Not every organization needs membership software. But many businesses and nonprofits do, and some founders and leaders don’t realize it.
Or you have anyone who engages with you that could be considered a member, or if the idea of membership is intriguing to you as a business owner, consider these five ways membership software could improve your bottom line.
1. A membership business model can unexpectedly benefit a variety of businesses.
Consider web designers and developers. Many of them build websites and consider their job done. They aren’t always a fan of doing maintenance and work. It’s time-consuming to bill for little support requests here and there. But with the expert troubleshooting skills they’ve used over the years, they know how to do support work. In addition, sometimes, the most technically-skilled developers are poor marketers; occasionally, new clients and projects are hard to come by.
A membership-based support model could turn around a web design business and help it grow into an agency. How this would work:
- Clients could sign up for a support “membership” with a monthly retainer. The best clients like to know they have someone to count on if something goes wrong or they need a new feature added.
- Through the use of membership software that is easily integrated into the designer’s website, clients can sign up for auto-recurring monthly billing with their credit cards (this type of payment reduces friction as opposed to clients having to remember to log in regularly to pay). The site can offer multiple membership levels that can suit a variety of client budgets.
- The great news with this is that even when clients aren’t requesting work, the designer is still getting paid. And the number of members grows year after year as new websites are built. The designer now has a steady and growing monthly income stream.
You might think that this model wouldn’t apply to your business, but if you are a service-based business or even a retailer, this subscription model can increase revenue and help you better predict your monthly income. Consider how HVAC companies now have customers who pay annually or twice yearly for preemptive service checks. Think of a farmer who once only sold at farmers’ markets but now offers a regular delivery service to those who subscribe.
2. Automated past due emails and failed payment notices bring in “free money” that may go uncollected.
For organizations that are truly membership or subscription-based, membership software is a must. With this kind of software, you can set it and forget it when it comes to automated notices. This means that instead of counting on staff or volunteer efforts (which are all bound to fail at some point as no human is perfect) to send out multiple past-due notices or let members know that their credit card number has expired, the software takes care of that.
It’s easier and cheaper to send out notices like this than it is to pursue new members or customers. In fact – depending upon your dues structure – the cost of membership software could be covered by just one member renewing every month who might not have if they weren’t reminded that they were past due. What’s even better is that online shopping sites and subscription services like Netflix have already trained people to log in to make payments and edit credit card numbers. So staff time is rarely needed to deal with taking in payments.
3. Spreadsheets are great, but membership software saves hundreds of hours of staff or volunteer time.
Some organizations think that they can’t afford software and instead use a member spreadsheet in an attempt to save money. However, they are likely losing money because of that decision. Spreadsheets could be considered the grandfather of today’s membership software. But, just like grandpa’s Oldsmobile, it’s not the best way to take a long journey unless you are prepared for a breakdown!
Here are some of the things that spreadsheets can’t do; they can take up hours of staff or volunteer time to handle manually (and with regular, human errors):
- Allow members to pay online with credit cards for invoices, joining, and renewing.
- Send welcome letters, and renewal notices failed payment notices for credit cards, receipts, and other automated emails.
- They can track other member activities such as ticket purchases and form submissions.
- Integrate with software like MailChimp, Quickbooks, and Xero.
4. Auto-recurring billing increases revenue through reduced friction
Auto-recurring billing can be enabled when membership software integrates with a payment gateway like Stripe, Authorize.net, or Paypal Pro. This feature is a win-win. Members like not having to log in to re-enter credit card information on an ongoing basis and organizations like to collect money automatically. When members pay this way, the group is more likely to collect dues as there is less friction. Friction can happen when things go wrong, like a member forgetting their password to log into the membership website or the member ignoring their renewal notice.
5. Rolling renewals bring in more money sooner
Before the advent of membership management software, having all members on a fixed annual renewal date like January 1st made sense. A membership manager would send membership notices or invoices every December and would only have to deal with renewals once a year. But with membership software, this process is no longer necessary. Let’s discuss the financial downside of sticking with fixed dates for renewals. Organizations have to decide how to price membership that is purchased at other times of the year. Does it cost 50% less after July 1st, or is it even more complicated? Under this 50% off scenario:
- Members don’t feel like they are paying the right amount except twice a year — on January 1 or July 1. Some members might delay joining (no money coming in right now), and others will delay and forget (no money from that person ever).
- Members who do join at the pro-rated amount pay only a portion of dues (less money for the organization now). In addition, if that member doesn’t renew, the organization has lost out on what could have been a full dues payment if they had been using rolling renewals.
Rolling renewals avoid these scenarios, as 100% of the dues payment is collected upfront. The membership software sets the renewal date one billing cycle from the member’s join date and manages the sending of renewals at the appropriate time.