Auto-Renewal and Monthly Payments: The Perfect Mix?
Automatic dues renewal is a trendy option for associations. I've had my doubts, but I'm seeing the light in the form of monthly membership dues.
Maybe it’s because more and more of the bills I pay these days are electronic and automatic. I even started using Apple Pay recently so I don’t have to take my credit cards out. Or maybe it’s because the topic just keeps coming up in the association community, in articles, discussion forums, and in-person events.
Whatever it is, after once suggesting that auto-renewal programs for association memberships might be “too good to be true,” I’m coming around to the idea that auto-renewal could work well for associations—but with one condition, which I’ll get to in a bit.
Last December, Mary Byers, CAE, and Amith Nagarajan penned a strong case in Associations Now Plus, calling automatic renewal “a concept whose time has come in the nonprofit world.” (See “A Page From the For-Profit Playbook: Auto-Renewals to Enhance Retention” [ASAE member login required].) Then, two weeks ago at ASAE’s Marketing, Membership & Communications Conference (MMCC), automatic dues payments came up in two sessions I was in, once from a presenter and once from an attendee during Q&A.
The first came in Susan Carawan’s Learning Lab “Is the Price Right?” In outlining various alternative pricing models associations could pursue, Carawan, chief marketing officer at HighRoad Solution, pointed out the American School Counselors Association, which offers two auto-renewal options: $12.95 monthly or $129 yearly, charged automatically to the member’s credit card. Stephanie Wicks, director of membership at ASCA, says about 10 percent of its members choose auto-renewal, mostly on the monthly option. For an association whose members typically pay out of pocket, monthly auto-renewal is “a great way just to be able to make it a little more affordable for people,” Wicks says. (Though, if you’re quick with math, you’ll note that $12.95 times 12 months is $155.40; Wicks says the extra cost covers the additional administration to manage the monthly payments.)
In the other instance when auto-renewal came up during a Learning Lab, Tony Rossell, senior VP at Marketing General, reminded me about a case study on the American Occupational Therapy Association from Associations Now Plus in 2013 [login required]. AOTA first offered auto-renewal with monthly payments, $18.75 per month, in 2006 and had 19 percent of its professional members on the installment plan as of 2013. AOTA Chief Operating Officer Chris Bluhm wrote then that the offer “resonated most with professionals whose dues were not subsidized by their employers” and “the additional labor costs are more than covered by the increase in revenue from increased recruitment and retention.”
Notable in these examples is how monthly automatic payment changes the nature of the transaction between association and member, in two important ways. First, and most obvious, is the lower immediate price. New ASCA and AOTA 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. Both associations frame their offers as such. (AOTA even calls it “Easy Pay.”)
But monthly automatic payment also removes the question of renewal altogether. The second time auto-renewal came up at MMCC was during a session I moderated on the choice between anniversary and calendar dues cycles, which is funny in retrospect because continuous monthly dues essentially renders that question moot. In both ASCA’s and AOTA’s cases, 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.
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.
Fundraising and advocacy consulting firm 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.
It can’t be enough, though, to simply change the dues schedule in a way that takes advantage of member inertia. 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.
So, if you’re going to ask members to pay you dues on a monthly basis, it would be wise to provide a membership experience that engages them regularly—at least monthly but perhaps weekly or even daily. Think about the types of services you typically pay for monthly: phone, television, electricity, and so on. You use these every day. Can membership in your association be a utility? That might be difficult: You’re an association, not a lifestyle. But it’s not impossible.
Auto-renewal still presents some significant hurdles, and I’m doubtful any association with a traditional annual renewal model could switch all at once to continuous automatic renewal without major challenges. But the prospect of memberships that are charged incrementally but last indefinitely is too appealing to not give it some serious thought. Consider me intrigued.
Does your association offer monthly automated dues payments, or has it considered it? How might that dues structure change how you promote your benefits or engage your members? Please share in the comments.