What do we need to know about retention?

The German membership platform Steady said the publishers that use its platform average a 3 percent monthly churn rate. This is “amazingly low,” said Sebastian Esser, Steady’s founder and CEO. He added that it often takes membership organizations longer to build up their base of supporters, but their data suggest members stick around longer than subscribers. 

“That’s one thing that speaks for membership: Low churn, high retention, strong relationships. People care [about their memberships]. If they cancel, it hurts. [Cancelling membership] is saying to a person I don’t want you anymore. It doesn’t hurt to cancel my Netflix account.”

It sounds promising, but what does that mean? Retention strategy is filled with jargon and terminology, and because digital membership models are still fairly new, MPP looks to the subscription space and public radio space for pointers, but acknowledges that there is more knowledge to be gained as the membership space matures.

Before you can set retention goals or tackle retention challenges, there are a few foundational concepts to understand. 

Know the difference between retention and churn. Retention rate is the ratio of customers that continue on as members of your newsroom month after month or year after year. Churn rate is the inverse of retention — it’s the ratio of members you’ve lost over a period of time (either month to month or year to year). A newsroom with a high churn rate would, by definition, have a lower retention rate. Many member-driven newsrooms measure both retention and monthly or annual churn. 

Know if you are measuring monthly retention or annual retention. Monthly retention is the percentage of members that stay on as paying members month to month. Annual retention is the percentage of members that stay on as paying members year after year. 

Monthly retention

MPP recommends tracking monthly retention in the first few months after a member campaign, and as an indicator of the strength of your new member onboarding process.

The simplest way to calculate monthly retention is: 

Illustration by Jessica Phan

What data exist for benchmarking monthly retention? A 2019 report from The Lenfest Institute and Shorenstein Center examined the engagement, conversion, and retention rates of 500+ news organizations with a digital subscription or membership model between 2011 and 2019. Many news organizations in this data set are national, metro, regional and local newspapers with established brands and paywalls.

This analysis found that the median publisher reported a 94.4 percent monthly retention rate. The top 5 percent of publishers studied reported a 97 percent monthly retention rate.  These rates are a good benchmark for mature newsrooms with a strong brand and a paywall component to membership, however a 95 percent monthly retention rate is a worthy goal for small and mid-sized digital newsrooms who are new to membership.

Annual retention

Tracking annual retention will help you understand how longer-term membership strategies are working, such as the introduction of new member benefits or changes to your onboarding series. If you see a dip in retention after a huge bump in membership numbers, those are low quality members. This often happens among members who join for a specific benefit, such as swag. 

One common way to calculate annual retention is: 

Illustration by Jessica Phan

MPP turns to U.S. public media organizations, the earliest practitioners of membership in the U.S., for benchmarks for this. NPR station KUER in Salt Lake City, Utah, reported their member retention rate over 12 months, 3 years, and 5 years as a whopping 93.24 percent, 69.54 percent, and 57 percent, respectively. (Although KUER is a standout, public radio generally reports very high annual retention rates.)

Know the difference between static and rolling retention rates. The retention measurements above are static rates, meaning they are calculated with a set date as the start and end date (in the example above, the first day of the year and the last day of the year), and can be calculated over any specified month or year. 

Rolling retention  is a measure of retention that allows you to assess how many members have stayed on as members relative to a certain date. If you have to prioritize what you measure, the research team recommends focusing on rolling retention over a static retention measurement.

Rolling retention is a useful metric to use when you want to understand the effectiveness of new member recruitment and retention strategies. For example, you might use this metric to check whether sending a series of donation requests to your membership list causes you to lose members. You can examine your rolling retention rate in the days and weeks following the implementation of that series, and see how it compares to your rolling retention rate prior to that action. 

Some services, like the News Revenue Hub, measure “annual, rolling retention” for the clients on a monthly basis. Here’s the News Revenue Hub’s calculation: 

Illustration by Jessica Phan

For example:

Illustration by Jessica Phan

News Revenue Hub uses this particular measurement with its clients because “it helps clients watch—and react to—any wobbling their organization might see in retention throughout the year.” Here are a few figures you can use to benchmark yourself: for small and mid-sized digital newsrooms in the U.S., the News Revenue Hub reports a median rolling annual retention of 60 percent. See here for more on how and why they calculate member retention.

The Membership Puzzle Project surveyed a set of member-driven newsrooms internationally and found that out of a set of 17 newsroom respondents, the average rolling annual retention was 69 percent and median 72 percent. Jump to “Developing membership metrics” for methods on the survey and more results.