Costs go up. Just ask anyone shopping for a 2 x 4 piece of lumber lately. Supply and demand. Cost of manufacturing. Fair market value. Inflation.
The same factors apply to the cost of acquiring, fulfilling, engaging and renewing members. Of course you will do your best to manage costs and provide your product and benefits to members as efficiently as possible. But don’t think you are somehow immune from the effects of rising costs and inflation. While you aren’t a lumber mill, you have obligations to your membership to maintain quality, deliver value and represent your members to the best of your ability.
And that costs money.
Membership organization revenues come partly from dues, and as costs go up it’s likely your dues need to increase to keep pace.
“But our members will revolt if we raise dues,” say membership leaders everywhere.
To which we say: “No they won’t. If you approach it correctly.”
Don’t apologize when you need to charge more to belong to your organization.
Let’s start with the most common, most counterproductive action taken by organizations when they increase dues: apologizing.
Assuming your dues increase is modest (less than 10%), you have nothing to apologize for. Costs go up. You need to pay for the things members value.
Apologizing implies you had some kind of control over the factors that influenced your need to raise member dues. It sets the wrong tone for the communication and puts everyone, both leadership and the membership, on the defensive.
Don’t make the dues increase into a big announcement.
Here’s the second mistake made by many organizations: making a big deal out of a dues increase.
Costs go up (are you sensing a pattern here?). Making it headline news draws too much attention to something that is a fact of life. Think of other aspects of your life. It’s very rare that costs go down for something you value, and far more likely the costs go up to keep pace with the expense of delivering value. No one likes to pay more, but if you value the product, you’ll pay a fair price for it.
There is one exception to this advice. Offering members an opportunity to lock in at the old dues rate by renewing early and/or renewing for multiple years is appealing to some members. This can help you generate short-term cash, but you might be giving up some long-term dues revenue (because the members most likely to take you up on the offer are loyal and would likely have renewed at the higher dues rate anyway).
Don’t wait too long to act on a dues adjustment.
The longer you wait to make appropriate and justifiable adjustments to your dues structure, the further behind you will be in fulfilling the promises you made to your members.
Here’s one reason this happens: fear of the blame game. We’ve seen volunteer leadership kick the can to the next administration because they don’t want to be “blamed ” for raising dues.
Another reason is a belief you can “save” your way out of the problem of dues and increased costs being misaligned. We all know the old saying, “Hope is not a strategy” (and that trying to “save” your way to prosperity is a myth). Hoping you can shave enough costs off your expense budgets to avoid a dues increase puts the control for delivering programs and services of value in the hands of the bill payers within your organization. Instead, put the control squarely with the team responsible for member satisfaction.
It’s a balancing act, but if you are aligned in your objectives to be good stewards of your resources (not pay too much) while delivering an experience that members value and will support in the form of continued renewals, modest dues increases are just a part of the formula.
Don’t try to play catch up all at once.
If you dug yourself a hole and need to get out of it, take the long view. Members won’t revolt when a dues increase is modest, even if it happens every year or two. Eat the elephant one bite at a time and pretty soon you’ve closed the gap and you won’t have shocked your members.
Short-term thinking in a continuity environment fails to take into consideration the best element of membership structures: lifetime value. Satisfy the member today, and they will renew tomorrow. Undermine the relationship by a) apologizing, b) trumpeting it at every turn, or c) trying to fix the problem in one big increase, and you don’t need a crystal ball to predict the future: renewals will plummet.
Follow this prescription—it works every time.
This prescription will have little-to-no impact on retention while training members to pay a fair price for the value they receive.
- Don’t apologize or over explain.
- Don’t make it headline news.
- Don’t wait too long.
- Don’t play catch-up all at once.
Before you kick off your membership dues increase, do some homework.
There are, of course, key foundational considerations before you act on a dues increase.
Are you confident you are delivering value to your members and doing it efficiently? Cost containment should be explored before a dues increase is announced. You need to be confident you are being good stewards of the resources the members are already giving you.
Are you sure you’re delivering what the members expect? If you’re spending a lot of money on a benefit few members value, maybe you can allocate those dollars toward more worthy programs. How to know? Listen. Actively.
Are there ways to boost membership metrics that increase retention (and reduce renewal expense)? Enrolling members in auto-renew or promoting multi-year memberships delivers better lifetime value and reduced costs.
Dues are what members exchange for value received. Align dues to value, and modest increases are a reasonable price to pay for the value they have come to appreciate.