Aptify's CEO Blog

If a member is willing to let you automatically renew them by charging a credit card or deducting dues from their bank account – why not do that? As long as you have proper security measures around sensitive data and ensure that you notify the member that they may opt-out before you automatically charge them, this is a great customer service. This improves member satisfaction by reducing the work the member has to do to stay a member. Additionally, those members that auto-renew will not require expensive renewal notices and will pay on time automatically, improving cash flow.

A few thoughts on how to implement auto-renewals for individual member organizations (and for subscriptions):

• Offer this service to all new and existing members and consider selling it one of these ways:
  • Convenience – the member doesn’t have to take any action to stay a member and they are charged exactly on the renewal date
  • Reduced Costs to Association – This is a selling point because the saved funds can be used to do more to deliver member value through programs, content, research, advocacy, and more…
  • Green – sending out thousands of renewal notices each year, in many case 3 or 4 times before stopping is incredibly wasteful and uses up a tremendous amount of paper, ink, and energy.
• Ensure the member is comfortable
  • Make sure your organization is PA-DSS/PCI compliant – this is something your software has to ensure but you have to implement policies internally to ensure appropriate security and controls are in place to achieve compliance. One quick note about this – make sure that any employee that handles credit card or bank data has an extra level of scrutiny applied to their hiring and continued employment – running a recurring background check including a credit report is not unreasonable for these roles.
  • Communicate to the membership that the auto-renewal data is stored securely and in compliance with PCI, etc.
  • Let the member know that each renewal period, they will receive a notice in advance of the actual renewal giving them an option to opt-out of renewal. This is critical – people want control – even if they have every intention of renewing for a long time now, things could change and this is an extra customer service value that also adds a level of comfort.
• Implement Advanced Notification
  • Implement an automated email message that goes to the member 30 days in advance of the renewal to indicate they are about to be automatically renewed. Given them an easy way to opt-out without jumping through hoops! But, ensure that you include a highly personalized report in the email that showcases all of the benefits they have taken advantage of – not generic member benefits, but those things the member actually did – in the past year, but also since they joined. For example, showcase their event attendance, committee involvement, publications purchased, etc. Make sure the report also showcases savings they have benefited from compared to non-member prices, if such a concept is relevant to your business model.
  • Notify members well in advance of a credit card expiring – if a credit card is going to expire in September 2010 and a membership is due to renew in December, don’t wait until December to figure this out. Implement automatic notification to the member telling them their payment method for auto renewal is no longer up to date and give them a secure web link that allows them to update this. Given them a friendly reminder notice automatically every 30 days or so.
  • If someone has auto-renewal turned on but has an invalid payment method and hasn’t responded to multiple emails, queue them up for a live call from a customer service rep to request their payment method details. Make sure that the outbound call is setup so that your customer service rep authenticates their identify to the member. These days, if someone you don’t know calls up asking for a credit card # it is suspicious. So, provide the member a few details that are not sensitive but provides them a sense of confidence that the person calling is valid.
• Other
  • When a member is automatically renewed, make sure you send them a thank you note via their preferred communication method. This is something you can easily automate these days.
  • Up-Sell and Cross-Sell BUT ask permission – many groups want to offer members new things upon renewal. Some are recurring requests such as PAC or Foundation contributions. In other cases, however, the renewal maybe a great time to offer a deal on pre-paying for an upcoming event, publication or other item that has relevance. Use the advanced notification to get the member to OPT-IN for those extra items. Do not ever automatically add new items to their renewal without their approval. In the early notification of auto-renewal show them what you have in mind as suggestions and indicate that they will have to click “Accept” to have these added to their renewal. Otherwise, the default would be to not charge for such items.

Full disclosure: Aptify provides a membership software solution. While our product has great functionality for handing all of these concepts there are many ways of implementing the ideas and achieving the business goals described here.

At times, I like to intentionally oversimplify a complex issue in order to break it down into manageable pieces. Understanding why members choose not to renew is a complex problem that requires deep analysis. There are many reasons why a member may not renew and they vary considerably from one group to another. They also vary based on economic trends, organization type, demographic cycles, among other factors. While there is a high degree of complexity to this problem, there are some simple ways to break it down. One method is to categorize the reasons that people don’t renew into "good" and "bad" reasons or put otherwise, things that are hard to address and things that should be easy to fix.

Here is a great example: several studies have shown over the years that a significant percentage of non-renewals in individual member organizations because the member forgot to renew. A similar category of responses are those who say they intended to renew but the process was cumbersome and they gave up.

