It’s Cheaper than Acquiring New Ones: Retaining members to your service

It’s Cheaper than Acquiring New Ones:
Retaining members to your service
The benefits of retention are well known: it’s cheaper and easier to retain existing customers than it is to try to acquire new ones. Secondly, retained customers play a vital role in the acquisition of new customers through word-of-mouth. Thirdly, retained customers have a higher monetary value, due to being more susceptible to cross-selling initiatives.

So, retention is important. But, it’s difficult to achieve, especially for membership organisations. Numerous organisations work on a membership-based business model, such as health clubs, trade unions, charities and even professional associations. Often, recruiting and retaining members is fundamental to the success of these enterprises which rely on membership fees as their primary revenue stream.

Retaining members, as opposed to retaining customers, often means retaining people to a subscription to something. Subscriptions often mean a ‘delayed investment’; only after paying up front for something, or signing up to a contract does a member see any return. Usage levels of subscriptions can fluctuate too, which can affect members’ perceived value month by month, and subsequently make cancelling their membership seem appealing.

Key players in retention – rational and emotional

A question often asked but rarely solved is “why do members end their membership?”. Identifying the key players in retention is essential. By having a better understanding of the reasons which eventually lead to members’ decisions to retain or to end their memberships can help steer managers towards general interventions to help reduce attrition across their entire membership, or towards specific interventions- targeting only those members who have indicated certain characteristics or low ratings (e.g. poor service quality) which render them ‘high risk’ of cancelling their membership or letting it lapse. Such interventions might include measuring ratings of certain ‘rational’ factors which have been linked to retention; service quality, brand, value for money and usage.

However, basing any such intervention on an assumption that service quality, brand, value and usage are the only key players in retention is short-sighted, and risks neglecting other ‘emotional’ factors. These ‘emotional’ factors include anxiety (degree of comfort, relaxation), motivation, and connectedness to other members. These emotional factors have varying degrees of importance depending on the nature of the membership organisation for example, how much interpersonal contact members have there.

Interpersonal contact

Services can be clustered by how much interpersonal contact is required by the member if the member wants to access the facilities/ benefits on offer to them. For example, getting value from members of health/sport/leisure/arts clubs usually requires the member to physically visit the club, use facilities, and interact with other people (staff and other members).

In these high interpersonal services, whilst the service offered perhaps feels more ‘real’ to members, the member is not only paying a subscription fee, but is also expected to pay with their time and energy in order to co-create any value from their membership. In a high interpersonal service, due to this physical investment of time and energy, what becomes important to members and their desire to retain membership is how comfortable and relaxed they feel during their service usage. Also what becomes important is how intrinsically motivated they feel to participate.  All of this means that the extent to which they feel like they ‘fit in’, that they know what they are doing, and that they are enjoying it, are all critical to retaining members in high interpersonal services.

On the contrary, in low interpersonal services such as professional services/associations, membership merely provides access to exclusive online resources, discounted event. The service perhaps feels less concrete to members but requires less of the members’ physical time and energy in order for them to gain value from their membership. In a low interpersonal service, what is more important to members is to feel connected with other members perhaps through useful, enjoyable branch events, networking activities etc.

Length of membership

As well as interpersonal contact, these emotional factors have varying degrees of importance depending on how long the member has been with the organisation.

The survival rate of new members is low until they been a member long enough to have moved into the ‘safe zone’. This safe zone can fall somewhere between 3 and 12 months.

For high interpersonal services, it seems that new members have a stronger desire to stay when they perceive the rational factors (e.g. service quality, brand quality) to be very good, but this becomes less important the longer they have been there, when the emotional factors (comfort, relaxation, motivation) take over.

High interpersonal services require more interaction with the member physically experiencing the service from day one when making use of the service on offer. As such, service quality can more quickly be evaluated, and the visual imagery of the branding can be seen either in the club or on any materials/documents received upon joining. In high interpersonal services, there are more chances to expose and introduce the member to the full service offering and the brand behind it. In fact, it is probably these aspects which led the individual to join in the first place- first impressions of service quality and brand. However, once the service quality and brand identification have been ‘confirmed’, as length of membership progresses, the member becomes more aware of more emotional factors. These factors then become the key players in retention.

Conversely, for low interpersonal services, it seems that new members have a stronger desire to stay when they feel connected through branch activities, but this becomes less important the longer they have been there, when service quality, brand quality become more salient as well as their intrinsic motivation for having the membership. In low interpersonal services the member may well have joined in order to make use of networking and career development opportunities. It is no surprise that branch activities, which offer the only chance to meet other like-minded members, are critical to the likelihood of the retention of their membership. However, after connections have been made and the membership association has become ‘demystified’, the member then starts to become aware of the quality and brand, and their enjoyment of the membership.

Comfort, control and connection

Overall, members at some stage will want comfort when using their membership, a feeling of personal motivation for their membership, and connection to a high quality service and brand. The nature of the service organisation and the length of membership determine the key players of retention- a ‘one size fits all’ approach to developing retention interventions should not be taken without firstly considering ‘who’ is being retained (current vs. new members) and also ‘how’ your members are expected to create value from their membership.

Dr Helen Watts
Senior Lecturer in Marketing
Worcester Business School
University of Worcester
and IORMA Research Associate

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