Subscription Management – How Renewal Cycles Could Be Affecting Your Growth

Subscription Management

Renewal cycles form an integral part of the smooth running of your member organisation, not to mention it’s financial stability. But have you ever considered that your choice of renewal cycle may actually be having a detrimental effect on your member growth and retention figures?

Whilst subscription management can be streamlined with software which makes the renewal process easier, the aim of this post is to show you why choosing the right renewal cycle should not just be about organisation finances and resources. But takes into account desired membership growth and retention rates too.

What Is Your Renewal Cycle?

You may not have given it much thought. Indeed your choice of cycle was probably based more on financial reasons than that of member growth and retention. Lets look at the two commonly used renewal cycles by membership organisations:

  1. Calendar cycle: essentially renewals take place on a fixed date each month or annually, regardless of when a member has joined. This typically is the preferred method of most membership organisations as it requires less resources than renewing members on the anniversary of when they joined (see below).
  2. Anniversary cycle: with this cycle members renew on the anniversary of them joining the organisation. For larger membership organisations where member numbers run into the ‘000s, this type of cycle helps spread the workload over the year and can be automated with subscription management software.

With both forms of renewal there are pros and cons, and much will depend on the size and financial stability of your organisation when it comes to choosing the right one. But finances aside, let’s talk about how renewal cycles can impact member growth and retention.

How Your Choice of Cycle Could Impact Growth

It may come as a surprise to learn that renewal cycles can affect a potential member’s decision to join. They may also affect an existing member’s decision to renew – perhaps their circumstances have changed and paying annually no longer works for them.

Surveys of organisations in America have shown that there is a link between renewal cycles and member retention and growth rates. A survey conducted by Marketing General Incorporated (MGI) and published in their 2013 Membership Marketing Benchmarking Report, showed that organisations using anniversary cycles experienced a growth in member numbers, whilst those using calendar cycles had a higher number of member retentions.

All of which can only serve to confuse, and potentially force organisations into choosing a cycle which will meet just one priority when it comes to membership – member growth or member retention? However, the report goes on to point out that new members are often the lowest group to renew. According to Tony Rossell of MGI:

“there’s also an important relationship between new-member acquisition and renewal rates:” “New members are always the lowest renewing category, so the higher your new-member input is, generally speaking the lower your renewal rate is,”

This would seem to indicate that in choosing an anniversary renewal cycle you will experience a certain amount of volatility in member numbers. Whilst larger organisations may be better placed to cope with this, fluctuating member numbers may be harder for smaller organisations to manage.

What’s Best For Your Organisation?

Ultimately the choice of renewal cycle will come down to a balance between what is best for your organisation and what is best for your members. An anniversary cycle may well be your members preferred option. But for many organisations, especially smaller ones, managing this is just too daunting. However, advances in subscription management software potentially changes this.

Membership software makes it far easier to implement a renewal cycle which works for both organisation and members. allows you to set the preferred renewal cycle and automate renewal notification when payments are due. Members can pay their fees easily online and options can be set to collect monthly, quarterly, bi-annually or annually. Direct debits (UK clients) also provide peace of mind for organisations concerned about collecting regular payments.

So if you are now wondering whether you should be changing your renewal cycle, Tony Rossell offers this advice:

“From a consumer perspective, a consumer’s expectation for best practice would be ‘I could join whenever I want to join, and I’ll pay for one year and get renewed a year later.’ And anniversary allows for year-round marketing and takes prorating of dues off the table,” he says. “So, in general, my recommendation would be if you can operationally manage it with your staff and technology, it’s the right way to go.”

Have you changed from one renewal cycle to another? If so, did you experience changes in member recruitment and retention numbers?  Was there a change in your management processes and time? What other factors does your organisation consider when choosing a renewal cycle?  We’d love to hear.

To find out which membership admin tasks, including automating your renewals, can be done quicker and easier online, download our free guide below or contact us today for a free demo.


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