Online Memberships, Discounts, and Commissions

Chess Clubs
1

I am curious as to “why the USCF offers discounts and Affiliate commissions on many of the membership categories that are available online?”

I would assume that the purpose for this would be to encourage affiliates to do much of the “manual labor” involved in processing memberships that would otherwise come into the office and have to be handled by staff who would have to be paid for their services.

I am concerned that the reason for giving the discounts and commissions must not actually be based on this sound business thinking, but must be based on some other reasoning. If it were to be based on this sound business reasoning, that same reasoning would have the same value for the Economy Scholastic Memberships which carry no discount or commission.

I am told that the reasoning for not offering discounts or commissions on economy scholastic memberships is to discourage the sale of this membership and is a compromise offered from those who would not like to offer this type of membership. So we really want to discourage any type of membership?

I really do not understand this thinking. Either there is value to having individuals and Affiliates enter the memberships online or there isn’t. It should not matter what you are selling, it either costs you to process it in the office or it doesn’t.

Why should the USCF be trying to influence Affiliates to coerce children who do not wish to read a magazine, but only wish to buy a rating service and a membership that allows them to play in scholastic chess events. It almost seems that the USCF is inviting competition and will potentially lose membership. I would think the correct business plan would be to get as many kids hooked on playing chess to the point that they wish to begin improving and figure out that additional membership categories make available resources that help them in their desire to improve.

It has been suggested to me that we seem to lose kids who do not take the magazine, so we need to encourage them to take the magazine in order to retain them as members. Incorrect analysis!!! I believe you will lose kids naturally as they grow older and as competition become too difficult for many to compete successfully. Only a certain number of children will stay with any activity as more and more opportunities for choice are given to them as they grow up. Its not the magazine that will keep membership, its the love of the game!!!

It would be curious to know what the percentage of memberships being processed manually in the office of economy vs. regular and the percentage processed online by Affiliates for economy vs. regular. It wouldn’t suprise me that as time goes on, affiliates just start mailing in their economy memberships and filing the regular memberships online. It sure would be alot easier!!

2

Sure there is the economy scholastic, scholastic and youth memberships. As a agent that sells USCF membership with a affiliate, the affiliate discounts are passed onto the players. If sending in a adult online membership, it would be as fair to send in a economy online membership.

Have little problem of selling a economy scholastic, or any USCF membership. If a parent has three children at 11, 9 and 6 years old; do not see the reason to have 3 youth memberships in the same household. The only time to sell a economy scholastic for only one USCF member in the household: would be a child under the age of 10. Do not see any real good for a K-3 player to get a youth membership, unless one of the parents wants to read 12 issues of Chess Life.

3

By offering affiliate commissions, the USCF encourages affiliates to sell and promote memberships. That is good for everyone involved with chess.

Let’s say I have a member at the club that is expiring soon. Do I a) let the person wait for their renewal card from USCF and hope they send it back in or b) actively encourage them to renew through me. Obviously option b retains more members, since the member is both getting a renewal card from USCF and a gentle reminder from a local club leader. Now a lot of us might do b no matter whether their are comissions or not, but when a commission is available it still creates financial incentive.

How does the USCF benefit? 1) Encourages sales of memberships 2) If the person is encouraged to renew early it might save USCF the cost of a renewal card 3) Helps create financially healthy affiliates 4) If I enter the membership online it saves USCF the cost of processing a renewal card. I would be that if you compare the cost of sending and processing a renewal card to the commission rates, it’s cheaper to pay the affiliate.

Regarding the economy scholastic memberships I like what they did. You say that having a scholastic player receive a magazine doesn’t increase retention rates, but you offer no statistics to support that. I have trouble believing that someone who receives a bi-monthly listing of upcoming tournaments in their area in the TLA section isn’t more likely to keep playing than someone who doesn’t receive such a list. That really requires me to suspend my believe in the power of advertising - and I say there are way too many ads in the world to believe that advertising doesn’t work.

I offer economy scholastic memberships for $13 and regular scholastic for $17 (rather than $19). I could offer $15 if I ignored the commission, but our affiliate does need the money. It’s not that hard of an argument to get a parent to spend $4 more to get a bi-monthly magazine for their child. Before they restructured the commissions I rarely every pushed someone to pick a non-economy membership, but now I almost always do. I have been selling mostly non-economy scholastic memberships lately it seems like, where before I sold almost exclusively economy scholastic memberships.

