Ah, the grace period, the bane of the membership profession’s experience. Should we have a grace period at all? How long should it be?
I will admit to being a hard-ass about grace periods. My preference is none. If your membership lapses on July 31, 2019, then your access is cut off as of 12:01 am August 1.
Remember how I recently wrote about rewarding the behavior you want to encourage? Well, we definitely want to encourage members to renew on time, and not offering a grace period is the “stick” side of the carrot-or-stick equation. “Renew on time or else you’ll lose something of value to you.”
BUT (there’s always a but)
This “no grace period” approach works best in individual membership associations with relatively low dues where the members access online resources frequently and where online payments can be processed in real time.
When I try to log on to get access to a member community, resource library, training webinar archive, or online publication that I use all the time at 9:15 am on August 1 and get the message that I can’t because my membership has lapsed, there’s a good chance I’ll pull out my credit card and pay my $100 or $200 dues right then, particularly if I know that as soon as I pay, my access will be restored.
It’s an entirely different story for trade associations, where decision-making about paying dues is more complicated than “I pull out my credit card and pay,” where dues amounts are higher, where dues processing takes days or even weeks to complete (when you include the member side of the process), and/or where it may take members weeks or even months to notice that they have lost access to member benefits.
Per Marketing General’s most recent (2019) edition of the Membership Marketing Benchmarking Report, offering a grace period of 2-3 months is correlated with higher retention rates:
(Chart from page 38 of MGI’s 2019 Membership Marketing Benchmarking Report)
It’s important to remember that correlation is not causation. The grace period is not necessarily what’s causing the associations that responded to the survey to be more likely to have retention rates above 80%. Some third factor could be causing them both (perhaps efficient and effective internal processes?), or they could be completely unrelated.
If experience demonstrates that your members are likely to renew (you *are* tracking your renewal rate over time, right?), but that some of them just tend to renew a little late (you *are* tracking who those regular scofflaws are, right?), there’s no good reason to create extra – and artificial – churn, particularly if restoring access to benefits isn’t an instantaneous flip of a switch.
But pay attention to your data.
If you have a LOT of members who renew late – or a set of members who ALWAYS renew late – it’s worth asking why that’s happening.
Are you creating the problem yourself? For instance, your members are HVAC contractors and you renew on an April or October calendar year, aka during their busiest times of the year, when people are first turning on their cooling or heating systems and discovering they aren’t working. Maybe shift to a December calendar renewal deadline.
Are you creating incentives for bad behavior? For instance, you regularly offer a discount or special deal to members to come back after they’ve lapsed and they’ve learned that you do that, so they wait for it. Maybe offer that discount or special deal ONLY to members who renew on the first notice.
As always, one size fits, well, one, so test different options, pay attention to what happens, and choose the option that the data points to.