Managing member retention is an incredibly important part of growing a sustainable business. According to research from Harvard Business School, increasing customer retention rates by only 5% increases a company’s profits by 25-95%.
Poor member retention is similar to filling a bucket with holes in the bottom: sure, you could keep piling on to make up for it, but you’re much better off figuring out what caused the holes and how you can patch them up.
Retaining members costs less than acquiring them, and both add to your club's bottom line. So before you go all-in on tactics designed to get new prospects into your membership pipeline, consider using one of these eight research-backed member retention strategies to grow your revenue by keeping the members you already have.
- Capture your club’s momentum
- Don’t just sell — educate
- Deliver surprise reciprocity
- Find ways to delight your members consistently
- But focus on service before delight
- Accept that speed is secondary to quality
- Build your member loyalty programs the right way
- Reward your loyal advocates
1. Capture your club's momentum
When exciting improvements are being made to your club, everyone in feels the momentum. But do your members feel the same way?
Create excitement with current members by showing them what your latest programs, amenities and offerings will help them accomplish.
For example, as we prepared to introduce major improvements to a member dining room, grill, bar and outdoor patio in 2017, we ran a series of preview emails and social media posts to generate excitement about everything members would be able to accomplish with the new and improved areas.
Not only does this build momentum for upcoming opening, but it also helps promote new usage that existing members might otherwise miss. And according to research from CX Solutions (formerly TARP Worldwide), telling members about new products or services they can really use creates an average 30% lift to usage or new member referrals.
2. Don’t just sell — educate
The same CX Solutions study mentioned above also found that “proactively providing information on how to avoid problems or get more out of your product” creates a 32% average lift to repurchase or recommend.
The last thing you want to do is leave members to fend for themselves after they’ve signed up. It’s crucial to offer resources that make it easy for new members to learn how to use their club.
There are a lot of different ways to train new members on how to use their club:
- Offer individual department onboarding with tips and tutorials designed to help new members get started.
- Send a series of lifecycle emails designed to guide new members through the process of learning how to use their club.
- Provide one-on-one training sessions with member support, sales, or an onboarding specialist.
- Create an online academy of training resources for new members who prefer self-service training. Example, how to make reservations online, what the attire for an event, how to refer a member, etc.
Build a community of club experts that new and long-time members alike can turn to when they have questions.
Private Club Marketing can also assist you with creating a new member orientation video series, in order for new and existing members to (re)learn more about our clubs and ask any questions they might have.
3. Deliver surprise reciprocity
Reciprocity is the social construct that makes the world go ‘round and keeps members coming back.
The concept of reciprocity is simple: people respond based on how they’re treated. When someone is treated nicely, they respond nicely. When they’re treated poorly, they respond poorly.
It’s no wonder then that consistently good service is one of the biggest drivers of repurchases and recommendations.
Source: CX Solutions
And while reciprocity works incredibly well on its own, research shows it’s far more powerful when it’s a surprise. Recall a time that someone did something nice for you unexpectedly. The gesture probably wasn’t all that unusual, but the fact that it came out of nowhere likely left a strong impression on you.
Brainstorm some ways you can surprise your members with a kind gesture. For example, the Beverly Hills Hotel asked its instagram followers to tell them who they could send handwritten notes and swag to just to say thank you.
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Thank-you notes are a rare throwback to old-fashioned, personal service; they stand out as a delightful gesture that makes members feel special and cared for. The relationship-building is well worth the relatively minimal investment.
4. Find ways to delight your members consistently
Discounts and freebies are a great way to delight your members, but they can be costly. Instead of leaning too heavily on these delights, you should embrace the art of the frugal wow — creating reciprocity through small, thoughtful gestures.
In fact, psychologist Norbert Schwarz found that as little as 10 cents can create reciprocity between two individuals. It really is the thought that counts.
In a study from the Journal of Applied Social Psychology, researchers found that waiters and waitresses could increase their tips by 23 percent through the simple act of returning to tables with a second set of mints.
