Auto-Renewals & Monthly Dues: Benefits, Pitfalls & Best Practices
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On-demand webinar available here: https://youtu.be/10YsjbQk6MI Auto-renewals and monthly installments could revolutionize the way members renew with your association. We'll discuss: - The benefits of auto-renewal and offering monthly installments - Any potential pitfalls - How to get started or optimize current processes
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Auto-Renewals & Monthly Dues: Benefits, Pitfalls & Best Practices
- 1. Membership Series – Part 2: Auto-Renewals & Monthly Installments - A Membership Game Changer?
- 2. Joint Membership Benefits, Pitfalls, & Is it right for you? Part 1 Auto Renewals & Monthly Installments Benefits, Pitfalls, & Is it right for you? Part 2 https://www.youtube.com/watch?v=NAaIGl-MCzw
- 3. National Success Story The American Occupational Therapy Association Results Early concerns that complaints about unexpected renewal charges would flood in were unfounded. Plan participants were 27 percent more likely to renew after the first year than new members who didn’t choose the payment-plan option Based on the success of the plan, AOTA then offered the option to all members. renewals up 15 percent among participants 15% https://www.asaecenter.org/resources/articles/an_plus/2013/october/can-a-monthly-payment-option-work-at-your-association
- 4. Does this sound familiar? “We can work on more valuable member services than being a billing administrative association in which we’re spending all our time kicking dues notices.” - Mark Jones, CAE, president of enSYNC Corporation ** http://associationsnow.com/2016/11/perpetual-membership-study-auto-renewal-reality- check/?utm_source=AN%2BDaily%2BNews&utm_medium=email&utm_campaign=20161109%2BWednesday
- 6. Kyle Bazzy Director of Growth Proud Detroiter Billhighway Technology built for CRPs Founded in 1999 Why Are We Qualified?
- 7. Do You Know Who Pays Your Members’ Dues? • Is it out of their pocket? • Is it professional development paid by their employer? • Other? Tip: If you’re looking for a new question to add to your member surveys, ask questions that get to the root of who pays for the membership and why.
- 8. What do YOU want to learn about auto renewals/monthly installments? Help Me, Help You!
- 9. State of Auto Renewals Member Opt-In On average, about 23 percent of members opt in to automatic renewal at associations that said they offer it. Tokenization Just 14 percent of associations offering automatic renewal said they use tokenization, a payment card industry (PCI) practice recommended for secure data storage. Cancellation Only 41 percent of associations offering recurring billing said they require members to initialize a cancellation instead of still sending an annual renewal notice. Of members opt in to automatic renewal at associations 23% http://blog.ensync-corp.com/survey-provides-details-on-perpetual-payments-plans/
- 10. Why? 01 Convenience 02 Automation 03 Predictable revenue stream 04 No decision points
- 11. Convenience Chapter Don’t have to send renewal reminders Member Set it & forget it National Can focus time on bigger initiatives than renewal of new members to ACCA have chosen the monthly auto- renewal plan 40% Tips from ACCA: • Create a single dues rate • Don’t hide how much dues are • Make it easy to join http://associationsnow.com/2015/10/monthly-membership-as-easy-as-possible/
- 12. Automation Chapter Less legwork for staff – increased revenue via monthly payments Member Members don’t have to mail in a check or go online National Members are a part of it until they’re not = perpetual membership Tip: Monthly amounts are more affordable for members paying out of their own pocket – frame your membership as “Easy Pay” Monthly membership cost is more than yearly Extra cost covers additional administration ASCA Example http://associationsnow.com/2015/06/auto-renewal-and-monthly-payments-the-perfect-mix/
- 13. Predictable Revenue Stream Chapter More support for volunteers/staff Member More affordable – a set fee people can count on like utilities National Shared information in real-time of associations offering multi-year renewal options saw an increase in renewal rates 44% http://membershipmarketing.blogspot.com/2014/04/what-can-be-done-to-increase-renewal.html
- 14. Remove Decision Points Chapter Staff don’t have to spend time sending renewal notices Member Member can’t forget to renew – it’s already taken care of National Value isn’t as closely scrutinized, also provides a great opportunity for National to share throughout the year the value members are receiving
- 15. Considerations: Implementation Annual versus monthly KISS Dunning management PCI Compliance Expired cards Starting small Trust Tips: • Find a company that offers automatic credit card/account updater technology • Survey exiting members to better understand their frustrations & improve processes “Because there is no obvious spot to reconsider the membership—especially in cases of automated payments—when members reach the point where they are unhappy enough to cancel, they are usually genuinely unhappy.” - Robbie Kellman Baxter, The Membership Economy http://www.marybyers.com/auto-renewals-planning-for-success/ http://associationsnow.com/2015/06/auto-renewal-and-monthly-payments-the-perfect-mix/
