What do health clubs, iTunes, Dropbox, Xbox and Netflix have in common? All require members to participate in monthly billing or auto renewal programs. And all are benefiting as a result.
Author and association consultant Seth Kahan recently hosted a summit on “Private Sector Membership Models,” a growing trend in the corporate world. He notes that for-profit companies embrace the membership model for renewable relationships and income potential, also of interest to associations. Says Kahan, “It’s hard for me to imagine there would be any resistance to auto renewal because its sounds like it makes things easier for everybody.” Indeed it does.
Here’s why your association should offer auto renewal:
Member Convenience. Auto renewals allow members to enjoy uninterrupted service and avoid the hassle of manually cutting a check or entering credit card information online. Members receive a notice in advance of renewal so account information can be updated if necessary, and they can opt-out if they choose to not renew. Otherwise, no action is needed.
Automation. Think of the flurry of activity in the membership department around dues renewal time. Then think about how this same energy could be put to better use enhancing products, services and the overall member experience instead of processing renewals. Programmed renewals allow for automation of much (if not all) of the process.
Predictable Revenue Stream. Many associations enjoy an influx of dues around the beginning of the calendar year—only to be staring at nearly-empty coffers toward the end of it. Automatic billing for dues on the member join date, rather than on a calendar year, creates a smooth revenue stream throughout the year (and is a practice worth considering even if you don’t use automatic renewal). Or, consider monthly or quarterly billing to further even out revenue.
No Decision Points. Sending a dues statement once a year provides an annual decision point for members and invites scrutiny: “Did I get my money’s worth this year?” “What am I getting for my dues dollar?”
Robbie Baxter, author of the forthcoming book, The Membership Economy, notes, “Because payment and benefits are ongoing, there is no obvious moment when the member must re-evaluate options, and potentially choose to end the relationship.”
Companies such as health clubs, iTunes, Dropbox, Xbox and Netflix don’t provide annual decision points. You want to be a member? Provide your debit or credit card number and you’re a member until you cancel. It’s a simple concept that could result in higher retention rates and millions of dollars for your organization.