Wednesday, July 23, 2008

Discounts

There have been many conversations about discounting dues. The best I can remember can be found here.

For those offering new member discounts, once a member goes to renew, I am guessing you have them start paying regular dues. How much do people complain? Once you start offering a discount to new members, do current members complain?

I am up for renewal on one of my magazines. I thought the price seemed high. I Googled the magazine and found I could get it at a 25% discount from a number of online retailers. So, I emailed the customer service department to find out why. Here is the response I got:

{blank} Magazine has always valued its loyal renewal subscribers; however, there are times when {blank} must add new subscribers to its subscriber list. This can be done in several ways: {blank} may offer a subscription plus a premium at the basic subscription rate, we may offer a subscription for less than the basic rate, or we may allow our agents to offer a subscription for less than the basic rate. Please note that these are special one time only introductory offers. Upon expiring these subscribers are renewed at the regular renewal subscription price. We try to be fair in our methods of doing business and from time to time we will make special one-time-offers to our renewal subscribers.

If we can be of further assistance, please let us know. To ensure your future concerns are handled in a timely fashion, please include all previous e-mail correspondence.


What is different about this from associations is, the number of options. If you want membership, you have to deal with one entity. For subscriptions, I can deal with hundreds and find the best price. They really aren't one-time introductory offers if I can find them anytime online from a number of retailers. And I would be willing to guess that the magazine pays a fee to the online retailers for each subscriber obtained. So why wouldn't you offer the same price they offer and keep the whole thing? It sounds like you would make more money and make people happier. What is stopping me from letting my subscription run out and just buying it every year from one of these retailers for a cheaper price?

25% is quite a difference. What would happen if you let Wal-Mart sell your memberships tomorrow for 25% less than you charge? Would people still go directly to your association to renew?

What if you flipped traditional thinking? What if first-time members paid X, but when you renewed, it was cheaper? I would love to hear Tony's take on that one.

3 comments:

Kevin said...

Actually, Matt, you'd be surprised how many associations offer just the scenario you suggest, through initiation fees or application fees or whatnot. It's not nearly as common as it used to be, but it still happens. Never understood the concept myself.

I'm on record as loathing discounts, but I'm not above them -- I have been known to offer the occasional online coupon code worth 50 bucks. And you know why? Well, as much as I hate it, it works. And our first-year retention rate isn't any different for folks who come in with a small discount as those who don't. What we don't offer is HUGE discounts (and, I like to think, real value). Which may explain why we've never really got any complaints about the renewal price. (Though there was this one time a few years back someone sent us a check for some random amount, maybe 50 or 60% of our dues, and said, "This is what I think membership is worth so this is what I'm sending." We returned his payment and wished him well.)

Kevin said...

Hmm, yeah, obviously I meant to say "what we DO offer is real value." :)

David M. Patt, CAE said...

One danger in offering membership discounts is that people begin to expect it and defer joining or renewing until a discount is offered.

If you feel discounts are helpful, it may be better to offer them for educational programs, products, or other things, not for membership.