Life Cycle V – Renewal

Renewal is the quantitative measurement of how successful you have been with the earlier components of your membership system. An aware, engaged, and interdependent member is much more likely to renew than one who is not.

But at the same time, there is a unique challenge to renewing members. Any renewal program needs to take into account that people are very busy and overwhelmed with communications.

Over the years, my analysis of why members’ lapse shows that the number one reason that people leave an organization is not that they are unhappy with the services or angry about customer service. No, the key reason most people do not renew their membership is because they “forgot”.

In some cases, the member moved and did not provide the association with a forwarding address. In other cases, the brand of the association did not stand out enough in the renewal notice, and it was overlooked. Whatever the reason, more members leave an organization by omission than commission.

In order to break through this omission challenge, renewal programs need to break through the clutter of competing communications.

Perhaps one of the simplest and often one of the most effective ways to improve renewals is simply to increase the frequency of notices. Increasing the number of notices sent to a member should be considered if tracking reveals that the final notices of the renewal program are generating a strong response or if subsequent reinstatement efforts produce good returns. I have met with organizations that do telemarketing to former members and have response rates in excess of 10 percent. This says to me that their renewal system is leaking members who communicated with properly are ready and willing to stay with the organization.

As a rule of thumb, the frequency of renewal notices should be increased until the cost of generating a renewing member through the system equals or exceeds the cost of acquiring a new member. In the rare event that tracking reveals the cost of renewing a member is higher than acquiring a new member, then decreasing the number of renewal notices would be appropriate.

A second tool to break through the challenge of members forgetting to renew is the use of multiple marketing media. In addition to mailed renewal notices, other channels like phone, FAX, and email can be employed.

A high frequency, multi-channel renewal program might look like the following.

Finally, an opportunity to positively impact renewals is to look at offering different options to actually eliminate the member’s renewal decision. This is accomplished by offering payment options like:

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

These payment options change the renewal dynamic from asking the member to act pro-actively to continue a membership to requiring the member to act proactively to end a membership. Associations that have members who accept some type of automatic debit or credit card charge can see renewal rates 10 points higher for these members than for typical members.

What techniques have you used to increase membership renewals? Please feel free to share them here.

By the way, you can read my first four posts on the Membership Life Cycle through the following links: Awareness, Recruitment, Engagement, and Interdependence.