The Boy Scouts of America (BSA) continues to make headlines for too many wrong reasons. Faced with an onslaught of sexual-abuse allegations and lawsuits that could potentially bankrupt the century-old organization, the BSA has suddenly announced that it will increase the annual youth membership fee by a whopping 80 percent.
Though the fee hike could generate an estimated $60 million in additional funds over the coming year — money that could be used to fight legal battles and cover liability insurance — it’s undoubtedly a hard pill for members and leaders to have to swallow.
It’s difficult not to conclude that the BSA dues increase is an object lesson in how not to handle a fee hike in a membership-based business or organization. It also speaks to the importance of handling such situations with an effective strategy, clarity, and intentionality.
When Should You Raise Membership Dues?
Raising your membership dues isn’t an inherently bad move. For many firms, it’s necessary and justified on a regular basis. Valid reasons can include:
- Keeping up with inflation
- Adding new programs and services
- Covering upturns in fixed costs
Almost every membership group has to raise dues eventually. The key to a successful extension is proper management of the why, how, and when.
Four Tips for Raising Dues the Right Way
As the BSA debacle has shown, there are right and wrong ways to raise dues. Here are some tips to help you enhance your dues without risking a significant backlash or cancellations.
Keep Increases Small
Research from a Height Performance Group study shows that a dues increase of 20 percent or less doesn’t usually lead to a significant drop in renewal rates. But a hike of 20 percent or more can substantially hurt retention.
So the percentage is clearly pivotal, but the flat dollar amount may also have an impact. For example, most people won’t cancel if you raise a membership fee from $7 to $9 (which is a 29 percent increase).
However, you’ll find that people raise their eyebrows when you go from $99 to $120 (a seemingly smaller 21 percent). The latter appears so much greater because of the dollar amount — and the fact that it crosses a significant pricing threshold of three digits.
Keeping price increases small — both in terms of dollars and percentage — should help you avoid overwhelming existing members or causing them discomfort. Think all of your options through before you proceed.
Raise Dues More Frequently
It’s also worth considering how often you raise your dues fees. Frequency and amount of increase go hand in hand. “The more often you raise dues, the less the amount should be,” Membership Works explains.
“If you wait too long and have to go with a high percentage, you risk member anger. Smaller increases on a more regular basis can train your members to expect that increases will happen.”
Justify the Increase
You mustn’t raise the figures just for the heck of it. Whether the increase comes to $1 or $1,000, you have to justify why you’re asking for that additional amount. Ideally, the justification will be appealing to your members.
The BSA decision to raise dues by 80 percent is horrible on all counts. However, it could have been made more palatable if a perceived value had been offered in return for the increase.
Instead, the justification was that it’s necessary to cover legal fees and liability insurance. Those are not items that will get most members terribly excited, if at all!
Soften the Blow
When you believe you have to raise dues but anticipate that your members won’t take it well, it’s helpful to contemplate potential ways to soften the blow. Here are a few possible options:
Consider keeping existing members at the same price and raising the fee just for new members. A little bit of goodwill like this can boost member loyalty while improving the bottom line … so long as you do manage to add new members.
Stagger your price increases over time. If you’re currently charging $10 per month and the plan is eventually to arrive at $20 a month, think about conducting a five-month rollout during which you raise prices by $2 each month. This can be an effective yet relatively painless way to ease people into it.
You could try adding a new tier to your membership program. For example, offer your existing members the option of staying at their current price point or going to a new level that includes premium features and benefits.
Add It All Up
Every situation is unique. You can’t control how individual members will perceive your dues increases.
However, the goal is to execute in such a way that the majority is willing to embrace the changes and continues to support your firm or organization. If you enact a strategic plan that prioritizes your current members, they’re more apt to reward you with loyalty and retention. So what’s your next step?