The flip side is those members who question the core value of their membership in an organization. Those who are wondering if the content, products and services being delivered are relevant, up-to-date, and still aligned with their professional goals. These issues are often challenging to address. In contrast, when you think about helping a member renew without them having to remember or making it easy to do so – those are situations that should never result in a dropped member.

So, what do we do about it? It is critical that business processes focus on the customer’s ease of use. I am a member of a number of organizations where I plan to continue membership as far out as I can forecast. However, in several cases, the organizations require me to manually renew every year. I would much rather give them my credit card to store(securely) and have them notify me once a year that they are about to renew me, let me opt out, but if I take no action, renew.

Alternatively if I didn’t wish to auto-renew, why not make it easy on the member to renew on the web? Most web sites require a member to login. The problem is this – if I’m a highly engaged member that uses a web site all the time, I probably saved my credentials or know them. BUT, if I’m one of these members on the fringe that doesn’t go to the site much – I probably don’t even know if I have an account. Making me figure out my account login, etc, before I can renew creates a barrier. There are highly secure ways of allowing an individual to renew without forcing a login. The goal – make it easy for the member to renew.

Engage your members, provide relevant and timely content, ensure member value far outstrips dues, and then, make it EASY for them to stay members. I’ll be writing a couple of follow-up entries to this post that focus on what we consider to be best practices for auto-renewal and e-renewal. There are plenty of good ways to do these things, but remember – put the onus on the association, not the member, to stay a member! Stay tuned…

Full disclosure: Aptify provides a membership software solution. While our product has great functionality for handing all of these concepts there are many ways of implementing the ideas and achieving the business goals described here.

Recently, I was asked a seemingly simple question – how to go about calculating member renewal rates? This question at face value seems to be pretty straightforward, you figure out how many renewals you had out of the # of possible renewals, and there you have it – a renewal rate. The challenge lies in calculating this in a consistent manner so that you can compare renewal rates as a key performance indicator (KPI) based on an “As Of Date”. Like any good metric or KPI, you must first have a very clear definition of the way it is calculated, otherwise there will be room for interpretation in directions you didn’t intend. So, in the case of member renewal rates, one example of a definition might be:

“The membership renewal rate is calculated by dividing the number of members that renewed their membership during the specified time period, by the number of members that were eligible to renew during that time period.”

Building on this further, it is important to define any exceptions such as:

• The renewal rate (does/does not) include memberships that were initiated in the current year from trial offers
• The renewal rate (does/does not) include memberships that were in a grace-period during the subject time-period

With a clear definition in place, it is possible to build a reporting model to automate this calculation. In the case of renewal rates, there are some complexities in calculating the renewal rate based on an As Of Date. First, you have to determine if each given membership was “Active” at the As Of date. Clearly, a membership that expired in a period prior to the subject period is not one that should negatively affect the renewal rate. Additionally, a membership that commenced during the subject period should not be included in the calculation either – that is, if a new member signs up mid-year, that membership was not renewed during the year, even though it was active, and should therefore be excluded as its active status bears no indication of renewal performance yet.

 

So, to summarize the logic here: for each membership record, include in the renewal rate calculation only if:

1. The membership is not in the first cycle (typically a year)
2. The membership did not expire before the beginning of the time period being evaluated
3. Any other exceptions as noted above, depending on business rules most appropriate for your organization

If your AMS doesn’t have a report that suits your particular needs out of the box you should be able to build this quite easily with a reporting tool or spreadsheet.

In my experience, quite a few association executives have a difficult time describing how they would categorize their “best” members. One of the reasons this is a challenge is due to the fact that association/member relationships are incredibly multifaceted. They are therefore much harder to quantify in value than a typical vendor/customer relationship. Since members are so much more than customers, their activities within an organization need to be considered along with more traditional metrics such as years of renewal and financial transactions.

The concept of tracking and acting on the level of member engagement is increasingly becoming a hot topic with executives I speak to. The goal is to define an aggregate score that incorporates data from a variety of activities into a singular measure that can easily be evaluated. Just as examples consider factors such as:

• Meeting attendance
• Earning/Maintaining Certifications
• Committee positions
• On-line forum moderation
• Social networking involvement
• Speaking assignments
• Authoring articles in a journal
• Financial Activities/Impact(Buying Products, Renewing Dues/etc)

Each association is different, so the weightings tied to each activity type need to be different. Additionally, the approach to weightings may change over time based on the strategic plan of the organization and its areas of focus.

Once you have a conceptual framework for defining engagement levels, use the information. For one thing, make sure that whatever system you are using to manage the data displays the engagement score prominently to users. Additionally, leverage this engagement score in your marketing and outreach as well as throughout your service delivery when considering the level of prioritization you afford to each inquiry. As I mentioned in a prior post, you can use this type of information in a predictive analysis effort quite effectively too.

