20% of calls to the Member Solutions’ call center are about customer cancellation inquiries. It can be the most challenging type of call. A member has stopped attending class, has stopped making payments, and wants out of the membership agreement.
Although you as the business owner are legally correct to enforce the terms of the contract, it doesn’t change the member’s view on what they perceive as “the right thing to do.” Most times, the member does not understand why he/she is being held to terms when he/she voluntarily stopped attending. This situation creates conflict and a disgruntled consumer.
An unhappy consumer will communicate the experience to as many people as possible. With social media and review sites readily accessible, we often see disgruntled consumers post untrue and negative statements. Readers of these posts do not have all the facts, and many times perceive the biased version as the truth.
The good news is that you have the ability to turn a negative experience into a positive by implementing any of the following suggestions into your business policy.
Here are a few ideas to help defuse this situation for your business:
1. Send Member Solutions a hard copy of your signed membership agreement to store.
Many disputes are averted simply by our representative’s ability to immediately present a signed copy of the agreement. The signed document reinforces the terms, including the rights for cancellation. Seeing the terms again in writing is sometimes enough ammunition to diffuse the dispute.
2. Build a cancellation fee in your membership agreement.
Select a dollar amount that may be equal to 30, 60 or 90 days’ notice. Some of our most successful clients use this option.
3. Create a term rate that is more attractive than a month-to-month rate—and include a cancellation fee.
If a customer wants to cancel prior to the end of the term, the cancellation fee equates to the difference between the two choices multiplied by the number of lapsed months in the agreement.
Here’s an example: The month to month rate is $100.00 per month. The term rate is $75 x 12 months. The cost difference is $25.00 per month. For instance, if the term customer wants to cancel 6 months into the agreement, the cancellation fee would be $25.00 x 6 months = $150.00.
4. Make sure your cancellation terms are clearly part of the signed agreement.
5. Offer a settlement when the account becomes 90 days delinquent.
Most Member Solutions clients choose to settle for 50% of the remaining balance. This option saves relationships and provides you with some of the principal balance that you may have not collected otherwise.
Additionally, a contract cancellation opt-out method may assist with your lead-to-membership conversions. Many people, especially in this economy, don’t want to commit to long term agreements and therefore won’t sign a term agreement that doesn’t allow them a method to break it.
Implement these suggestions to effectively handle membership cancellations. Ultimately, ending a business relationship on a positive note will aid member retention and referrals.
What membership cancellation terms have worked for your business? Have a tip to share? Comment below.