How to protect cashflow in your membership businesses

This has led to huge growth in TV, music streaming services, with subscription business models dominating the market. Online fitness also grew significantly and is expected to reach $79.87 billion globally by 2026.

For memberships such as associations and professional organisations, the last 2 years has been a turning point. While initially it was thought members may decrease, it also meant that businesses turned to memberships to find support and expertise in their particular area of industry.

Further initiatives such as flexible payment terms or freezes, reduced rates and the introduction of new categories meant that membership rates held across the sector, with many organisations reporting an overall increase in membership.

It’s no surprise that the recent impact of cost of living has impacted memberships across many sectors, not least the health and fitness industry. Almost 1 in 5 can no longer afford fitness services, which is the number one reason for cancelling fitness products and services, according to recent research.

With stats showing that more than one in three people (37%) stopped going to the gym by month-end after signing up in January, it is vital that now more than ever, health and fitness businesses should consider their new membership and renewal processes and communications.

For other membership organisations, this is a familiar story. With membership fees still contributing to the majority of membership associations’ income, organisations must offer a fair price as well as value and benefits to their members.

There is no one-thing that will guarantee membership income, but more organisations need to look at marginal gains wherever possible. The sum of small incremental changes will be powerful enough to slow any rate of declining income. 

It’s also important to consider the following:

1. Payment options for new customers and at renewal

Given the current climate, consumers and businesses alike may not be able to pay their membership in one large lump. Instead, offering monthly or weekly instalments via a Direct Debit collection service can help with their cash management whilst helping you sustain a regular cashflow.

Similarly, offering different collection dates which could be at the start or end of month to take account of salaries, or mid-month to help even out costs.

Direct Debit payments provide you with steady, smooth cashflow that will not change even if the payer changes their bank account or if their debit card expires.

2. Reduce or eliminate late payments

Almost a quarter (24%) of small or medium-sized enterprises (SMEs) have seen the number of late payments they receive increase since the cost of living has gone up, according to new research.

Source: Daily Business Group

Chasing overdue invoices or having those awkward conversations around being paid is never something anyone looks forward to. It can be avoided by setting up a recurring payment option for your members, which means you receive your payments at the same time each month.

To take it a step further, encouraging a Direct Debit payment would give you advantages over recurring card payments, namely that there’s no chasing up should the card expire and payers are protected by the Direct Debit Guarantee.

3. Start using digital payments

Millennials and generation Z expect a digital experience, from the moment they arrive on your website to the moment they sign up to pay for their membership.

So it’s vital to consider your online payments experience from start to finish and whether it is satisfying their needs. Ask yourself the following questions: 

• Is it frictionless? 

• Is it mobile friendly? 

• How long is the process? 

• What’s the renewal process for payment? 

Consider what you could do to reduce abandonment rates to make this a more seamless journey for your prospects.

This is important not just for new members, but also at renewal time. Your retention rate will improve if you reduce the barriers to renewal and make it an easy, simple process.

4. Create trust and transparency

Trust and transparency are two vital components for membership, and when coupled with demonstrating value and benefits, will bring loyalty and retention.

Make it clear to your customers where their money will be invested, what your payment terms are and if their data will remain safe and secure – a key point especially with younger members. For example, independent gym owners could utilise social media to advertise new equipment, facility upgrades and more, showcasing to members where their money is going.

With consumers still being careful with where they spend their money, communication will remain a big factor for member engagement in the future.  It’s also essential to consider what else members need from their membership to ensure growth. Customers expect outstanding service, so it’s never been more important to go above and beyond. 

This creative thinking about their offer to current and future members, to align with the changing ways in which membership value is consumed and delivered, should be considered to protect membership income at all costs, especially in the light of falling revenues elsewhere.

Source: CBI & Memcom TA Membership Report

At Access PaySuite, we have a range of payment processing solutions designed for membership businesses. Whether you require payment software for a gym or general Direct Debit software for memberships, we can help with our secure and compliant solutions.

Contact us today and we’ll help you streamline the cash flow management of your membership business.