Maximizing the Benefits of Term & Ongoing Memberships
Client Question: What Term membership length is best? What cancel notice period is optimal for ongoing memberships? Which one should I use?
I am often asked these questions about Term and Ongoing memberships so I’ll share with you my recommendation for your review and consideration. Please keep in mind a few of these upfront points:
1. Each facility is different and there are multiple good answers to provide.
2. Laws vary from state to state and country to country, so always check with your legal advisor if you have any restrictions to consider.
3. If selling isn’t a strong asset for you and your team, I recommend Ongoing memberships as an easy way to get new members on board initially.
4. Price is critical too because this determines your revenue. You need to price your memberships factoring level of commitment. Too often I hear about owners giving substantial discounts for low obligation memberships to entice buyers: this hurts the bottom line. If delinquencies and dropouts rise, your cost of business can wipe out profits faster than a Bruce Lee block and counter move. Check out a great article posted by Dina Engel, our COO, for more info on delinquency management: 10 Ways to Reduce Your Delinquency Rate & Increase Cash Flow
Ok, finally, my personal opinion …
I believe that new members and existing members should be managed differently, since they have two different frames of reference. Existing members should be willing to commit more than a new member, if I am providing great service and they are experiencing success (obtaining benefits). With this distinction, I would set up the following:
New Members: I would offer new members two ongoing membership options:
The first can be cancelled at any time with 30 days advance notice. This membership would be priced very high. The purpose of this membership is to establish the value of the program. I am not looking for many takers here because the notice period is still too short for my comfort level given that summer is 2.5 months long. But if a member is looking for ultimate flexibility, I am willing to accept the higher price point in exchange.
The second can be cancelled at any time with 90 days advance notice and I would price it at 25-35% off the 30 day notice program. It’s important that this price point not be inexpensive compared to your competitors. It should be what you actually want for monthly tuition per member. This program still offers the member a low pressure enrollment and a cost savings to justify the extra 3 payments should they terminate the membership. I like it because it gives me and my staff enough time to overcome any challenges that are causing termination and perhaps we can repair it.
Existing Members: I would offer a Term membership:
What I like most about Ongoing memberships is that they don’t expire, giving me the freedom to choose when to renew or upgrade a member. The best time to do this is after a belt exam. Once the member has been training for 3 to 6 months, they should have a more educated view of Martial Arts training and the benefits they are absorbing. This should lead to increased value for Martial Arts training and create an easier upsell to a bigger and better membership option with more commitment. Many people refer to these “Advance Training Programs” as Black Belt Club, Leadership teams, Master Black Belt Club, etc.
These Term memberships can vary in length up four years. Personally I like a full one year commitment with an auto renew option with a 60 or 90 day cancel notice. In this way, I acquire a sense of commitment from the member while also eliminating expired programs which save me from renewal work.
Your membership strategy is a critical aspect of your business that impacts your bottom line in many ways. There are many solutions that can work and sometimes you need a trial and error strategy.
Joe Galea is the President of Member Solutions. Galea, one of Member Solutions’ founders, has been counseling school owners for over 20 years, and spends part of everyday speaking with clients and industry leaders.
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