MGI Tipster – Volume 9 Issue 12 – The MGI Membership Lifecycle

December 9, 2010   |   Vol. 9   |   Issue 12

Renewal: Step Four in the MGI Membership Lifecycle Marketing Model

The MGI Membership Lifecycle

The MGI Membership Lifecycle helps organizations develop a comprehensive, integrated approach to membership marketing. The Lifecycle has five steps: Awareness, Recruitment, Engagement, Renewal, and Reinstatement.

In last month’s MGI Tipster we examined Engagement, when new members are made to feel they belong with you. This month we focus on Renewal, when lapsing members make the decision whether to keep you.

Renewal Step

Renewal—a cornerstone of membership growth.

Members lapse for many reasons, and some are not under your organization’s control. Members may switch jobs, change careers, take a sabbatical, or retire, and so their affiliation comes to an end.

But for those who are eligible for continued membership, the level of an organization’s renewal rate is, in fact, a quantitative measurement of how members value your organization. An aware, engaged, and interdependent member is much more likely to renew than one who is not. (Engagement was discussed in Volume 9 Issue 11, which can be found on the MGI website www.marketinggeneral.com.) But putting value aside, a key reason many people do not renew their memberships is simply because they forgot. So the job of a renewals program is to remind as well as confirm.

Renewals are increasingly complex.

Renewing members has become an increasingly complicated process. Today’s most effective renewal systems are built around multi-media contacts that combine mail, email, and telephone, all integrated with the Web.

One of the easiest and most effective ways to improve renewals is increased frequency of contact. This becomes particularly important when final renewal notices generate a strong response or when follow-up reinstatement requests produce sizeable returns. For example, some reinstatement rates of return can reach upward of 10 percent, which signals a renewal system that is failing.

As a rule of thumb …

The frequency of renewal notices should be increased until the cost of renewing a member equals or exceeds the cost of acquiring a new member. If the cost of renewing a member is higher than acquiring a new member, then the number of renewal notices should be reduced.

Make the decision easier.

The easier the organization makes the act of renewing, the better the chances the member will act on it. Payment options have proven to be significant incentives that make the decision easier, such as:

  • Automatic credit card renewal
  • Automatic electronic funds transfer renewal (EFT)
  • Automatic monthly or quarterly credit card installment billing
  • Multiple-year memberships
  • Life memberships.

These payment options change the dynamic from asking a member to proactively continue membership, to instead requiring a member to move proactively and end membership. Some organizations that use automatic debit or credit card charges have seen renewal rates rise by as much as 10 points.

Take note of the percentages.

Marketing General’s 2010 Membership Marketing Benchmarking Survey compared when organizations complete their renewal efforts, measured by months from expiration. The survey then cross-tabulated its findings against membership renewal rates.

The data indicate that organizations that stop the renewal process sooner are more likely to have renewal rates of less than 80 percent. On the other hand, those that continue renewal efforts longer are more likely to have renewal rates greater than 80 percent.

In fact, those that don’t stop contact at all are 83% more likely to be in the higher renewal group than those that end contact.


Renewals Part II

There are many more renewal tips to share with MGI Tipster readers, which we will explore in next month’s issue.

We at Marketing General would like to take this opportunity to extend to our readers our Best Wishes for Happy Holidays and a Peaceful and Prosperous New Year.

If you would like to learn more about the MGI Membership Lifecycle and how it can help your organization grow, telephone Rick Whelan at 703-739-1000 or email him at rick@marketinggeneral.com.

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