MGI Tipster Volume 1, Issue 8

Do you know…renewals are the foundation for membership success?


Nothing is more important to an association than an efficient and effective member renewal program. Dues through renewals are a primary income source. But just as important, renewal rates mirror an association’s success in other areas too. How many members renew reflects their satisfaction with the organization. While low renewals may result from a poorly planned or implemented renewal effort, they may also hint at an ineffective member communications program, poor products or programs.

THE ECONOMICS OF RENEWALS

An association with a 50% renewal rate keeps its members an average of 2 years—half drop out the first year, the remaining half drop out the second year. If dues are $100 per year, then a member’s average lifetime value is $200. Assume the renewal rate is higher—80%. 20% of the members leave each year so each stays about 5 years. If dues are $100 per year, each member’s lifetime value is $500, 21/2 times the lifetime value of the 50% renewal rate. You can see that incremental renewal improvements result in exponential revenue increases. Plus, it is far less costly and far more productive to develop and maintain a strong renewals program than to implement new member acquisitions.

THE BUILDING BLOCKS OF RENEWALS

There are several keys to successful renewals:

  • Successful renewal programs are the result of year-around member retention efforts.The association must maintain accurate, up-to-date membership data. Renewals must be consistently and accurately executed month after month.
  • The renewals program must be monitored, adjusted and tested.

Renewals typically use direct mail so messaging can be targeted. Direct mail also simplifies responding by providing an order form and reply envelope to encourage a response. Renewals increasingly include e-mails because they are less expensive, deliver immediately, tend to have a faster response, and when linked to a website it is easy to sign up. Many associations also utilize the phone and proven marketing techniques including automatic renewal and multiple-year memberships to increase overall renewal rates.

THE FREQUENCY OF RENEWALS

Renewals typically begin 4 to 6 months before membership expiration and continue several months after. The number of notices is determined by careful tracking to decide when to stop, which is when the members’ lifetime value that the last notice brings falls below the cost of sending out the notices. It is also important to continuously test offers, formats, messages, and timing—always trying to improve results.

THE FORMATS OF RENEWALS

Renewals must be clearly stated, easy to complete, and simple to reply to. Often the first renewal is simply a notice with brief copy that reminds members to continue membership. Successive renewal notices should add an increasing sense of urgency and emphasize the reasons to continue membership. They can use testimonials, messages from the executive director, guarantees, multi-year savings, and discounts until a last chance message closes out the series.

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