Discounting For Long-Term Revenue Gains

September 19, 2016       THE NONPROFIT TIMES      

Not many people can resist a real bargain. That’s why offering discounted memberships to boost your headcount, while initially costly, generally will result in long-term value, according to managers at AARP.

AARP, which has 38 million members, had great success when using Yield Management concepts, offering targeted discounts to selected renewal members, according to Anne Golightly and Joe Harr, who spoke to participants at the 11th annual Bridge to Integrated Marketing and Fundraising Conference, held in July in National Harbor, Md. The two discussed strategies for building an integrated multi-channel win back program.

At AARP, using Yield Management techniques, such as expanding discounted prices to members who have let their memberships expire, saw great results. Their response rate increased 34 percent, while average term increased 27 percent and the lifetime value increased 22 percent. They warned, however, that Yield Management must be viewed as a long-term strategy and that initial revenue will be lower.