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Auto-Renewal, Monthly Payments, and The Membership Economy

Auto-Renewal, Monthly Payments, and The Membership Economy

Recently in Silicon Valley, senior marketing executives at some of the world’s largest and most sophisticated technology firms gathered in an auditorium on a futuristic Microsoft campus to learn more about how associations do business.

Robbie Kellman Baxter, author of the book “The Membership Economy”, was there to help these private-sector leaders understand how to move their enormous universes of customers into a membership model, entering enthusiastically into what she describes as “the forever transaction”.

For those of us who have been immersed in that very model for many years, it’s both fascinating and encouraging to see that this form of customer relationship is increasingly viewed as a positive and something to be emulated.

It’s also an opportunity, as the possibility exists that as companies adopt the membership model they might tinker with it a bit, making it their own with modifications that associations might find worth reviewing. A virtuous cycle, if you will – they learn from us and we might just learn from them.

“The Membership Economy” references companies who have been successful “early adopters” of the membership model – Netflix, Spotify, etc., and when one compares/contrasts their membership models with those of associations, two key differences stand out:

  1. Auto-Renewal
  2. Monthly Payments

These are concepts that many in the association space have been considering recently, and that’s a good sign. Ms. Baxter is a Stanford MBA (Harvard undergraduate) with over 20 years of strategic consulting experience in Silicon Valley, and I find it reassuring that the she is discussing membership models with her high-powered clients that are essentially identical to those being discussed by association professionals at places like the Real Magnet booth at the recent ASAE Marketing, Membership & Communications Conference in Washington.

Auto-Renewal and Monthly Payments aren’t going to be a good fit at all member-based organizations, and as you consider whether it is right for yours, be aware that Marketing Automation technology can enhance your ability to make the most of the benefits of this model.

First, think about (under a monthly payment model) how much more meaningful it is for association staff and leadership to be able to monitor member engagement on an individual and ongoing basis. The Member Engagement Scoring functionality built into association-specific Marketing Automation systems provide that, along with automatic triggering of email campaigns and/or staff alerts so that at-risk members are both noticed AND encouraged before it’s too late – and “too late” now happens every 30 days.

Second, be aware that Marketing Automation can powerfully complement what most consider to be the primary benefit of a monthly dues payment structure. This benefit derives from the fact that people are often more willing to buy something (such as an annual membership to an association) if they can spread their payments out over the course of a year, even if it means they end up paying more in total. An example would be choosing to pay $300 over the course of a year @ $25/month rather than paying $250 all at once at the beginning of the year,

Marketing Automation makes it possible (and easy) to automatically send timely information to each individual member right around the time that you know their credit card is being charged each month (you decide if right before, right after, or even same-day makes the most sense for your association)

Even with the reduced “pain” of a low monthly payment, Ms. Baxter’s “forever transaction” concept would suggest that membership organizations would be well-advised to continually demonstrate value to each individual member. Take advantage of the automated, “set it and forget it” functionality of Marketing Automation to trigger emails to members that you’ve written to reinforce your value to them.

Seeing the membership model envied and emulated by large and sophisticated private-sector organizations should both please and inspire association professionals. It’s nice to be validated, and even nicer to find a new source of potentially-interesting ideas.

Maximizing Member Engagement is desirable under both monthly and annual dues payment models. Consider optimizing the engagement levels of your members on an individual basis by communicating with them in as personalized, relevant, and timely a manner as possible. To discuss the ways in which Marketing Automation is being used by Marketing and Membership teams at both member-based organizations and the private sector, contact info@realmagnet.com or speak to one of our subject matter experts at 240-743-2941.