Many of your members and your membership prospects are consumers of the subscription economy. Think about everyone you know who belongs to Spotify, Netflix, Hulu, Audible, eHarmony, Blue Apron, or Stitch Fix. And that’s just a tiny sample of the booming subscription market.
Associations have been consumers of the subscription economy since the rise and adoption of Software as a Service (SaaS) platforms such as association management systems, learning management systems, and other association software. You and your colleagues probably use other subscription-based tools like Dropbox, Office 365, Adobe Creative Cloud, Slack, Asana, or Buffer.
Members already pay for monthly subscription services in their personal and professional lives – why not give them the option to pay for their association membership the same way? Just like memberships in the consumer world, monthly dues payments can be automatically charged to the member’s or employer’s credit card or paid via an electronic funds transfer from a checking account.
If members decide not to renew, they simply notify the association and automatic payments are cancelled. In the meantime, their monthly dues payments are set for auto-renewal – aka “perpetual membership.” It has a nice ring to it, doesn’t it?
Auto-renewal in the association world
The auto-renewal trend is growing in the association community, according to Marketing General Incorporated’s (MGI) 2016 Membership Marketing Benchmarking Report.
29 percent of associations now offer automatic renewal and 41 percent of them offer installment plans as an alternative to annual payments.
And, more members are now choosing the auto-renewal option. EnSYNC’s The State of Perpetual Memberships report says 23 percent of members opt into automatic renewal at associations that offer it.
Why do associations offer auto-renewal?
Members, particularly younger members, benefit from having the option to pay their dues monthly via auto-renewal. But, associations benefit too.
1. Offer members a more affordable membership plan.
The initial cost of joining an association can seem like a formidable outlay of funds for many prospects.
- Younger or early career professionals whose dues aren’t subsidized by their employers – or any professionals in that situation.
- Professionals in between jobs.
- Retired professionals.
- Self-employed, freelance, and contract workers.
- Small businesses or start-ups with cash flow challenges.
A one-time dues payment of $325 can be a deal-breaker for many, but it’s much easier to manage if you only have to pay $28/month.
In 2006, the American Occupational Therapy Association (AOTA) was eager to increase its recruitment and retention of younger members. A survey told them young members considered the cost of dues a key barrier to joining.
AOTA decided to test a monthly membership payment plan with auto-renewal on new members. Self-paying members were the most receptive to this new payment plan. As a result, annual new member dues revenue increased by more than $200K. Yes, you read that right.
When they offered the monthly auto-renewal plan to all members, renewals increased by 15%— a $350K increase in dues revenue and a solution to the slowing renewal response rates (and lower retention) they had been experiencing with younger members.
They also learned that new member participants in the auto-renewal plan were 27% more likely to renew after the first year than new members who didn’t choose the monthly payment plan option.
2. Eliminate a barrier to the purchase (or joining) decision.
We’re less restrained with our money when we spend it in small increments – ask anyone with an iPad full of $1.99 Kindle ebooks (ahem). A monthly auto-renewal payment plan allows a member to join your association for the price of lunch and start receiving benefits immediately. The decision to join is easier to make at the lower monthly price, especially if a member pays dues out of their own pocket. It’s like a trial membership without any fine print.
When you visit the Air Conditioning Contractors of America’s (ACCA) website, you see their monthly dues rate of $39 splashed all over the place. Compared to the annual rate of $450, a monthly bill for $39 seems like a no-brainer which is probably why 40% of their new members have chosen this option.
“We’re an organization of small-business owners, so for a lot of our members it’s more of a personal money decision than it is a corporate decision. We want to make it as easy as possible for you to make that decision.”
ACCA’s results align with the findings of the 2016 M+R Benchmarks Study: people give more on a monthly basis than they do on a one-time basis. The average one-time online gift is $102, while the average monthly online gift is $24—which comes to $288 over 12 months, a substantial difference.
3. Make life simpler for members.
The great thing about automatic renewals is members can set it and forget it. They don’t have to worry about a service interruption if they forget to pay. And, they don’t have to complete forms and gather approval signatures to get a check cut every year.
To make sure they have the member’s correct credit card number and expiration date, associations send a notice to members in advance of the renewal (payment) date. Members can log in and update their account information if necessary.
4. Give members options.
Everyone appreciates having options. Some members rather pay their dues all at once because their employer prefers it that way. However, others appreciate having a more budget-friendly option. In fact, MGI found that 26 percent of the associations participating in their survey said one of the top reasons members didn’t renew is because employers wouldn’t pay or stopped paying the member’s dues. That’s less of a problem when dues payments don’t cause sticker shock.
5. Free up association staff time.
Association staff love auto-renewal payment plans because they reduce the amount of time spent on the renewal process. You no longer have to spend time developing and sending renewal emails, making renewal calls (or asking members to make those calls), and finding out where invoices ended up and where they need to go to get paid by the member’s employer. The time you used to spend on these tasks can now be spent on more mission-critical work.
One time-consuming task for staff is dealing with expired or reissued credit cards. However, that’s less of a problem now as more payment processors are offering an Account Updater function. With your members’ permission, if a card is declined, the payment processor automatically requests a card update from the card networks and receives the most current card information along with authorization of the monthly fee.
6. Eliminate unintentional non-renewal.
19 percent of the association participating in the MGI survey said one of the top reasons members didn’t renew is because they simply forgot to renew. Auto-renewal eliminates that problem.
With auto-renewal, you also don’t have to worry about dues invoices ending up on the wrong desks. And, as long as their credit card still works, you don’t have to worry about members in transition (personal or professional) who forget to provide you with a new mailing or email address.
7. Enjoy a predictable revenue stream.
The business world has taken to the subscription model because it provides recurring revenue each month and a steady predictable revenue flow throughout the year. Best of all, according to the EnSYNC survey, half of the associations offering either automatic renewal or installment plans reported improved member satisfaction and retention. Isn’t that what it’s all about?
If the idea of a monthly auto-renewal payment plan is starting to look good to you, stay tuned for our next two posts. We’ll dive into the items you need to consider before deciding to offer auto-renewal, and explain how to make a business case for auto-renewal, and prepare to launch your new monthly dues payment plan.