A retention strategy that reduces the pain of a large dues increase in the short-term.

It’s best practice in the membership world to increase annual dues rates a little each year rather than keeping dues rates the same for years and then increasing at a larger percentage. But what if you haven’t taken that course of action and are left dealing with a larger dues increase after many years of no increases?

Years ago, I worked at a large association with an anniversary-based membership cycle that kept dues at the same levels for seven years. No incremental increases over that time period in any category. Our members appreciated the consistency year after year.

The board of directors eventually decided it was time for an increase. It was in our constitution and bylaws that a dues increase must be approved by the board. After a lengthy discussion, they approved a dues increase across all membership categories that averaged 12%.

The decision was made in the spring prior to the increase taking effect the next January 1st. So, I had time to develop a communications plan and implement retention strategies that would provide a healthy transition.

The Retention Strategy

In July, we sent a two-page printed letter to members in the mail to provide justification for the increase mentioning the many increases in inflation over the 7-year period, the many additional programs, products, and service that had been added to the value proposition, and an offer to lock-in the current dues rates for multiple years at a discount by a September deadline. The multi-year options were for 2 years or 3 years.

This was a difficult campaign to implement and there was a lot of work done by our IT department and customer service center to pull it all off. All of the preparation and planning paid-off.

The Good News

We ended up with our best membership sales year ever!

There was an excellent response to the multi-year membership offers and we received many calls with questions about the offer but no real complaints or objections to the large rate increase. When I saw the excellent response rates to the offers, I knew we would see big sales numbers in the short-term and see solid retention rates in the long-term.

The Bad News

When we developed the multi-year offer and gained approval from leadership on our proposed plan, I stressed that if it worked, the short-term success would help retention and show excellent sales activity. I also emphasized that we were borrowing from our future dues revenues by making this offer. By asking our members to renew early for multiple years at a discount, our most loyal members will likely take us up on the offer and if they did, the monthly deferred dues revenue over the next 2-3 years would show lower increments. We would see less cost to renewal efforts since we didn’t have to notify all of those members that paid for multiple years of an impending expiration date for the next couple of years.

So the sales numbers were off-the-chart great in the months leading up to the dues increase and leadership was quite happy and even giddy about their decision. By the spring of that year, we began seeing lower dues revenue months and lower renewal rates as the new dues rates kicked in for those that didn’t take us up on the multi-year offers with each new monthly renewal group. Leadership started asking what was going on and I had to remind them of the borrowing-from-our-future concept that they were made aware of a year prior (without using the phrase “I told you so.”) The complaints from the board and leadership continued for years yet by the end of that third year, the monthly dues revenues were at much higher levels and the annual targets were significantly higher than previous years and were being met.

Conclusion

I still like this strategy for those dealing with a long overdue dues increase. The bottom line need is to support retention efforts through the transition to much higher dues rates. You’ll need to have leaders that can stomach the long-term aches and pains that come with the strategy.

Remember, every dues increase brings increased dues revenues. It’s the retention rate that usually suffers.