January 11, 2011 | Vol. 10 | Issue 1

RENEWAL: Step Four in the MGI Membership Lifecycle, Part II

The MGI Membership Lifecycle helps organizations develop a comprehensive, integrated approach to membership marketing. The Lifecycle has five steps: Awareness, Recruitment, Engagement, Renewal, and Reinstatement.

In last month’s MGI Tipster we examined the process of Renewal, when new members decide whether to keep you. This month we take a further look at Renewal and its importance in the MGI Membership Lifecycle.
Renewal essentials
Successful renewal programs combine exacting data processes, rapid production turnarounds, and meticulous coordination month after month. Member services and accounting staffs must work seamlessly to produce updated member files consistently and accurately. Time is of the essence because renewals are almost always an organization’s primary revenue stream.

Six tips to increase efficiency and effectiveness

Use common inventory each month for notices sent, whether the first notice or the last. Save postage and maintain inventory control by placing all notices in a single zip string.
Messaging can be personalized for each notice and each member type using variable lasering. This enables your organization to convey specific offers and benefits unique to each member type and amplify the messaging force with each subsequent month, all on a common form.
Manufacture similar envelopes for each step in the renewal process. As a cost savings employ a variety of paper colors so a distinctly different color envelope mails each month.
Organizations save time and money by manufacturing six versions of a renewal buckslip. Print them six-up on 11 x 17 sheets that are then cut. This enables each buckslip to highlight specific messaging that rotates through the renewals every six months.
Renewal envelopes often use an oversized window to allow variable headline letter copy to appear through the envelope so the copy changes but the envelope does not. This allows a personalized message to appear outside the envelope for each cohort without changing the carrier envelope itself.
Finally, the effectiveness of higher-frequency renewal programs was confirmed by the 2010 MGI Membership Marketing Benchmarking Survey, which concluded that the optimum frequency of renewal communications lies between seven and ten renewal contacts.

Electronic renewals

Renewals through direct mail are still the norm, but they are increasingly supplemented by electronic marketing. Emails are an effective and inexpensive way to initiate a renewal series, particularly when offering an early renewal that can be coupled with an “early bird” discount to incent response.

Emails are a money saver as well as a real convenience and a time saver with the ability to link members to the organization’s renewal sign-up web page. Like an acquisition campaign, renewing membership should be made as easy as possible to encourage the greatest possible response.

Invoices vs. renewal notices

The terms “renewal notice” and “invoice” are oftentimes used interchangeably in membership marketing copy and particularly in headlines. In truth, there is an important legal difference between the two.

Jean Murray, author of U.S. Business Law/Taxes, writes, “An invoice is a bill sent by a provider of a product or service to the purchaser. The invoice establishes an obligation on the part of the purchaser to pay, creating an account receivable.”

However, when a membership is up for renewal, there is no obligation to pay for another membership term and no account receivable. The member has received nothing and has the option to pay, not a legal obligation to pay. Because a renewal notice is not an invoice, organizations cannot legally use the word “invoice” in renewal wording.

On the other hand, there are times when invoices can be sent to members—if prospects ask to be invoiced from a membership solicitation or a renewal notice. Invoicing is allowed only when a member or prospect has agreed to assume the obligation to pay.

Payment options

Payments for most continuous services such as telephone, electricity, and heat, are billed monthly, and many are paid almost instantly by credit or debit card. Electronic payments facilitate the transaction and have less of a visible impact on member wallets. Coupled with automatic renewal, where the next year’s dues are rolled over, credit largely removes the decision to continue or not.

But many membership organizations don’t offer monthly or quarterly payments or arrange to debit members’ bank accounts. Instead, they rely on traditional up-front dues payments.

MGI has tested monthly installment billing with considerable success. In fact, one test saw the control package with standard payment generate a 1.16% response rate, while the test package with the installment option produced a considerably better 1.75% response.

Clearly many prospects may be more willing to join a membership organization if they have the option to pay in installments and more likely to remain members if they are offered automatic renewal.

Renewal rates by type

Differing business rules among organizations as well as environmental factors unique to different professions can have a huge bearing on renewal rates. As a result, one association’s renewal rate can rarely be compared to others. But there are some generalities that hold true.

Organizations offering individual memberships typically have lower renewal rates than institutional or company memberships.
Organizations that serve professions where dues are paid by employers are likely to see better renewal rates than dues paid out of pocket by individual members.
Organizations with rapidly growing memberships tend to have lower renewal rates than groups with a steady or declining membership.
The stronger the incentive used to recruit members to join an organization, the lower the renewal rate is likely to be when compared to members who joined without an incentive.
Associations that serve highly transient markets, where job turnover is high or members are moving out of the industry, will see lower renewal rates than a steady marketplace.

Telemarketing

Call centers can contribute significantly to a successful renewal program. Whereas emails are the least expensive contact channel and are largely used to launch a multi-part renewal series, telephones are the most costly device and should be used toward the end of a campaign to persuade the most difficult-to-convince members to continue their affiliation. Telephones are useful not only in renewal series but can also play a role in bringing lapsed members back to the organization.

Next: Reinstatement…when past members choose to return to you.
When organizations lose members despite an effective renewal system, it’s time to take the final step along the Membership Lifecycle. In the next issue of the MGI Tipster we will examine effective reinstatement programs to return as many lapsed members back to the organization as possible.

If you would like to learn more about the MGI Membership Lifecycle and how it can help your organization grow, telephone Rick Whelan at 703-706-0350 or email him at rick@marketinggeneral.com.