A couple years ago we started allowing our customers to optionally setup automatic renewal at membership checkout.
This post covers how many customers choose the auto-renew option, and how many of those customers actually renew. I’ll also provide some stats on users who manually renew. These kinds of stats should make their way into the Memberships > Reports dashboard sometime soon.
Renewal Stats from the PMPro Plus Launch
The data below tracks the renewal rate for members who initially purchased PMPro Plus membership between July 28th and August 9th, 2015. During this time, customers were incentivized to choose the auto-renewal option since it locked them into the lower $47/year price instead of the coming $197/year price. Let’s compare the renewal rate for customers who selected automatic renewal vs. those who had to manually renew.
Sales Data for Initial Purchase
Total Sales: 695
Revenue: $26,350
Yes Auto-Renew: 515 (74%)
No Auto-Renew: 180 (26%)
Automatic Renewal Sales
2015 – Initial
515 (74%)
2016
288 (56%)
2017
229 (44%)
Of the 515 users who checked the auto-renew option, 288 (56%) of them had a paid order 1 year later in 2016, and 229 (44%) of them had a paid order 2 years later in 2017.
Manual Renewal Sales
2015 – Initial
180 (26%)
2016
5 (2.8%)
2017
3 (1.6%)
Of the 180 users who didn’t check the auto-renew option, only 5 (2.8%) had a paid order 1 year later in 2016, and 3 (1.6%) of them had a paid order 2 years later in 2017.
Renewal Data Recap
Perhaps unsurprisingly, users who checked the auto-renew option were much more likely to actually renew. In this case, they were 20 times more likely to renew. Total sales for the same 13 days in 2016 was $25,759. $13,771 of that (or 53.5%) were the 293 renewals at $47.
The above stats are for a promotional period when there was a lot of incentive to check that option since it meant locking into a lower price. Let’s look at similar stats for a more regular period when membership was for the full $197 and there was no incentive for checking auto-renewal since even users who manually renew get the same $50 discount (although the wording of our checkout page might still encourage it a bit).
Renewal Stats for PMPro Plus from Winter 2016
The below stats are for our PMPro Plus members only who made their initial purchase between January 1st and March 31st, 2016. These members paid the full price for membership and were shown a box to optionally set up automatic renewal for $147/year.
Sales Data for Initial Purchase
Total Sales: 489
Revenue: $92,599
Yes Auto-Renew: 150 (31%)
No Auto-Renew: 339 (69%)
In this data set, the stats have almost reversed, with twice as many customers leaving the auto-renewal option unchecked.
Automatic Renewal Sales
Initial
150
2017
110
Renewal Rate
73.3%
Manual Renewal Sales
Initial
339
2017
50
Renewal Rate
14.7%
Of the 150 users who checked the auto-renewal option, 110 (73.3%) of them had a paid order 1 year later. Of the 339 users who didn’t check the auto-renew option, only 50(14.8%) of them had a paid order 1 year later.
Total sales for the same 3 months in 2017 were $126,770. $23,520 of that (or 18.6%) were the 160 renewals at $147.
Conclusion
There are many factors that go into why a user would renew their membership that are hard to suss out of this data. Besides changing our pricing, running promotions, and updating the formatting and language of our checkout page; we were also releasing product updates and running content marketing campaigns throughout the year. It’s hard to tell if these other factors played a bigger or smaller role in renewal numbers. We also can’t tell how many of the users who checked the auto-renewal option would have been more likely to manually renew.
Still…the data is pretty clear in that users who checked the auto-renewal option were 5 to 20 times more likely to actually renew there memberships one year later. When you account for failed payments, cancellations, and eventual refunds, more than 50% of users with auto-renewal setup resulted in a renewal payment one year later.
Renewals account for at least 18.6% of our sales during a typical month.
If you are not offering an auto-renewal option for your membership, you’re leaving a lot of money on the table.
If you are using Paid Memberships Pro, you can add a renewal option to your checkout using our Auto-Renewal Checkbox Add On.
Further Testing
Some things to test further would be actual A/B tests within the same date range where some customers were shown the auto-renewal option and others were not. We could A/B test offering a renewal discount or not. It also might make sense from a revenue stand point to require automatic renewals for all customers or at least default to having that option checked. If auto-renewal was required, you would likely have more refunds for users who don’t want it. (We’ve seen a lot of cases where users cancel immediately after checkout to clear up the subscription.) Still, you probably would get more revenue to make up for those refunds.
