Ruth Doyle, Senior Consultant
Professional membership bodies have historically had high retention rates – PARN’s benchmarking report in 2015 showed a UK sector average of 84% retention, and a recent benchmarking report from US-based membership specialists Marketing General Inc shows a median renewal rate of 80%. In our own Member Engagement Survey earlier this year, the average retention rate from 23 UK professional bodies was 90%, with the lowest reported as 70% and the highest an impressive 99%. Still, recruiting anything from 1 to 30% of your membership each year is a challenge.
The financial benefits of retention are not just the time and budget saved from recruitment but, importantly, the continued spend gained from the retained member – their customer lifetime value. For a recent client of ours with 44,000 members, retaining just 500 more Chartered members each year would bring an additional £150k per year in membership fees, as well as the possibility of further income from event or conference attendance, product purchases, member referral and volunteering value.
Going around in circles
The debate about rolling renewals (where members renew on the anniversary of their joining) vs annual (all members renew on the same date) rumbles on. MGI’s report shows that in the US, associations with individual members tend slightly towards rolling (57%). Sue Froggatt's recent benchmarking report - which includes associations across the globe - goes the other way, with 54% having annual renewals. There are advantages and disadvantages to each, but we've heard that some of our clients are coming under pressure to switch to annual renewals. Why?
The case for annual renewals
Finance and audit colleagues often prefer this model, as it allows for a greater certainty when forecasting income and preparing budgets, and a cleaner financial year. If yours is a small organisation, you can concentrate your administrative effort on one short period, scaling up with temporary resources if you need to. Strategic planning is simpler, with reasonably reliable indications of expected retention rates. The timing is critical though, especially if you have large numbers of student members, who may join mid-way through your financial year – asking them to pay a full year’s membership can be a deal breaker.
The case for rolling renewals
Although switching from annual to rolling renewals is a big project, those who’ve moved rarely look back. A smoother income curve, continuously cleansed member data, opportunities to tweak and improve communications and offer throughout the year, are powerful advantages. Often, the strategic shift to rolling renewals allows you to introduce other significant changes – like direct debit payments by default, instalment payments or multi-year membership pricing. Building automated email sequences could take some of the administrative headache away, giving you an opportunity to monitor and continuously improve your renewals marketing.
MGI’s report showed that, in the US at least, most associations start renewal campaigns three months ahead of lapse date, and continue for three months after – a good reason to let automated email sequences to do the heavy lifting.
MGI’s data shows that the best channels for renewals were email (84% rated as the top channel), direct mail and phone, with members being contacted an average of four times. The main reasons members didn’t renew were: employer wouldn’t pay fees, lack of engagement with the membership body, or they had left the industry. Surprisingly though, a large segment - around one quarter - just forgot, which is where outbound phone calls can really pay off.
Closer to home, MemberWise’s The Perfect Membership Scheme offers some helpful advice from other membership professionals about why you might choose rolling or annual, and 44 questions to ask yourself about your current model.
Renewals – a time to reiterate value and re-engage
Signing-up members for another year isn’t just a financial imperative. It can be a great time to re-engage members with their CPD and remind members of the value they get from membership – with a simple infographic or even a personalised “receipt" of everything the member has used in the last year.
It’s also a great time to clean up your data, ask questions and gain both qualitative and quantitative insight. For renewees, it’s a time to ask about their challenges ahead and how your organisation can help them. And, as anyone who’s done an exit interview with a departing employee will know, asking lapsed members what you could have done better will yield rich insight and learning.
Ahead of renewal time, membership bodies can leverage CRM data and digital channels to identify and target at-risk members before they lapse. MGI reports how social advertising and Facebook custom audiences are being used to target advertising to those at risk and to remind them to reinstate.
A great case study from Gavin Berkerey at the Royal Society of Medicine demonstrates how data mining and propensity modelling allowed the RSM to identify a lapse-risk segment for more targeted engagement, long before the renewals campaign. The outcome makes for encouraging reading.
Whether your organisation chooses annual or rolling renewals will depend on your own financial imperatives, strategic priorities and retention patterns; some have chosen a hybrid model. Either way, renewal is a time to reinvigorate the member relationship, restate the value for members, clean your data and gain valuable insight into member needs.