Member Credits System: How Prorated Member Upgrades & Downgrades Will Improve Retention and Increase Revenue

Introduction (00:00:00)

• The topic of discussion is an update to the Member Credit system, which is the tip of the week, and was released as an add-on approximately a year ago, giving members credits that can be applied towards purchases on a website (00:00:00).
• The Member Credit system add-on was introduced to provide members with credits that can be used for purchases, and this update is a result of frequent requests, specifically for pro-rated member upgrades (00:00:01).
• The update in question is pro-rated member upgrades, a highly requested feature (00:00:23).

NEW: Prorated Upgrades & Downgrades (00:00:29)

• The Member Credit system add-on is required to enable prorated upgrades and downgrades, and this functionality is available with the individual add-on or the VIP add-ons Club (00:00:31).
• The Member Credit system allows for manual addition and deduction of credits to individual members’ accounts, and credits can also be automatically added after members sign up or upgrade to a specific membership plan (00:01:01).
• Members can automatically earn credits by referring new member sign-ups, similar to an affiliate program, and credits can be used for membership plan renewals, upgrades, and other purchases on the website (00:01:35).
• With the update, membership plan changes now include prorating and adding credits if necessary, making it part of the Member Credit system add-on (00:02:17).
• Providing credits as an incentive or benefit to members who sign up, especially for higher-tiered membership plans, can help get them started and can be used as an alternative to offering a discount on the initial payment (00:02:29).
• The prorated upgrades and downgrades are tied to the credit system, and the two features work together to calculate and apply a pro-rated amount of credits to members when they change their plan (00:00:41).

How Member Plan Changes Work (00:02:58)

• When a member changes their plan, the process differs from the normal default process, where the member would simply pay the listed price of the new plan without considering their previous payments or time used on their current plan (00:02:58).
• Without proration, if a member downgrades from a higher-priced plan, such as the Premium plan, to a lower-priced plan, like the Basic plan, they would pay the listed price of the new plan, disregarding any previous payments or time used (00:03:10).
• With proration, the website takes into account the time and value left on the member’s current plan, allowing for a pro-rated credit to be applied if the member has time remaining on their current plan (00:03:43).
• If a member has paid for a month but only used five days, the additional time can be applied as a pro-rated credit, which they can use when changing their plans (00:03:52).
• The proration system enables members to receive a credit for the unused time on their current plan, which can be used towards their new plan, providing a more flexible and fair membership experience (00:04:01).

Example Scenarios (00:04:07)

• When a member downgrades their plan, they will receive credits for the difference in cost, which can be used for future renewal payments or other purchases on the website, for example, if a member pays $200 per year for a plan and then downgrades to a $100 per year plan on the same day, they will receive $100 in credits (00:04:14).
• The credits received when downgrading can be used on future renewal payments or other purchases, such as purchasing leads or publishing posts, and the amount of credits received decreases as the member uses up more of their current plan (00:04:32).
• When a member upgrades their plan, they will only need to pay the difference in cost between the two plans, rather than the full cost of the new plan, for instance, if a member initially signs up for a $100 per year plan and then upgrades to a $200 per year plan on the same day, they will only need to pay the additional $100 (00:04:52).
• The proration of credits gets smaller and smaller as each day goes by, so if a member downgrades after using up half of their current plan, they will receive fewer credits, such as $0 in credits if they’ve used up half of their $200 per year plan and then downgrade to a $100 per year plan (00:05:39).
• The website takes into account what the member has already paid for and how that differs from the plan they are looking to move to, and calculates the credits accordingly, ensuring that members are not overcharged when upgrading or downgrading their plans (00:05:20).

Benefits of Prorating Plan Changes (00:06:16)

• The benefits of prorating membership plan changes include an enhanced member experience, as it allows members to adjust their plans without feeling penalized or burdened by having to pay the full price for the new plan (00:06:16).
• Prorating can demonstrate that a website values its members’ needs and is willing to accommodate their changing preferences, potentially increasing customer satisfaction and loyalty (00:06:43).
• By taking members’ needs and changing preferences into account, prorating can help members feel more heard and supported, increasing satisfaction and long-term loyalty (00:06:54).
• Prorating can reduce financial barriers, making members more willing to upgrade or downgrade their plans, as they will only have to pay the difference or receive a credit for their remaining balance (00:07:06).
• Offering proration can encourage members to explore different membership plans, potentially upgrading to higher-priced plans, and increasing plan adoption (00:07:36).
• Prorating can contribute to member retention by allowing them to change their plans rather than canceling their membership altogether, providing a smooth plan change experience and increasing the likelihood of retaining members in the long term (00:07:52).
• Prorating can lead to increased revenue potential by encouraging members to upgrade their plans, and in the long term, it can also lead to higher revenue if members who downgrade are retained instead of being lost through cancellation (00:08:14).
• Prorating can also create upselling opportunities by making higher-priced plans more accessible to current members, who may be more inclined to upgrade if they only need to pay the difference (00:08:46).
• Overall, prorating expands the possibilities of what members can do and what a website can do, potentially increasing the lifetime value of members and retaining more revenue within the website (00:09:25).

