Rollover and Retention

Retention

A little over one year ago, we introduced a new tool to Member Assembler called Seasonal Rollover. The basic concept was to rethink the common model of putting the onus on past and current Members of a CSA to sign up for the next upcoming season. Instead, we would automatically sign them up with the option to back out easily. Basically instead of starting from 0% each year, we’d start from 100% retention.

Most subscription models of business assume that a customer will stay a customer until they cancel but CSAs in general do not presume so and leave it up to their customers to take the steps to continue and renew their Memberships. We wondered if rethinking the assumption might result in an increase in retention. We now have a year’s worth of data to report on and it seems that rollover indeed had a strong positive effect on retention.

We looked at nine farms (including a fishery, yay CSFs!) who use Member Assembler and have made use of the Seasonal Rollover tool. The farms varied in size from less than 50 members to almost 700. All of the farms had at least three seasons with Member Assembler and most had five or more so we had a lot of data to compare season-over-season retention. For farms that collect signups more than once a year we compared both adjacent seasons (like Summer to Fall) and year-to-year seasons (like Summer ‘15 to Summer ‘16) in calculating the effect of rollover.

The results were very positive. On average across the farms, retention increased 7% by using the rollover tool. Weighting for size of member bases, the increase in retention was 6%. In two cases, there was an even stronger correlation as after trying Seasonal Rollover the businesses went back to not using it and had the retention drop back down.

Rollover Retention Rates

What does an increase in retention of 6% mean as far as the lifetime value of a customer? Looking purely at income since we don’t know what each farm’s profit margin is, we’ll use the average ($460) share price for a member the past couple of years* and the average retention rate for CSAs (45%)* to get $836 as the lifetime value of the customer. Increasing the retention rate to 51% brings that value up to $939. For a 200 member CSA that’s an increase in over $20,000 in income with no other big changes to the way the farm does business. Is that kind of return something that would cause you to rethink your model?

It is not a silver bullet. Seasonal Rollover definitely needs to have some clear communication with your members to make it work as you can see in some feedback we got from administrators.

The positive:
“The Rollover tool has improved our retention rate and members have expressed they are pleased they do not have to remember to rejoin each season. [It] has also helped with our cash flow from membership fees as we are able to request payment at the time of the rollover several weeks before the new season begins. The Rollover tool has improved our efficiency and decreased the amount of time we must spend on recruiting current members for the next season.”

The negative:
“At least half of my members despised the auto rollover! They felt it was assumptive  and unethical! I got some very negative reviews and had to take a bunch of folks off.  So, we did not have a good experience with it.”

We pointed out to this administrator that despite this anecdotal evidence of her customers being unhappy, her retention had actually increased 4% using the rollover tool. Like all of us, we tend to remember the squeaky (or angry!) wheel. With those numbers in mind, she said with the proper communication she’d be willing to try it again.

If your interest is piqued, please have a read of the details of how the tool works with Member Assembler and remember you can always reach out to us with any questions. We are here to help you succeed!

* From the 2015 CSA Farming Report

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