Should you charge a penalty for late Member or Subscriber Renewals?

In the age when organizations dealing with expiring members or subscribers are looking to increase retention while drastically reducing costs, many are feeling the pressure to implement "creative" strategies to fuel growth and reduce attrition.

But hold tight! When the standard "discounted or early bird renewal" seems to no longer be working, resist the temptation to go 'Bad Cop' and strictly penalize your constituents for not jumping on board.

A recent question was posed on one of our trade association's, ASAE (American Society for Association Executives) ListServ's highlighting this very topic:

"My Association is considering a monetary penalty to members should they not renew their Association Membership by their 'drop date.'--does anyone else do this?"

Of course this sparked much debate; from "Sure, why not?!" to "ARE YOU KIDDING ME?! this isn't an A/R-- you can't penalize those for not responding--plus, you may be disincentivizing your members."

But I feel the answer to this isn't as simple--in fact you could just be treating the symptom and not the problem. That, of course, being why they aren't responding in the first place. It might not always be a pricing issue.

Case in point: A client of ours publishes a variety of  research heavy publications throughout the year. Customers can purchase them individually or subscribe and receive all publications as they are published, at a discounted rate. Recently, their renewals seemed to be dipping midway through the series and then spike again towards the end.

Now, the easy route would be to simply throw some discounts or premiums to spark interest during the lull- but we wanted to do a more creative and scientific approach--to really find out what was causing this change. 

The Answer? We quickly did a benchmark survey to gather a few key metrics from subscribers. How satisfied were they with the publications? Did they find their topics on point and useful? Where they overwhelmed by notices?  The responses were overwhelming and gave us the key to the mid-cycle drop off!

In short, subscribers loved the offerings, felt the price was right (read: discounting it wouldn't have made much difference and would've unnecessarily left revenue on the table) but among other smaller reasons, what most subscribers were waiting for was the release of the next year's titles which coincided with the mid-cycle drop. BINGO!!

So what did we do? Well, moving the release up wasn't an option--as we released them when we knew them. So in gathering all the data, we implemented a multi-pronged approach to redesigning the series.

1. We kept the general areas of interest of each publication consistent throughout each year. Giving the subscriber the clear expectation of what was to come each year.
2. Implemented a multi-channel renewal series; mixing email with mail and phone follow ups. The final response was converted to a short survey asking to provide feedback on the publications, with a soft ask for their renewal along with a 10% off coupon to use on the webstore.
3. Tiered the Renewal Pricing. This went beyond the "Early Bird Rates" and made a consistent plan to increase the renewal price as the efforts increased. So in essence, it was less a harsh penalty and more a soft encouragement to renew sooner in the cycle.

This was implemented and tested against the control renewal series with astounding results:

• The Renewal Rate Median jumped 2 renewal efforts. Meaning, the highest rate of return was previously on effort 4;  now it was on effort 2 with an increase in early bird, non-promoted renewals.
• Cut efforts by a third. What was a 7 effort series, was reduced to 4. Since the median moved, there was no reason to extend the efforts out so long.
• Lapsed Renewals converted to online buyers. By providing the 10% off webstore coupon with the final effort, lapsed renewals either returned their survey with valuable information and/or utilized the 10% off coupon to purchase publications online--keeping them engaged in the organization.

The case calls to mine an invaluable quote that has come to be  our internal mantra as well as one that we many times will convey to our clients, when their spirits start to suffer:

"Even in the worst of times and in every industry, there are those that are successful and those that are not. Don't let external influences keep you from being in the former. Do something different."

By taking a diligent step back, re-grouping and taking the time to  listen to the members and subscribers, we formulated a great strategy that was easy to implement, test and modify with the agility that is needed in today's market!