‘Perpetual Membership’ Study Is an Auto-Renewal Reality Check
The “member until you cancel” model has intriguing potential for associations, but a new survey shows they have a lot of work to do to adopt it.
In the span of a few months last year, here on this blog we explored both the potential power of automatic membership renewal combined with monthly payments as well as an example of one association that had launched just such a model.
Up to now, there wasn’t a great name for it, but a recent survey on associations’ usage of automatic billing and installment payment plans gives it a name that, at least in my mind, just might stick: “perpetual membership.”
Mark Jones, CAE, president of enSYNC Corporation, an association technology solutions firm, says his organization has been using the term for several years. While “recurring billing” or “installment plans” sound like accounting techniques, “perpetual membership” makes the concept clearer for associations by “putting something around it that really makes them think differently,” Jones says. Hence the title of enSYNC’s study released in October, “The State of Perpetual Memberships.”
I like that terminology because it does indeed capture the style of membership model in which a member provides billing information up front and then belongs indefinitely until he or she chooses to cancel. It’s a model long used by fitness centers, utility companies, and magazines and now growing among popular subscription services like Netflix, Hulu, Amazon Prime, and a bevy of other companies in the “membership economy.” Associations are masters of the annual cycle, but perpetual signals the genuine shift in mindset that adopting such a model requires in the association setting.
The enSYNC study suggests, however, that, while usage of recurring billing and installment payments might be growing, most associations still have a long way to go toward truly embracing perpetual membership.
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:
- On average, about 23 percent of members opt in to automatic renewal at associations that said they offer it.
- Just 14 percent of associations offering automatic renewal said they use tokenization, a payment card industry (PCI) practice recommended for secure data storage.
- Only 41 percent of associations offering recurring billing said they require members to initialize a cancellation instead of still sending an annual renewal notice.
These represent some clear growing pains for associations introducing perpetual membership options to their members. Recurring billing and keeping members until the cancel require significant shifts in processes, systems, and mindsets, and associations aren’t all the way there yet, says Sherry Milligan, CAE, vice president of nonprofit strategy at enSYNC.
“In the association world, we’re so used to asking our members what they think, what they want to do, and what they think of what we’re doing that it’s hard to get out of that loop,” she says. “I think we’re on an exponential learning curve right now about PCI compliance and tokenization and storing credit cards and how you do it securely and why you need to do it. So, I think if we do this survey again two years from now, we’re going to see a lot of different answers in these areas.”
The good news is that many associations offering automatic renewal and installment payments told enSYNC that they’re seeing some important benefits. At least half of associations offering either automatic renewal or installments reported improved member satisfaction and retention. Improved recruitment was reported by more associations offering installments (46 percent) than those offering recurring billing (18 percent).
Fewer survey respondents reported gains in staff efficiency (41 percent among respondents offering automatic renewal; 27 percent among those offering installments). One reason may be the need to contact auto-renewing members to update their stored payment information (for example, when credit cards expire), but Jones noted that payment technology providers are beginning to provide services to automatically update users’ credit card information. Though such a service may carry an additional fee, Jones says associations he has worked with have said the auto-updating can catch as much as 70 percent of accounts that need updating.
With continuing improvements in technology and a greater understanding among associations of the dynamics of the perpetual membership model, Jones says the opportunity for greater staff efficiency is significant, and it could lead to even further gains in member service and satisfaction.
“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 out,” he says.
Would perpetual membership work for your association? Have you considered or tried automatic renewal or installment plans? Please share your thoughts or experience in the comments.