Most importantly, experiment with different models and stay agile so that you find the approach that suits the characteristics of your organization best.

I previously wrote about some of the theory behind using predictive analysis in a member-based organization. This post is intended to take the next step, looking at some specific variables that might be relevant in a membership renewal business case. Here are some quick examples that may prove interesting in a predictive model. The value of these data points may be greater in some organizations than others and in some cases these attributes may have no bearing at all on renewal probability. These are just some common data points that we've seen in some way correlate to renewal probability.

# of Years as a Member

Is there a correlation between the # of years someone is a member and their likelihood to renew. For example, is an individual/organization that has been a member for one year, less likely to renew than a 10 year member? Depending on the organization and the nature of the membership structure, there could be different answers. For your group, do you know the answer?

# of Non-Dues Related Transactions

Members that are active in purchasing books, certifications, or other non-dues items from an organization may be getting more value for their membership, and therefore more likely to renew than others. Is this true for your group?

# of Years of Uninterrupted Attendance at Annual Event

Attendance at Annual Meetings, as well as other events may be a factor in someone’s willingness to renew membership. A committed member that attends annual gatherings, year after year, is more likely to renew, or are they?

# of Committee Assignments

The involvement level of an individual or organization in volunteer activities, such as committee positions, may have a bearing in their overall perception of value from membership. Is this the case for your constituents?

These factors are simply a handful of dozens or hundreds that can be evaluated quite easily with modern predictive analytics tools. Additionally, a key goal of predictive analytics is to find factors in the data that you didn't necessarily think would impact your intended business goal.

Once you have started the process of running these types of analytical tools, you must have an action plan, otherwise there is little value in the analytics. For example, if a predictive model suggests that your most at-risk members are those that have been with the organization between 3 and 7 years and have not attended at least one event in the least 2 years, what do you do? The action element is just as important as the analysis. Remember, no predictive model is perfect, but they get better as you use them more and more. Don't be afraid to act on good, yet imperfect ideas that come from these tools. Make sure you foster an inquisitive culture organizationally and constantly go back to tune the modeling approach.

The Financial Times published a very interesting article today regarding the growing use of "predictive analysis" tools capable of detecting when customers are growing unhappy with a company. With most companies still facing tough conditions despite recent signs of improvement, many managers have shifted their focus from attracting new business toward keeping customers that they already have relationships with. This concept has important implications for member based organizations as well.

Capturing Relevant Data

While the specific tools and technologies used by companies vary widely, no solution can work at all without relevant, timely, and accurate data. Attempts to predict outcomes based on incorrect or partial sets of data can lead to wasted resources and can even backfire. Member based organizations need to ensure that all data relevant to members are stored in a central repository rather than data silos restricted to individual departments. Any attempt to build an analytical framework prior to being satisfied that all relevant data are accurate and timely can be an exercise in futility.

Selecting Criteria to Measure

Once an organization is satisfied that sufficient data has been captured, it is necessary to come up with specific criteria that can help identify members that may be at risk of not renewing their dues in the future. The criteria will be different for each organization but there are some common themes that nearly all organizations can measure. For example, most associations find that members who are engaged with the community in various ways are most likely to renew their dues.

With a comprehensive information system, a manager can identify members who have never engaged with the organization except for paying their dues. A member who never logs into the organization's website, does not attend meetings or conferences, and has not made additional purchases during the year may be at high risk for not renewing in the future. By analyzing past data for non-renewals, such patterns can become apparent and then incorporated into your member retention strategy.

Of course, each organization will need to select additional criteria and this will be an iterative process that can be refined over time.

Taking Action

Action can be taken to engage with such members prior to the renewal cycle assuming that relevant the data capture has taken place and appropriate criteria have been identified. Members who have not participated at all during the year can be contacted through written communications or by phone. Special offers can be targeted to those who may be specifically at risk rather than providing such offers to all members including those who are almost certain to renew anyway. The methods used to reach out to members will vary for each organization, but the idea of spending time to save members is universal. It invariably costs much less to retain a current member than it does to attract a new one.

Many Other Possibilities

Member retention only scratches the surface of what is possible through effective analysis of member behavior. For example, it is possible to track member activity on your website in a way that can reveal the types of content they are looking at and to target products or services specifically to those who may be interested. There are some privacy issues to be aware of when monitoring website usage but it is now quite common for privacy policies to permit this type of data collection.

Of course, the key to all of these exciting possibilities is to have accurate and timely data to begin with. Regardless of the member management system you are using, it is wise to invest the time to ensure the quality and accuracy of your data in a manner that can help with member retention. Type your content here...