Let’s See How Proration Adjustments Work (00:10:26)

• The credit system add-on requires enabling the advanced setting “prorated plan changes” to offer proration, and if this setting is off, proration will not be taken into account when members upgrade or downgrade (00:10:28).
• A demo is set up to show how the proration adjustment works, including signing up as a paid member on a site with the proration setting turned off and then turned on to compare the differences (00:10:53).
• The demo site has three membership plans: premium paid plan, basic paid plan, and a free General user account, and the premium paid plan costs $200 per year (00:11:29).
• When proration is turned off, downgrading from the premium paid plan to the basic paid plan requires paying an additional $100, resulting in a total of $300 paid on the same day (00:12:27).
• With proration enabled, downgrading from the premium paid plan to the basic paid plan results in a pro-rated discount of $100, and the order summary shows the pro-rated time left on the current plan (00:13:18).
• The pro-rated discount is calculated based on the number of days used on the current plan, and the credit can be applied to the new plan, with the option to deduct the first day’s usage (00:13:36).
• The member credits system allows for credits to be added to a member’s account when they change their membership plan, which can be used for future payments, and this is demonstrated by changing the membership plan and applying $100 as credit (00:14:14).
• When a member downgrades their plan, they can receive credits for the remaining time on their current plan, and this is shown by downgrading to the basic paid plan and receiving $100 in credits (00:14:21).
• To ensure that members can see their available credits, it is necessary to enable the display of available credits in the member’s dashboard, which can be done by going to the finance and membership plans section and setting the display available credits option to yes (00:15:02).
• The credits system helps to keep cash in the website’s pocketbook by not providing cash refunds, and instead, providing store credit that can be used for future purchases or plan upgrades (00:15:39).
• The member credits system allows for membership fluidity, enabling members to easily change their plans and try out different features without losing money, and this is demonstrated by downgrading to the free general user account and receiving another $100 in credits (00:16:16).
• To enable credits for each plan, it is necessary to go to the plan settings and enable the display available credits option, which is shown by enabling credits for the general user account (00:16:47).
• The credits system provides a flexible way for members to manage their membership plans, and it allows them to use their credits to purchase leads or upgrade to another plan in the future (00:17:15).
• The member credits system is beneficial for both the member and the website, as it provides a way for members to try out different plans without committing to a full payment, and it helps the website to keep cash in its pocketbook (00:17:30).
• Premium members have access to exclusive content, such as videos, articles, and PDF downloads, and they can sign up and access this content on the same day, but a loophole allows them to downgrade to a free plan and get a full refund, effectively getting the content for free (00:17:44).
• To address this issue, an advanced setting can be used to deduct the first day of usage from the proration calculation, ensuring that members start paying for their membership from day one and do not get the first day for free (00:20:17).
• This setting can be applied to a premium paid plan, and when a member downgrades to a free plan, they will only receive a refund for the remaining prorated time, minus the cost of the first day of usage (00:20:20).
• The proration calculation is based on the plan’s cost divided by the number of days in the plan, and the member will be charged for the first day of usage, even if they downgrade to a free plan on the same day (00:21:05).
• By using this advanced setting, site owners can prevent members from taking advantage of the loophole and ensure that they pay for the content they access, even if it’s only for one day (00:20:32).
• The Member Credits System allows for membership plan fluidity, enabling members to upgrade or downgrade their plans while receiving credits, which can help encourage them to stay on a paid plan (00:21:36).
• There is a setting that deducts the first day’s usage from proration calculations, which can be enabled or disabled depending on the desired use case, such as allowing members to explore the first day without incurring any charges (00:21:41).
• The proration support works hand in hand with the Member Credit system, providing a clear and straightforward way to manage membership plans and credits (00:22:09).
• The system’s flexibility can help members explore different plans and stay on a paid plan, rather than cancelling their membership altogether, by providing credits when they upgrade or downgrade (00:22:15).
• The Member Credits System and proration support are designed to work together to provide a simple and efficient way to manage membership plans, despite the complexity of the numbers involved (00:22:33).

Use Exit Surveys To Prevent Member Cancellations (00:22:37)

• The concept of proration is familiar to many people due to its use in other services, allowing for a more flexible and risk-free experience when upgrading or downgrading plans (00:22:38).
• One major benefit of proration is that it helps to keep revenue within the website by reducing the need for full or partial refunds to members who want to change their plans (00:22:48).
• Proration also makes it easier for members to upgrade their plans, as they can apply the amount they have already paid for a lower plan to the more expensive upgraded plan, encouraging them to stay on the higher plan (00:23:00).
• The ability to easily switch between plans, including downgrades, is seen as a positive aspect of proration, as it allows members to explore different options without significant financial risk (00:23:18).

Proration Summary (00:23:21)

• Members can upgrade or downgrade their membership plans without losing any value, which can be a benefit to educate members about and address any fears or concerns they might have about signing up to a higher tiered plan (00:23:21).
• The ability to upgrade or downgrade plans can help members feel like they are not losing out on anything, which can be a positive aspect of the membership system (00:23:23).
• By informing members that they can change their plans without losing value, membership sites can alleviate concerns and make members more comfortable with signing up for a higher tiered plan or downgrading to a lower one (00:23:25).
• The flexibility of being able to change membership plans can help members feel more secure in their decision, knowing that they can adjust their plan as needed without penalty (00:23:27).
• Membership sites can use this flexibility as a selling point to attract and retain members, by emphasizing that members can upgrade or downgrade without losing any value (00:23:29).
• The proration system allows members to change their membership plans and have their accounts adjusted accordingly, so they can end up with the plan that best suits their needs (00:23:32).
• The membership system is designed to be flexible and accommodating, allowing members to make changes to their plans as needed, and landing on the plan that works best for them (00:23:34).