- 16. Define Your Goal Senior leadership buy-in Chapter buy-in Retention, staff efficiency and membership growth (recruitment)
- 17. Other Ways to Increase Renewals 71% of associations that extend a grace period two months or more to allow members to renew have renewal rates over 80% compared to 50% of associations that limit the grace period.71% 69% 66% 69% of associations that include phone contacts as part of their renewal efforts have renewal rates over 80% compared to 44% of associations who do not use phone efforts. 66% of associations that use direct mail as part of their renewal efforts have renewal rates over 80% compared to 45% of associations who do not use direct mail. http://membershipmarketing.blogspot.com/2014/04/what-can-be-done-to-increase-renewal.html
- 18. Tips to Get Started Create a business case Evaluate your current process Measure success Test options http://www.marybyers.com/auto-renewals-planning-for-success/
- 19. Date: Thursday, December 22nd Time: 12:00-12:45 PM E.S.T. Top 10 Takeaways for Chapter-Based Associations 2016 Webinar Finale: Did you miss any of our 2016 webinars? No worries, we’ll recap our best tips, tricks and advice from our previous webinars Register: http://bit.ly/2hwJSnO
- 20. Fact Finders You bring the challenge, we find the answers. IT’S FREE! Project Do you have a chapter project on your plate? Business Case Trying to make a business case but need some external supporting resources? Resources Are you looking for resources or research to guide your project? http://www.billhighway.co/assn-fact-finders/
- 22. Q&A – Ask Away!
Notes de l'éditeur
- Kyle: Share Slide Share link in chat
- Have a lot of new faces, enter in the chat box where you heard about the webinar? Can view our previous webinars on our knowledge bank: http://www.billhighway.co/knowledge-bank/association/
- The American Occupational Therapy Association instituted a monthly payment option, with auto-renewal, for member dues in 2006. Results have been positive, with renewals up 15 percent among participants, equating to about $350,000 in annual dues revenue. Here's how AOTA designed and tested the program. Around 2006 (AOTA) found itself battling slowing response rates and lower total retention among its younger members. For these young members, survey data showed that price was a key barrier to joining. AOTA test marketed a monthly payment option, with auto-renewal, to new members. In its first test of the monthly payment plan, new member response rates increased 50 percent. With a $225 dues price, offering membership for $18.75 per month resonated most with professionals whose dues were not subsidized by their employers. Knowing what percentage of members self-pays for professional memberships is important for this plan to succeed For AOTA, the improved recruitment responses equated to more than $200,000 in annual new-member revenue. The key component of AOTA's plan was combining auto-renewal with the monthly payments. Key language on the new application included "Monthly payments will be charged to your credit card account until such time as you cancel the credit card authorization by sending written notice of your request to cancel." "Such termination will be effective, and your credit card will no longer be charged for monthly dues, beginning the following month in which you send a termination notice." Early concerns that complaints about unexpected renewal charges would flood in were unfounded. The few members who were caught unaware called AOTA and received an immediate refund. In general, they harbored little or no ill will toward the association if the problem was addressed promptly. Early data showed that plan participants were 27 percent more likely to renew after the first year than those new members who did not choose the payment-plan option Based on the success of the plan, AOTA then offered the option to all members. Survey data shows that some members use the plan as a budgeting tool, while others select it for convenience.
- You know the drill! What does BH do? Work with chapter-based associations to simplify the operations and financial complexities of having chapters.
- Insert poll question with options? This is important to consider when deciding to implement auto renewals and monthly installments. Joining is an easy decision when your company pays for it, but a rise in nontraditional careers might mean more professionals making membership decisions with their own money in mind. When your members send you their dues payments, do you know whose pockets they’re reaching into? Their own, or their employers’? The answer may shed some light on how solid your membership foundation is. If you don’t know who is paying, then how can you create a payment option that benefits the majority of your members? Tip: If you haven’t already, we suggest that you start by surveying your members to find out. See our suggested survey question above Fact: ASAE asked a broad sampling of association members (i.e. ASAE’s members’ members) about who pays for dues in its series of Economic Impact studies between 2009 and 2012. In those surveys, between 16 and 23 percent of respondents said they would drop their association memberships if their employers stopped paying: “What happens if more of our members become self-employed and must pay for their own professional development?”
