By Charles Veal
Your membership renewal rate is a key metric to understanding how your organisation is performing. As a rule of thumb, it costs about five times as much to recruit a new member compared to retaining them, so it’s a great investment to make sure that your renewal rate is as high as possible.
Renewal rates vary
Renewal rates vary considerably depending on the type of membership organisation. Mandatory membership bodies, or professional bodies where you are expected to be a member, have very high renewal rates, usually more than 95%. Professional bodies, which offer professional recognition and services, but where it is not mandatory or not expected that all practitioners will be members, will often see renewal rates around 90%. As the relationship with the member becomes more transactional and is based more on the services rather than status, membership renewal rates drop. Typically, a more transactional membership organisation will have renewal rates between 80-90%
Even within this range of renewal rates, it is important to remember that a 90% renewal rate hides a large degree of variation within your membership. Members with more than 5 years of membership will have a higher renewal rate than members in the first year of membership. Different types of members, students or associates, who have a weaker connection with the organisation will also have lower renewal rates.
How can you improve your renewal rate?
Any form of renewal campaign will cost money, so it is best to focus your efforts on where you will get the greatest return and understanding which members are most likely to lapse is important. For example, targeting full members in their first year of membership can be very effective and as they are the most likely type of member to lapse. Here are four suggestions about how you can incentivise members to stay.
- Renewal Calls – Call your first-year members to find out how their membership has been and to encourage them to renew. If that is impractical it is worth employing an agency to call them as even a 1% or 2% increase in renewal rate will pay for the cost of the campaign.
- New Member Engagement – Ensure that for new members, you have a structured way of engaging them in the first year. This could be a series of welcome emails encouraging the member to use your services and engage.
- Incentives and discounts – Many membership organisations discount membership fees for early-year members or offer discounts and incentives to encourage renewal.
- Offer Direct Debits and Recurring Payments – Get your members to automate the way that they pay you; automatic payments noticeably improve renewal rates.
Whatever approach you decide to take, understanding what your renewal rate should be for your type of organisation and understanding which members are most at risk of lapsing means that you can design effective renewal campaigns to improve your renewal rate.
Charles Veal, Director – Membership Insights
Membership Insights is a membership data analytics and strategy agency specialising in the membership sector. Try their free membership forecasting tool