If you run a membership-based business that generates the majority of its revenue from membership fees, renewals will inevitably be one of your focal points. As you probably know, it’s far more cost-effective to retain an existing member than to go out and identify and attract a new one.
But if you don’t currently have a membership renewal strategy, you’re almost certainly missing out on easy opportunities to expand your bottom line.
Five Tactics for Increasing Renewal Rates
Whether you operate an exclusive membership website, a Software-as-a-Subscription product, or a meal delivery service, renewals are the lifeblood of your business. Every percentage point you can increase your renewal rate represents more money at the bottom line.
Here are some proven tactics you could use to move that needle upward:
1. Start Early
One of the biggest mistakes that new companies make is to wait on renewing current members until just before their deadline. If you hope to increase your rates, you ought to start as early as possible.
Research indicates that associations who launch their renewal efforts five months or more prior to expiration may enjoy a 25.7 percent increase in renewal rates over those who do not make that choice. The key is to start with soft renewal pitches and gradually become more direct and bold about how you communicate with your members.
You want to respect the fact that they are currently paying for your services while simultaneously give some attention to the fact that they could secure their future by re-upping immediately. You should never pressure people into renewing at the three-, four-, or five-month mark; just let them know the option is available to them.
2. Offer Discounts
Few of your members are apt to renew multiple months in advance without a strong and clear incentive to do so. One of the best ways to increase early renewal rates is to offer tiered discounts and incentives.
Here are some examples:
- A flat discount rate often appeals to subscribers. If you usually sell a membership for $99, an early rate might be $79.
- A tiered discount rate can be effective if you seek to have an effect on how early people choose to renew. If your standard membership is $99, you could offer it at $79 for members who renew two months in advance and $89 for the ones who commit one month in advance.
- Another option is to extend the person’s or company’s membership based on early renewal. If you typically offer a 12-month membership, an early-bird special might tack on an additional two months at no extra charge.
Feel free to get as creative as you like. Just make sure you keep the renewal offers clear and simple as well as enticing. The more straightforward the discount, the more likely people will feel inspired to act.
3. Compose a Persuasive Membership Renewal Letter
Renewal letters are undeniably one of the greatest tools for encouraging existing members to re-up. Crafting a high-conversion renewal letter requires considerable effort and expertise, though. According to MembershipWorks, a good renewal letter:
- Has a great subject line (6 to 10 words)
- Is simple and concise (50 to 125 words)
- Reminds members why they belong
- Communicates a sense of urgency
- Links members directly to the renewal page
- Includes contact information for any questions or concerns
- Engages the member to take immediate action
- Is preferably tested with care before it gets circulated
- Includes a series of emails in succession
As you craft your membership renewal letter, you’d do well to keep all of these essential tactics in mind. Successful retention often depends on such minutiae, especially if they accompany each other in a skillful manner.
4. Reduce Friction
There’s no place for friction in the renewal process. Any element that might possibly make it more difficult for the person to renew will lower your subscription rate. Reduce potential barriers by:
- Allowing for automatic credit-card renewals
- Minimizing the number of input fields and steps necessary to renew
- Supplying a direct subscription button within your emails
Over time, you’re apt to master what works and what doesn’t for your particular member base. Keep precise and copious notes and don’t be afraid to test new ideas and strategies.
5. Increase the Value
In certain membership-based operations, members are willing to renew only if they believe they’ll see an increase in value offered. Make it a point to innovate regularly and enhance your value proposition, so both new and existing members feel as if they’re getting a solid return on investment.
Refine Your Membership Renewal Strategy
Combined with a proactive approach to new lead generation, a strong membership renewal strategy will help you grow your business and increase profitability. Now’s the time to revisit your current approach and optimize in order to scale up in a lean but efficient manner.