- Start with poll question below…then go to open-ended question above. Insert poll question with Does your association offer monthly automated dues payments, or has it considered it? Yes No Considering it (Note for Kyle: if we get any of these we could push further and ask what’s holding them back? Try to get at their fears/pain points… We want to understand what brought you here today Ask: If your association offers automatic renewals, how has it affected your renewal rates and staff workload? And how high have you set your goals for adoption? How might that dues structure change how you promote your benefits or engage your members? Do you have a burning question about them? If so, we’ll work to get it answered.
- Need source Among associations responding to the survey, 26 percent said they offer automatic renewal, and 48 percent said they offer installment plans (monthly, quarterly, or other). Despite the small sample size of 84 organizations, these numbers are roughly in line with other industry benchmarking. Marketing General Incorporated’s “2016 Membership Marketing Benchmarking Report” showed 29 percent of associations offering automatic renewal and 41 percent offering installment plans in 2016—numbers that have been growing over recent years. The enSYNC study digs deeper into the practices, though (see stats on slide)
- Member convenience. Members enjoy uninterrupted service (like Netflix, cable, etc) Avoid hassle of manually cutting a check or entering credit card information online – it’s already done 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. Dues renewal can be a busy time for staff Instead staff can focus on other things like: 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?“ This eliminates that thought process
- In this section, we’ll dig into the benefits as they relate to national, the chapter and the member. National & Chapter Depending on what your renewal procedure is, hundreds of hours of kicking off emails and making phone calls could be saved with auto renewal - Imagine what you could do with all that extra time? (tackle new initiatives, focus on gaining new members, increase member value) Monthly installments increase payment options. Providing additional ways for members to pay also can help increase renewals. For example, 44% of associations offering multi-year renewal options saw an increase in renewal rates along with 43% of associations offering and early bird renewal discount, and 41% of associations offering an automatic credit card renewal option. Ask: How many of you provide multi-year renewal options or early bird renewal discounts? Member convenience Members enjoy uninterrupted service (like Netflix, cable, etc) Avoid hassle of manually cutting a check or entering credit card information online – it’s already done 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. Tip: Put all the information up front. Make it as easy as possible for members to make that decision to join. Example: In July, the Air Conditioning Contractors of America launched a monthly, “join now” dues rate of $39 (an “open membership” dues structure with an annual rate of $450.. Since then, about 40 percent of new members have chosen the monthly auto-renewal plan. “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. You’re talking about low sums of money and someone’s doing an impulse buy. What we’ve found that works for us is someone comes to our site, and, if they’re looking for something specific or they want to get a piece of information, it’s very easy to get it now, at 39 bucks.” Be sure to track & compare metrics: Monthly members will present a new array of membership metrics to track: month-to-month renewal rate monthly members’ length of membership how many members have dropped and later come back how many times those “boomerangs” have left and come back analysis of what monthly members buy, attend, or engage in compared to annual members Think about: How will you convert existing members to the monthly structure? “Our focus is on getting a lot of value, getting in everybody’s face, so they see what we’re doing, creating new publications, creating new online training,” he says. “We’re just trying to keep giving the contractors what they need, which is information on how to run their business more profitably.”
- Benefit to HQ, Member, Chapter Automation. Dues renewal can be a busy time for staff Instead staff can focus on other things like: 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. Choice between anniversary and calendar dues cycles is eliminated. Members join and are charged monthly until they request cancellation. There is no cycle. You’re a member until you’re not. That’s a game-changer. Example: The American School Counselors Association offers two auto-renewal options: $12.95 monthly or $129 yearly, charged automatically to the member’s credit card. 10 percent of its members choose auto-renewal, mostly on the monthly option. Monthly auto-renewal is “a great way just to be able to make it a little more affordable for people” when members pay out of pocket $12.95 times 12 months is $155.40 (higher than the yearly cost). The extra cost covers the additional administration to manage the monthly payments Note that monthly automatic payments change the nature of the transaction between association and member. First, and most obvious, is the lower immediate price. New ASCA members can join and start receiving benefits for less than $20, and from then on a small monthly payment just feels like less of a burden than a lump sum. Fact: M+R found a similar dynamic in online donations in its “Benchmarks 2015” study. At the 84 nonprofits it surveyed, the average one-time online donation in 2014 was $104, while the average monthly online gift was $23—which totals to $276 over 12 months. We’re a lot less restrained with our money in small increments than all at once. Matching auto-renewals with a monthly schedule, rather than annual, seems to be the way to go.
