A recent MarketingSherpa case study is instructive for anyone selling a high-priced subscription or membership based product or service, and wishes to boost renewals.

MarketingSherpa profiled Corbis, a photo licensing agency, which was having difficulty handling the renewals of its content licenses.

The solution? To introduce a process for identifying licenses about to expire and allow sales representatives to target those account holders with about-to-expire licenses and persuade them to renew. Sounds simple… but Corbis had licenses covering 4 million online images with varying types of licenses as well as varying license periods. Around 7,000-10,000 image licenses were expiring each month. And at the time only about 2.5 percent of those licenses were being renewed.

Corbis developed a renewal program that used automated emails to remind clients that their licenses were about to expire, and gave a prioritized list of account holders to sales reps who could then contact the relevant members. While this is relatively easy to set up in most off-the-shelf membership scripts, it’s not so easy when you’re a large company and need to modify existing technological infrastructure.

Essentially, the steps which Corbis took - and which YOU can model, especially if you’re running an expensive membership program - are as follows:

1. Automate the sending of reminder emails to members whose membership is about to expire;
2. Automate the sending of emails to you (or your staff) about the members with accounts about to expire (e.g. by email). Ideally prioritize account holders based on renewal value or other relevant factors; and
3. Call those clients (in order of priority).

Corbis’ automated email efforts resulted in doubling its online renewal rates – from about 2.5 percent to 4-5 percent. The follow-up calls further boosted renewal rates to 10 percent in some locations.

What I find particularly compelling is the use of follow-up phone calls. So many Internet marketers seem averse to contacting their customers by phone… but if you have members paying, say, a few hundred dollars per month, isn’t it worth it?

Source: MarketingSherpa, “How To Double Renewals with Triggered Emails and Sales Reps: 6 Steps”, MarketingSherpa, November 6, 2008

Run a membership program - or thinking of running a membership program? Be prepared: depending on what you offer, your member may only stay with you for an average of 3-4 months, based on what various Internet marketers who run membership programs have experienced regarding membership longevity.

This has two major implications for you if you want to maintain, let alone grow, your membership base. You’ll need to:

1. Actively recruit more members to overcome member attrition (otherwise you’ll eventually have no members); and
2. Do what you can to retain members longer and/or motivate them to renew.

When it comes to the latter, it may be tempting to “buy” members’ loyalty by offering them an incentive to stay on as members. Banks, credit card companies, telecommunications companies, ISPs and numerous other businesses are among those that are quick to offer customers incentives - e.g. discounts, freebies, upgrades, etc - to stay with them instead of leave.

But offering people incentives to renew or continue with their membership won’t always be appropriate. It may, for example, devalue your product offering. Well, the good news is that it IS possible to increase member retention without “buying” members’ loyalty. It may just take some time and effort to find and implement the right strategy.

MarketingSherpa recently profiled a professional organization that seems to have hit the bulls-eye - or is, at least, getting closer to it. The Society for Marketing Professional Services has worked hard to develop a multi-faceted, email-anchored member renewal strategy that has lifted its retention rate from 71 percent to 82 percent - an impressive 15.4 percent increase.

Some of the key tactics the organization used to lift retention were to:

• Avoid using a discount or offer to entice members to renew;
• Scrub their email list by removing “bad” email addresses. What’s more, before doing so, they first attempted to contact members by phone to see if they wanted to renew and to update their correct email address;
• Send a formal “business letter” style email 60 days out from a member’s membership expiry date reminding them to renew;
• Send a friendly postcard 30 days out from the expiry date; and
• Send an formal email and a cute postcard a few days before the expiry date.

Whether or not a similar strategy will work for you is something you’ll need to test. But this case study certainly reinforces the ideas that:

1. It takes concerted effort - beyond relying on the quality of your membership program - to retain a portion of your members. That being so, think about how best to time and send reminder notices, and the optimal medium for each message. Is email enough … or are you better off reinforcing several emails with a phone call, some postcards, or some other forms of communication?
2. You don’t necessarily need to offer discounts or freebies to retain members. Doing so may actually devalue and commoditize your offering.
3. Continue to test. Is an email 60 days out from expiry optimal… or is an email sent 45 days before expiry better? Should you follow up with a postcard… or a letter… or a phone call? You won’t necessarily achieve your desired results with your initial approach… so keep on changing, tweaking and testing to achieve ongoing improvements.

Source: MarketingSherpa, “Member List Going to the Dogs? Simple Email-Postcard Strategy - Not Incentive - Brings Back 15% More”, MarketingSherpa, September 3, 2008