-year subscription term options with tiered pricing. Those subscribers that are certain they will renew from year-to-year often lock in at the 5-year term no questions asked. Others might elect to select a shorter term just to balance cost versus commitment. Regardless, giving the member choices can lead to higher renewal rates overall.

Payment Plans

Some of our clients will tie payment plans to longer terms to help drive retention. An example would be to offer the option to sign up for a 5-year membership and pay for it in 6 monthly or 3 quarterly installments. This is done by recording a credit card with the account and charging that card at the agreed upon dates. Doing this does lead to some complexities. What do you do when you encounter a rejection on a credit card? Some clients will drop these into a daily billing cycle while others will set the term end dates based on the amount collected to-date which forces those members into the appropriate renewal cycle.

Magazine Renewals – Wrapping Magazines with Varying Renewal Promotions

Offering subscribers who are receiving a magazine the opportunity to renew can be an effective use of the “touch.” Since the member is already expecting either a print or digital interaction with the organization, including an opportunity for renewal with relevant messaging can be an effective renewal strategy. Especially when taken in consideration the other topics presented here.

Pricing and Premiums

One of our larger clients loves to test pricing and/or premium offerings during renewals tied to monthly magazine subscription. Throughout the year they will segment subscriptions using varying criteria and offer different renewal offers around term lengths (10% discount on 5-year subscription) or premiums (renew and get a branded shirt or discount with an affiliate). This comes with complexities regarding processing returns via postal mail, call center, and/or web sites. We have spent a great deal of energy building this sort of capability into MemberzPlus through our campaign setup and management features.

Stacking Contracts

If you are going to push renewals as part of a year-round strategy, you must stack subscription contracts and ensure no interruption of service throughout the overall subscription term. At MemberzPlus we refer to this as future contracts. This comes with complexities especially when dealing with cancellations.

Example Renewal Scenario – Membership Model

Let’s look at a sample renewal process that one of our large membership dues driven clients implemented using MemberzPlus. This is presented as a sample to see how the topics presented above can impact a renewal cycle.

For this example we will take into consideration all members that expire during the month of June. Prior to this renewal all segments must be identified and applied across the expiring members. The actual mail-piece design, promotional, and other content consideration must be complete and in place well before the actual renewal process begins.

Renewal - 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, renewals 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 renewals 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 renewal is delivered (email vs. postal mail) is also a consideration.

Auto Renewal Credit Card Processing

Between 1st and 2nd renewal notice processing most of our 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 in this document.

Renewal – 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 – 3rd Notice

For many of our 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, unpaid corporate and gift memberships, many of our clients will send out individual renewals to the benefitting member in an attempt to keep the member enrolled.

Renewal – 4th Notice

4th renewal notices are generally sent after the expiration plus a specified grace period as a cancellation notice. The goal of the 4 th notice is to encourage the member to submit payment and not allow the membership to lapse. Some of our clients have used renewal 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

Many of our 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 strategy 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.

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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.