- 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. Increase Payment Options – Providing additional ways for members to pay also can help increase renewals. For example, 44% of associations offering multi-year renewal options saw an increase in renewal rates along with 43% of associations offering and early bird renewal discount, and 41% of associations offering an automatic credit card renewal option. Again, these are against a 30% baseline of associations reporting an increase in renewal rates.
- 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?“ This eliminates that thought process Members forget to renew 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. 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. When you combine small monthly payments with the removal of a periodic decision point for renewal, you can put members on cruise control. Consider the typical gym membership: If you had to pay $600 upfront for a year, you’d say “No way,” but when a $25 automatic payment shows up on your bank account twice a month you think “Eh, that’s no big deal.” Even if you haven’t used the gym in a month or three, it’s nice to know it’s still there when you want it. You don’t make a decision every month whether to renew your electricity supply. Association membership, on the other hand, is a more discretionary purchase. This could backfire…
- Auto renewals isn’t all puppies and rainbows. Let me start out by admitting that putting this type of program in place is an administrative challenge. Credit cards expire and have transaction fees. In the case of electronic funds transfers (EFT), bank accounts open and close. So this type of change will require staff time and programming time. The higher the dues payment, the more beneficial this type of program will be. You know more than anyone that membership is complicated work, so here are some things to consider. Think carefully about implementation. Are you going to force members into auto-pay or give them an incentive to join? "I think a carrot is better than a stick," says Baxter. "Use incentives to get them to sign up, and then offer them even more based on their membership level. Think about the behavior you want to reward." Think about annual versus monthly. "One of the things about a monthly payment is that it becomes a part of their life," says Baxter. "If it's an annual decision, the number becomes really big so it becomes a budget question every year.“ Payment method. You can’t set up automatic credit-card payments if members aren’t paying dues via credit card in the first place. ASAE’s benchmarking data shows that the average portion of associations’ dues collected via paper check was still 43 percent in 2012. You’d have to wean these people off checks first. Payment authorization. Employers’ financial support of their employees’ memberships in professional associations (or organizational memberships in trade associations) is a positive for associations, but it may be a barrier to automatic-renewal payments. It’s doubtful that many companies are keen on permitting employees to set up automatic payments on company credit cards. Or, members who pay with their own cards and get reimbursed may worry about future cuts to professional-development budgets beyond their control. ASAE’s Decision to Join studies found that 40 to 45 percent of association members are reimbursed for their dues; that figure at your association may vary, but it’s likely a significant portion of your membership. PCI compliance. Following payment-card-industry security standards is already a necessity for processing one-time credit- and debit-card payments, but storing those numbers for future use is an additional layer of complexity and security to establish. Keeping members happy In The Membership Economy, Robbie Kellman Baxter calls membership the “forever transaction,” likening it to a marriage in which both parties must contribute to the relationship. There’s a dark side to auto-renewal, should the association not tend well to its end of the relationship. “Because there is no obvious spot to reconsider the membership—especially in cases of automated payments—when members reach the point where they are unhappy enough to cancel, they are usually genuinely unhappy,” Baxter writes. This also sets your organization up better to know when members are truly unhappy so you can survey and gather better understanding around exiting members Technology versus human management. In the words of Ron Popeil, “Set it and forget it!” That’s part of the allure of auto-renewal, and, fortunately, many association management systems and e-commerce platforms have developed automatic billing features, but that may not equate to a decreased workload. As Desri Lashley-Rogers, member services operations manager at the American Urological Association, told me, overseeing its auto-renewal program adds an extra step during renewal time for one of AUA’s membership staff. Much of that comes from following up with members whose cards either expire or become invalid for other reasons. Lashley-Rogers estimated that about 25 percent of the cards on file in its most recent auto-renewal round were expired or found invalid. Convenience isn’t a leading motivator. Research from NACHA—The Electronic Payments Association shows that direct payments via electronic transfers and recurring direct billing are rising in popularity, but consider the types of payments people are most likely to automate: monthly utility bills, rent, insurance, and so forth. These are all frequent and steady bills that are both a chore to pay manually every month and unlikely to change over an extended period of time. In other words, you don’t make a decision every month whether to renew your electricity supply. Association membership, on the other hand, is a more discretionary purchase, and all but the most loyal members will likely prefer to have a yearly, conscious decision point on whether to continue as a member. Can membership in your association be a utility? Trust (or the lack thereof). As tech-enabled as the world has become, we are increasingly concerned about privacy and all the various ways it can now be infringed. For an association to ask members for permission to automatically handle their money is to ask for a high level of trust, and it must come with clear assurances of exactly what will and won’t be done with the member’s info. (State laws may even make specific requirements about such disclosures.) A lot of people have been burned in the past by shady automatic-payment schemes or have heard horror stories from others. No doubt your association is a trustworthy organization, but many consumers may simply have a psychological barrier to automatic payments that is too high to overcome.
