Wednesday, February 10, 2010

Auto-renewal—Holy Grail or Holy Fail?

During my career working for and in associations I have heard regular conversation about how to get members onto an auto-renewal program. Fortunately I have worked at a few large associations (AARP, National Geographic and American Association for the Advancement of Science) where we tried really hard to make auto-renewals work. We knew there were obvious benefits in that you could better project membership numbers, save money by cutting down the number of renewals notices being sent and better project cash flow to name just a few. My experience showed it was a very tough thing to make work. Here is a little about why I am curious to know if you think automatic renewal is the Holy Grail or the Holy Fail.

There are two types of auto-renewal: 1) credit card auto-renewal where are member gives you their credit card number and allows you to hit it at some agreed upon time and 2) what I like to call bill-me auto-renewal where a member basically agrees they are going to renew so you then bill them for their membership instead of sending them a renewal notice.

I know that bill-me auto renewal might sound like you are just changing the name of what you already send from a renewal notice to an invoice but it is not. For whatever reason, getting people to commit and then sending them more of a "you committed to renewing" notice instead of a "please renew" letter has shown to increase response rates. There is a lot to think about as you implement auto renewal. Some of the biggest things include:
1) How obvious are you going to make what they are signing up for? For some time, orgs were basically hiding the details of their auto-renew program .Personally I think it is better to disclose to members that they are signing up for auto-renew so you lessen the number of complaints/questions you receive.
2) What sources are you going use to implement auto-renewal? From my experience it is much easier to introduce auto-renewal in retention activities as opposed to acquisition. Members seem to be more comfortable giving a credit card number to an organization they are already involved with and know and trust.
3) Are you going to use a link-letter? A link-letter is basically a short letter that reminds people they have signed up for auto-renewal and that you are getting ready to hit their credit card.
4) Is your system set up and ready for auto-renewal? Most systems can handle this these days but before you jump into it make sure your system is ready. 

Most of us now pay our cable bill, our newspaper subscription, our cell phone bill, our ISP and more by auto renewal yet getting people to agree to auto renewal for their membership seems to be a challenge. So do what you think? Is auto-renewal the Holy Grail or Holy Fail?


1 comment:

  1. Auto renewal programs take time and effort to put in place, but I am familiar with a client organization that has 80,000 members in the program and enjoys a 10 point lift in renewal with this service over those not in the program. Tony