5. But focus on service before delight
Many companies assume exceptional member service can only be achieved by going above-and-beyond — that loyalty is built on showy gestures.
But according to research from Dixon, Toman, and DeLisi published in The Effortless Experience, the true driver of member retention and loyalty is the ease of getting a problem solved.
Delight isn’t the foundation of a member service strategy; it’s a second-order effect. First, focus on consistently meeting expectations and avoiding unpleasant surprises. Then go the extra mile. Here are a few more tips.
Provide support on the right channel(s)
It’s important to make sure you’re providing support on the channels that make the most sense for your business and your members. Hosting companies, for example, know that live chat is critical when their members’ sites go down; other companies may have members who prefer using self-service (web), or even phone support.
Make member support a communal effort
Countless case studies have made one thing clear when it comes to creating an efficient support system: you need to keep everybody in the loop.
At Private Club Marketing, we use our integration with online/mobile chat to access real-time notifications of what’s happening on the member AND prospect end. We were able to improve our response time by 340% (not a typo!) by creating a support channel for all of our teammates. Members don't have to call the club, they can simply inquire through online chat and notifications are sent to a specific or group of department heads on their cell phones.
6. Accept that speed is secondary to quality
When it comes to highly rated member service, quality and completeness matter more than speed.
According to research from Gallup, members were nine times more likely to be engaged with a brand when they evaluated the service as “courteous, willing, and helpful.” “Speedy” service, on the other hand, only made members six times more likely to be satisfied.
Telling your team to spend more time with members might seem counterintuitive, but numerous behavioral psychology studies have shown that everyone views their service experience as more positive when they don’t feel rushed or ignored.
Whether you’re responding to support requests or delivering new features, speed is only delightful if you’re delivering exactly what your members need. You’ll do more damage than good by rushing and delivering something that creates more problems than it solves.
In fact, research conducted by John Goodman found that members were much more sensitive to price changes — and thus more likely to churn — when they experienced a few problems with the product or the support they received.Source: Strategic Customer Service
7. Build your member loyalty programs the right way
The key to creating loyalty programs that work is to know why members use them and what gets members to keep using them. Luckily, there’s a ton of research on member loyalty programs that you can use to set your program up correctly from the start.
Give loyal members a head start
Consumer researchers Joseph Nunes and Xavier Dreze are known for their studies on the Endowed Progress Effect. Their results have conclusively shown that the biggest pitfall in preventing member loyalty programs from succeeding is getting people started.
In their well-known car wash study, participants were twice as likely to finish loyalty cards when they were automatically started (or rewarded) as soon as they signed up.
Make ideal members VIPs
Additional research by Dr. Nunes on retention programs has shown that people love being VIP or “gold” members. There is one caveat, though — this only works when people know there is a class below them on the totem pole. Speaking to human nature, Nunes saw a notable increase in gold customers’ participation as soon as he implemented a silver class.
Assign your members positive labels
Research on voting patterns conducted by Stanford University revealed people are more likely to participate in something if they are labeled with a positive trait.
Buffer refers to their premium customers as “awesome” customers and even named their upgraded payment plan the “Awesome Plan.”
8. Reward your loyal advocates
When your members go out of their way to recommend your product or service to others, let them know that you see and appreciate it! If you spot someone recommending your business on social media, for example, reply to say thanks. It shows you’re paying attention and that their testimony means something to you.
Another way to recognize your brand advocates is with a referral program. For example, many clubs give their members a club credit when they refer someone who becomes a member (and that new member gets a $X credit on their account).
Retaining members is a balancing act
There are many member retention strategies, but there are no shortcuts. You can’t hack a personal relationship, so why should we assume business relationships are any different?
The bottom line is that the strategies above should hopefully give you some fresh ideas for approaching retention, but they’re not a cure-all. Your product and service will do most of the heavy lifting in keeping members loyal, and there are no shortcuts for that.