- 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?“ This eliminates that thought process Members forget to renew 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. 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. When you combine small monthly payments with the removal of a periodic decision point for renewal, you can put members on cruise control. Consider the typical gym membership: If you had to pay $600 upfront for a year, you’d say “No way,” but when a $25 automatic payment shows up on your bank account twice a month you think “Eh, that’s no big deal.” Even if you haven’t used the gym in a month or three, it’s nice to know it’s still there when you want it. You don’t make a decision every month whether to renew your electricity supply. Association membership, on the other hand, is a more discretionary purchase. This could backfire…
- If you decide not to auto renew, here are some tips that might help increase your renewal percentages. Talk about progressive profiling. With each renewal time frame, members need to review their contact info and maybe fill out one or two new fields so you can learn more about them. Then use that information. Remember, even small percentages make a difference! For example, going from the average individual association renewal rate of 79% to an 85% rate, increases the average tenure of your membership from 4.76 years to 6.66 years. That’s a 40% jump in tenure for a 7.5% lift in renewal rates. Obviously you should survey and monitor your members and your renewal efforts to see what works for them and for you. There’s no sense pushing something that clearly isn’t working.
- Evaluate your current process With the end of the year upon us, maybe it’s time to reexamine your renewal procedures. Scheduling a yearly review can help See what is working and what isn’t Consider your options Test options. Select a subset of your membership to test various pricing strategies. In addition to determining if you're going to bill annually, quarterly, or monthly, consider tiered pricing, which allows you to offer richer benefits at a higher price, possibly resulting in more income for your association. NAIFA's Ewing admits, "It took some heavy testing and trial runs to work out the finer details for billing. There were some concerns over the increase in bank fees associated with a monthly charge versus a one-time payment. However, the increased retention rate eased these worries." Create a strong business case. If your association is one in which changing how you collect dues would require board action, carefully consider your approach. Have a clear case, complete with numbers, and promote the convenience as a member benefit. Use case studies of other associations that have adopted the practice. The chances of success will be higher if championed this way. Measuring Success See how the plan was received by membership – send them a survey to find out Calculate and weigh in any additional labor costs due to updating expired cards, etc. Were you able to hire additional staff members to help or work on new initiatives? Track the increase in recruitment & retention
- This will be our call to action! Do you have a project, business case or are you just looking for resources? We can help! It’s our holiday gift to you…and it’s FREE. http://www.billhighway.co/assn-fact-finders/ or http://bit.ly/2ggYTsM How does it work? We’ll provide… RESOURCES - We'll aggregate resources that apply to your chapter project TAKEAWAYS - Present applicable resource takeways in a cheat sheet format TEMPLATES - Provide or suggest tools and templates when appropriate FACT FINDING EXAMPLE: Here is an example of Fact Finding we've done (but definitely not limited to): Project: An association was looking for information and guidance on launching virtual chapters Fact Finding: We provided scholarly articles, whitepapers, articles from industry leaders, trends and highlights regarding virtual chapters
- As always, you can find on demand webinars on our Knowledge Bank – check it out! http://www.billhighway.co/knowledge-bank/association/ We’re heavily investing in providing education to chapter-based associations since we’ve learned that there is a huge void of information and educational material for component relations professionals (CRPs). That is where our primary focus is right now.
- 15 minutes Questions: Do you have an examples of auto renewal/monthly installment fails/successes? Do you incentivize members to renew? Do you offer multi-year renewals? Do you offer early bird renewal pricing? What topics do you want more of? What templates do you need? What other tools do you want to hear about? (worksheets, fil in the blank, examples, copy and paste) Where are you going/what are you searching to get info? What medium would you like tools to be delivered to you? (email, blog, social, online community/forum, etc) Where do you want to find the tools? (website, email, social, etc) How often would you like to hear from us? What is your inbox missing? What would make your job easier?