Deciding on annual versus monthly billing can be one of the biggest challenges of do-it yourself membership programs. Annual plans seem to present the easiest option in terms of origination and maintenance, but monthly plans hold many advantages that may be worth the extra effort. Let’s take a look at why:
At first glance, annual membership plans are appealing due in large part to their simplicity. One annual payment per customer means very little work in terms of tracking and billing the membership. This means less office work for the practice, and less of a headache tracking down payments every month. However, limiting membership choices to annual billing could have a great effect on both the number of people that sign-up and retention. Thus it is not a decision that should be made solely out of convenience or fear.
A pet-care group – with over 1 million active membership plans – recently estimated that their customer base would be about 50% smaller if they didn’t offer monthly membership plans. The reasoning, simply put, is that annual payments are hard to afford up front and hurt renewal rates by forcing one large spending decision every year. If money is already tight, customers may be less likely to renew with a hefty renewal payment, especially if they haven’t used the service much in recent months.
On the other hand, a monthly option breaks the commitment into easy-to-swallow installments and combined with auto-renewals, results in no inflection points during which the customer determines if it is worth it to renew or not. With a little bit of planning, the business can make sure that services delivered do not exceed payments received, making the only concern — billing. While the task of monthly billing may seem daunting, the right membership software can make tracking and billing these plans a breeze. Furthermore, it creates the potential for more customizable membership options, structured to fit the needs of each individual client. This helps your business stand out from competitors, by allowing each client to create a payment plan that fits their unique situation.
Bottom line is that if you really want to impact the growth of your business using membership programs, you really need to consider monthly plans.