Retaining Your Membership

Publication date: 20 March 2008

The Royal Automobile Club of Tasmania has always been able to attract new young members. Its problem was retaining them. But a new product offering has helped to redress the balance.

In 2002, the Royal Automobile Club of Tasmania (RACT) addressed a declining membership base by introducing a redeveloped Roadside product. The aim was to attract and retain new members, especially those in the younger age bracket. It turned out to be a major success.

RACT's research showed that it had good levels of young members joining the RACT but they had a significantly higher rate of churn than other new member segments. In most cases these young members were given membership by their parents or grandparents as birthday or Christmas presents. As the new member had not been actively involved in the purchase decision they were far less likely to continue the membership at renewal, even if they had been provided with roadside assistance during the course of the year.

The redeveloped roadside product sought to redress this issue. The structure included 3 distinct features. Firstly, a clear and definable roadside offering between a basic and premium cover.

Secondly, a group pricing option which allowed individuals to group together and nominate one member as the addressee of the group for billing purposes. The more members in the group resulted in an increasing scale of discount. The pricing favoured uptake of the premium product. Thirdly, payment could be actioned through direct debit and when coupled with a membership group could be arranged on a monthly schedule.

The group pricing option allowed existing members to form a group with their partner, children, elderly parents and even friends and receive a discount on the subscription that they would have otherwise have paid.

Arranging payment by direct debit meant that the member could now afford to ensure all members of the family were covered and receive the best level of roadside cover available.

The purchase decision was now not in the hands of the new and young member but with a brand loyal parent. The renewal rate for members paying by direct debit is a high 97 per cent, compared to an overall renewal rate of 90 per cent.

Because of this RACT has been able to retain younger members when part of a group for a much longer period and that affords them a better opportunity to experience the benefits of roadside service as well as participating in other RACT services. This provides a bridge from a purchase based on tangible value to one which includes an emotive tie.

The new product structure has turned around an annual average loss in membership of 1.5 per cent per annum in the previous three years to a healthy 4.2 per cent average per annum increase over the next five years.

Over the same period, the under-25 age group has increased by an annual average of 14 per cent.