When economic times are tough, individuals and businesses alike suffer. As people tighten their purse strings, businesses are making less money on less necessary products and services such as travel. This means member retention and growth are more important in a tough market than ever. But how do you retain—and even grow—membership in a time when people are trying to cut spending anywhere they can?
Why is Member Retention Important in a Tough Market?
Companies track member retention rates right alongside new customer rates in terms of importance for a reason: retaining members is just as important (if not more so) as getting new customers in your door. Since it costs five times as much to attract a new customer than it does to retain current customers, building that relationship and earning loyalty is not only good marketing, but it is a smart business decision for the company’s bottom-line as well.
Depending on the industry and pricing, customer retention has a direct impact on revenue. A 5% increase in member retention can increase revenue anywhere from 25-95%. Even more, retained customers tend to buy more often and spend more money than new customers because they already know about the value of the products and services offered.
Member retention equals customer loyalty. When customers renew their membership for another term, it can be assumed that the customer saw enough value in the membership that it made sense for them to continue paying a membership fee.
The term value may be subjective, though. What we do know is value is more than just a low price. The first step in member retention is to ensure you as a company know what value means to your members. Many varieties of value exist, depending on the target customer, some of which include:
- Convenience – Can they get everything they need in one place with convenient options like online shopping and payments, convenient customer service, and with desirable service times and locations?
- Financial Benefits – Are they saving a significant amount of money or at least enough money to offset the membership fee and justify continuing to pay a set amount of money each term to stay with the company? This may include providing opportunities to financial protection and money saving programs like supplemental insurance to help protect their families.
- Exclusive Benefits – What member benefits are you offering that other companies are not? If your brand is handing out discounts or referrals that people are able to easily access online or through the company directly, the membership fee isn’t getting them anything they couldn’t get elsewhere for free.
- Quality – Are the products and services being offered higher quality than competitors that aren’t charging a membership fee? If the quality of the products and services is equivalent to—or higher than—the price being charged for them, people are more likely to hang out and keep paying a membership fee even during tough economic times.
What Member Benefits Are Typically Offered?
Many memberships include a variety of benefits for members’ families at home and on the road. Some common member benefits are:
- Discounts on products
- Products and services that can’t be found elsewhere
- Exclusive events
- Free products
- Health and wellness benefits (gym discounts, free nutrition counseling)
- Loyalty programs for consumers to earn perks or free products
- Convenience of a one-stop-shop
Depending on the company providing the benefits, some make more sense to offer than others. However, members want some benefits more than others, and not all these benefits carry over as well into tough financial times. With so many membership options in any given location (and online), the member benefits offered by a brand must stand out and give people something they can’t get elsewhere. In tough times when people are cutting memberships to save money, standing out to stay competitive is more important than ever.
How to Make Your Member Benefits Stand Out
In the effort to stand out against the competition brands have to think about what consumers really want.
Sure, travel perks and discounts are great, but when money is as tight as it is, traveling is usually the last thing on a family’s mind. Discounted products are crucial and can help these families save money on products they absolutely need, but plenty of stores offer similar prices on products, and it’s usually possible to find comparable pricing on most necessities at multiple stores.
When people are spending less money and focusing more on necessities for themselves and their families, the feeling often felt most is fear. They are afraid they won’t be able to provide everything their family needs, afraid they won’t have enough money to take care of their car, home, health, and an emergency if one arises. What people want most in tough times across the board is protection.
How a Brand Can Provide Protection
Protection during tough times is of utmost importance to members, and if they feel they are getting that protection from a brand, they will be more likely to renew their membership to avoid losing the protection, which is a major gap in what is currently being provided.
On top of member retention, offering protection to members will bring new members on board. In lieu of other memberships where they are spending money to get less necessary products and services, people start opting for brands that offer discounts on products and services, while helping them better protect their families in the process.
Costco’s current insurance program offers exclusive savings to those members who opt in, and according to their data, they save members an average of $587.17 in the first year of switching their car insurance. These offerings have over 500,000 of their members switching and increases customer loyalty as they want to continue to hold onto their coverage and savings. Costco sites that 9 out of 10 of their members renew their policy, which equates to 450,000 member retention.
Earning the loyalty of a member by understanding their greatest needs and priorities is the best way to compete with and beat your competition. Answering members’ needs for this protection gap creates stickiness in a way not many other member benefits could because of its exclusivity and demonstration that you care for the well-being of your members.
In a 2021 survey run by Franklin Madison’s data analytics team, 59% of single individuals and 49% of married individuals value the importance of insurance for financial wellness. That same survey discovered that 65% of city dwellers and 64% of rural dwellers define financial wellness as having insurance (64% married and 68% single), and while 65% of city dwellers have insurance, only 52% of rural dwellers do.
Most brands think they are already providing some level of protection for their members in various ways, such as:
- Higher quality and discounted products
- Supplemental wellness services like discount pharmacies and eye care
- Trusted car repair products and services
- Discounts on other wellness products and insurance referrals
While these services are typically found to be valuable, when a brand offers personal protection for their members, retention and growth both increase.
Part of earning and maintaining trust with a member is looking at the customer from a holistic perspective at a full 360-degree view of their lives and purchases. Why are they making the purchases they are making? Why now? Understanding more than just what types of products customers want helps give customers the value they are looking for when they want it.
Building trust requires keeping your products and services within the brand’s family to ensure your members are getting the best fit for them. Providing protection services yourself allows you as a brand to better control the types of services being provided. When you are doing more than just offering referrals to products that may interest your customer, you are choosing to focus more on the customer experience overall.
Members will respect your brand’s concern for the experience and the ability to provide them financial protection for tough times, times of emergencies, and protection that can weather the storm in the bad and into the good.
How Franklin Madison Helps You Care for Your Members
Member loyalty comes from providing a level of financial well-being and protection, and with the proper resources and expertise, security can be provided in a way that benefits all involved. Turnkey and branded to your company, Franklin Madison helps brands build trust with members when the offers come from the brand and not a third-party company. Offering protection from your brand shows your level of care for customers, builds on the trust that creates loyalty, and assures members you have their best interest in mind.
Franklin Madison helps brands provide personal protection for their members without requiring an in-house agency or a dedicated staff. With the right partner, your brand can stay competitive by offering protection services that fill a gap—in good times and tough ones—that competitors are not filling, setting your brand above others by creating a deep member loyalty, even when finances are tight.