Membership management systems are the ideal solution for organizations who have outgrown the spreadsheet method of keeping track of members or subscribers. Some nonprofits and businesses hold on to the idea of keeping processes as they are; inertia is powerful. With competition for membership dollars and attention is at an all time high, organizations that do not meet members’ expectations of efficiency will suffer.
What are the financial upsides of using a membership system?
Let’s start with a story that illustrates the profitability of membership software. One neighborhood association used PayPal buttons on their website to collect dues. The association board thought, “People like to pay online, so we are offering a way to do that.” The buttons offered a family membership or single membership, but the payments were not recurring. No one was sent notices to renew, although each issue of the quarterly newsletter did contain a printed membership form. The volunteer membership chair had no real postage or printing budget for mailing out notices (let alone past due reminders) and didn’t have email addresses for all members. One board member felt like they could do better.
They hired a web designer who built a new website in WordPress and implemented a WordPress membership plugin. The membership spreadsheet was imported into the plugin with expiration dates and email addresses gleaned from PayPal transaction records. Their membership renewal rate and dues income skyrocketed as:
- Members were automatically emailed before their membership expired.
- Those who went past due were sent multiple reminders to renew.
- The new membership management software integrated with Stripe, which allowed auto-recurring billing. That prevented members from having to log in to make a payment each year.
- The membership signup form included options to contribute additional funds toward the association, and many members opted to make those donations in support of the organization’s mission.
The bottom line is that members had always wanted to renew — the association had just not been reminding them in a personal way to do it.
Rolling membership renewals are more profitable
If you are prorating membership for new members, you are not collecting a full dues payment up front. Many organizations that rely on spreadsheets versus a membership platform have fixed member renewal dates. This condenses the renewal period to a short amount of time (say the month of December for an end-of-year expiration date) so that notices are generated and sent out all at once, perhaps by a staff person or membership volunteer. The problem is that unless you have a 100% renewal rate, your revenue will suffer. The member who joined in July and paid 50% of a full year’s dues may not decide to renew on Dec. 31st. And now you’ve lost the other 50% of that income that could have been paid up front. With a rolling renewal date, members can join at any time of the year, pay the full annual payment and get a full year’s membership.
Rolling membership renewals gain more members
Some organizations don’t offer discounts for members who join after the annual renewal date. Or they offer one discount (say in July with an end-of-year renewal date) and this isn’t enough to entice a member who may think of joining in November. This can cause potential members to put off joining so they are not paying full price for a partial year of membership. They may forget and not return to join. This is not an issue for organizations with rolling renewals.
credit card payments retain members
A Gartner study estimated that in the software space, by 2020, 80% of vendors will be using a membership or subscription model. Those numbers may not apply to your organization’s industry, but the move toward subscription billing for many types of industries can not be denied. You can leverage this knowledge by setting up membership software along with a payment gateway such as Stripe, Authorize.net or PayPal Pro that accepts recurring payments. It’s easier for members to “set it and forget it.” No one really wants to spend time re-entering their credit card information year after year. If you look at your own personal subscriptions to magazines, subscription meal services, Netflix and more, you’ll probably see that the organizations that take auto-recurring payments are much more likely to keep you than those that require you to take action like mailing in a check each month or year.
Profit with add-ons or donation opportunities at membership checkout
Just like the neighborhood association in our story, you can upsell your members with other opportunities when they are in the process of buying or renewing membership. By using a membership system with an online checkout, you can strike while you have their attention.
are the logistical and secondary financial upsides of using membership
Free up time for more important tasks
The logistical upsides are huge. Here are some of the big ones:
- When software sends out renewal notices, staff and volunteers don’t have to take time for annoying mail merge activities.
- When members go past due or their credit card fails, the system automatically sends out a notice, increasing the chance that the member will come back to renew.
- Allow members to manage their own records with their own login and password. This reduces calls and emails asking you to change someone’s contact info.
Offer more member benefits
- Get staff out of the process of manually verifying member-only benefits such as special ticket pricing. A good membership system that includes an event registration functions can do this for you.
- Members can now enjoy an online member directory that is tied to the member database. It can be viewable by members or the public. Public directories help members promote their businesses and are useful for organizations like chambers of commerce, artist cooperatives and discount clubs. Financial bonus: you can stop printing your directory if you ever had one.
- You can offer member and non-member pricing in an online shopping cart that verifies membership.
- You can sell access to valuable member-only website content by requiring membership to view it.
Do you agree or disagree with the advantages of using membership software over a membership spreadsheet? Let us know in the comments.