Guest post by Novi AMS
Association Membership Dues Key Points
Although membership dues are a declining percentage of association revenues, they are still an important way to diversify your income, and dues dollars are tax-exempt in most cases.
Millennials are taking over the workforce, and their experience with membership is different than generations that have come before them.
A membership auto-renewal program may help boost your retention rate, dues income, and provides a new level of convenience for both your members and you.
How did we get here?
The face of membership is changing. Robert Putnam’s 2000 book, Bowling Alone, sent shock waves through the association community. Putnam’s theory that people were becoming less and less inclined to join organizations served as a wake-up call to all association professionals.
Fast forward 20 years, and we’re still here.
Percentage of dues vs. non-dues revenue
However, the profile of many associations has transformed in the meantime. More and more of associations’ revenue comes from non-dues sources, such as events, certifications, advertising, sponsorships, and product sales. In fact, according to the ASAE Foundation’s Operating Ratio Report (2016), dues revenue has dropped from 95.7% in 1953 to 45.4% for trade associations and only 30% for professional societies.
But do keep in mind that membership dues are almost always tax-exempt, while products and services may be subject to Unrelated Business Income Tax (UBIT). Please consult a tax attorney for full details on UBIT.
So when members resign, is the relationship really over? The answer is: Nope.
As a new generation takes over the workforce (2020 is the year that Millennials will hold more than 50% of all jobs in the U.S.), new expectations about membership are emerging. Is your association prepared to capitalize on the trends? Here’s what we’re seeing…
Trends in membership retention
Membership is more of a cost/benefit equation than a loyalty statement: Increasingly, people are looking for tangible value from their memberships. They’ll join when they see cost savings and will re-join and drop as the perceived value ebbs and flows. For example, when an association offers a members-only discount that exceeds the cost of membership dues on certification, or for attending the annual conference.
Expense budgets don’t necessarily prioritize membership dues: In many sectors of the economy (especially government), membership dues aren’t allowable or reimbursable expenses. But this audience still values your organization’s offerings. Keep these former members in the fold with consistent communication about your organization’s products and services.
Don’t stop asking for the membership renewal: According to Marketing General Inc’s Membership Marketing Report, a significant minority (about 20%) of associations never stop asking their former members to renew. Sometimes the non-renewal was just an oversight. Sometimes the former member moved on to a new job and their replacement wants to take over the membership. You’ll be pleasantly surprised by the ROI of consistently asking former members to renew.
Here’s a quote from an actual association executive about how they designed their renewal messaging:
Renewal invoices and letters are initially mailed three months before renewal, followed by a mix of email/mail each month through three months past renewal. Our renewals were annual on July 1, so the process would begin on April 1 and continue through October 1.
All reminders had different messaging customized to the member type and the stage of the renewal process. For example, the first message sent would include information regarding key accomplishments over the past year along with what to look forward to in the future. Past due messages would inform the member they would no longer have access to members only materials (including listing what programs they specifically used, and how many times) and what programs they would no longer be supporting by not continuing their membership.
We ended the renewal campaign at the three month overdue mark with a personalized video, followed-up by one final email with a custom message based on whether the member opened the email, viewed the video, or didn't open the email.
The point is, don’t stop believing! Hold on to that feeling! Even if the member doesn’t pay membership dues, there are multiple ways you can continue engaging the customer. And maybe thinking about members as customers is a better way to frame things in your mind, anyway.
But maybe there’s something you can do to reduce the incidence of membership defections...
Setting up a membership auto-renewal plan
According to Marketing General Inc’s 2018 membership marketing benchmarking report, 45% of associations are using some kind of auto-renewal campaign.
Many association management systems (AMS platforms) now offer features that allow members to have their memberships renewed automatically, charged to the member’s credit card. Auto-renewal, a key feature of Novi AMS membership management software, is an increasingly popular option for members because it’s convenient for them; just one less invoice to process. It’s also gaining traction with association executives because it helps them boost retention rates and reduce the number of delinquent membership accounts.
Membership auto-renewal tips
Implementing an auto-renewal program isn’t without risks. A few practical tips:
Make your messaging around enrolling in an auto-renewal program obvious to your prospects when they’re signing up for membership, or when an existing member opts in for the first time.
Think about allowing members to have their membership auto-renewed in monthly installments, instead of annually. The expectation to pay monthly for membership or subscriptions is common with health clubs, Amazon Prime, premium content websites, and Netflix. This is especially important for trade associations, as their dues can run into the thousands of dollars, depending on the industry and the company’s size.
Remind members that their membership is about to be auto-renewed. About a week or two in advance should be enough time for them to cancel if they want.
Don’t make it too difficult to opt-out of auto-renewal. For example, a member should not have to call the association headquarters to opt-out. Put yourself in the shoes of a member. Would you be annoyed by a difficult opt-out process? Your members probably would be, too.
Consider a discount on dues for enrolling in auto-renewal. Or even better, offer a larger incentive in the way of a coupon to be used in your association’s online store, or as a credit to be used towards a future conference or webinar.
Implement a process to scan members’ accounts for expired credit cards, and notify the member in advance if their card is out of date. Ideally, you’d start the process far enough in advance that you could contact the member multiple times if their card is expired.