Improving Membership Retention through Automatic Renewal Programs

There is a way to increase renewal rates without adding more member value or changing your marketing efforts. You can raise rates by adding an automatic renewal program to your payment options.

Time after time, we find in lapsed member interviews and surveys that many members leave an organization for reasons of omission instead of commission. They did not dislike the organization, they simply forgot to renew.

That’s why associations have experienced success by adding an automatic renewal program where members actually have to proactively stop membership. It is not unusual for automatic renewal members to renew at 10 points above those not in the program.

Under this system, a member is given the option when they join or renew for an annual -- or sometimes even monthly -- credit card or EFT debits made to their account for dues payments.

Here is the publically available language that one organization uses on their web site to set up an automatic annual renewal program.

“Yes, I'd like to take advantage of AOPA's Automatic Annual Renewal Program and save $4 off my dues this year. I understand that each year you will automatically charge my annual membership dues to my credit card unless you receive a request from me to withdraw from this program. Enrollment in AOPA's AAR program will convey 2 sweepstakes entries to the enrolling member.”

Legally and ethically there are also issues to consider in launching this type of program. Rather than go into detail about them, here is a link to guidelines in the circulation industry that are used in order to establish an advance consent or automatic renewal program. Many of the points apply to membership.

Also be aware that an automatic renewal program will require additional administrative time and attention. On the June 13, 2008, ASAE membership listserv, Lillian Israel, the Director of Membership for the Association for Computing Machinery, wisely shared these experiences and cautions. “My association just began using automatic credit card renewal on our online renewals . . . there was a large pick-up of the service by our members. The only con, and you might not even term it that, is coming up with a strategy on the process used to notify members of expired cards, getting the updated credit card information, naturally making sure the credit card information on file is encrypted in a really smart way.”

If you are not looking at automatic renewal programs, it is something to put on your list. For those of you who have it in place, what has been your experience?


Scott Oser said...

Hi Tony,

I would love to see your examples of where credit card automatic renewal increased response rates by 10%. I tried credit card auto renewal at AAAS and at National Geographic and asking for the credit card always reduced response rates. This was a few years ago. Willingness of consumers to give their credit card number may have changed over time and that would be great if it did.

In your experience did groups offer an incentive to get people to give their credit card number? Many publishers tried that tact (i.e. pay less or get a premium when you sign up for automatic renewal with a credit card now) with some success.

How obvious have the companies that you have seen made it that you are signing up for an auto renew program? When I was working on it there was constant debate on how blatantly you told people that there were signing up for a program of that sort. I am sure that the DMA has nipped some of the ability to hide it in the bud because they do not want another sweepstakes like fiasco where the FCC eventually came in and killed the golden goose.

Do you know if associations are sending notices in advance (link letters) to tell people that their credit card is about to get zapped again? I believe that the DMA still strongly recommends that companies using credit card auto renew do so.

In my past experience I found that many organizations had more success using what tends to be called bill-me auto renewals. In this type of renewal program you get a customer to sign up for an auto renew program where they are basically committing to renew the following year. Instead of zapping their credit card annually you send them a series of invoices basically reminding them that they signed up for the program and they already committed to paying you. You can now send them a more aggressive invoice type renewal instead of the friendlier renewal notice most associations tend to use.

Credit card renewal has lots of potential challenges. Lower response rate, rejected credit cards and customer complaints are just a few. Associations need to research what has worked for other companies (publishers especially).the legal ramifications and test the idea to see if it is right for their unique audience.

Tony Rossell said...

Scott -- Great points and questions. All of the clients that I work with who use automatic renewals do it as an opt-in, not an opt-out. In all of these cases, I have never seen the members NOT enrolled in automatic renewals have a higher renewal rate than those enrolled.

At what point in the member releationship you offer this option to members is another question. It may best be done as a pre-renewal offer or as part of the renewal series. Some clients offer a diocount or a free gift to encourage a member to go into the automatic renewal system. Tony