I think the USCF has all of the membership costs structured pretty well.

4

I agree with everything you say. It would also all apply to the sales of economy scholastic memberships. I would also say that no one has any reliable statistics that would say that magazine subscriptions cause a young scholastic player to retain his membership. As far a advertising, you are correct, it is effective if you can get kids to read the magazine.

5

I’m sure someone (i.e. Mike Nolan?) can run some stats that will show that regular scholastic members are more likely to renew than economy scholastic members. The data is out there.

Of course that won’t show a causal relationship. It may be that those predisposed to stay members tend to buy a regular scholastic membership with a magazine and those on the fringe go cheap.

I believe in the power of advertising though. Having a magazine get dumped in your mailbox every couple of months has to count for something.[/i]

6

There are a number of people who feel that the Economy Scholastic membership is a BAD IDEA. I’m one of them.

Historically, the USCF has not prospered when it has encouraged people to become USCF members without receiving some kind of regular contact in the form of a magazine.

We have done this at least three times in our history, in each case we have had problems with memberships in the years that the non-magazine membereship category was available, either declining membership or greatly increased turnover rates in the non-magazine membership categories, which often leads to declining memberships.

With the new online system, we are very definitely trying to encourage TDs and affiliates to sign up people online, and also for individual members to sign up using the website.

Each membership we can process that way saves us 3-5 minutes of staff time, which is why we offer a $2 online discount for most membership categories. That’s actually a bit above the cost savings involved, but I think a smaller discount would be more work to implement and not as attractive to members and TDs/Affiliates.

BTW, in January we processed 2641 memberships that arrived by mail, 839 by phone, 1824 from the website and 1255 from the TD/Affiliate Support Area. I have predicted on several occasions that by the end of the year 2/3 or more of all memberships will be handled online.

We’re also reorganizing the way the membership and ratings departments work, combining them so that we have a pool of employees who can handle both issues. Most membership, tournament rating report and TD requests should be handled by the person who answers your phone call or gets your e-mail, saving a lot of time passing them from one person to another.

This should result in better and faster service by the office in several areas, and hopefully will improve our ability to answer the phones as well.

In order to be able to offer an online discount without creating a major membership revenue shortfall at a time when the USCF is just barely emerging from nearly a decade of losses due largely to inefficiency and poor leadership, the affiliate commission was restructured so that in most cases there is a $2 affiliate discount, available to any affiliate whether submitting memberships online or in the mail, plus another $2 online discount, available to the person submitting the membership online, whether that’s a TD/Affiliate or an individual member.

This was done after quite a bit of analysis of the potential revenue impact.

Note that in some cases the total discounts available to affiliates for submitting memberships online actually increased, as in the full scholastic membership which can now cost the affiliate as little as $15, or only $2 more than the economy scholastic membership. Whether affiliates keep some or all of the $4 or rebates it to the member is their choice, I think about half of the scholastic affiliates pass the savings back to the members.

For a variety of reasons, mostly political, it was decided in August not to offer either an onliine discount or an affiliate discount for the economy scholastic membership.

It was also decided to limit it to one year, ie not to offer multi-year discounts. (The alternative was probably to eliminate the category completely or restrict it to those in financial need, which would have been an administrative nightmare to keep track of. Politics is the art of balancing the logical with the practical.)

7

Douglas, it takes several years to generate enough statistical evidence to suggest a trend. (Causality is much harder to prove, as you noted.)

However, at this point it appears that the renewal rate for a new scholastic membership (ie, with a magazine) is around 25-28%. The renewal rate for a new economy scholastic membership (no magazine) is around 18-20%.

The renewal rate for a new youth membership (12 issues of Chess Life vs 6 issues for a scholastic membership) is also somewhere around 25-28%. I think that the renewal rate for scholastic memberships might be slightly higher than for youth memberships, but part of the reason for that is that as players get older they’re far more likely to get involved in things other than chess.

The renewal rates for a 2nd year scholastic or youth membership are both in the 50% range, for a 2nd year economy scholastic memberships it looks like it will be in the 20-25% range.

So, the early evidence is consistent with the USCF’s history, getting a magazine does tend to lead to a better membership renewal rate.

8

I again would completely agree that those who are taking the magazine are more likely to continue to be members. Of course they have already made the commitment to want more from their membership. I would also agree with you that this is not a causal relationship.

Just because you can sell someone a membership doesn’t mean they will renew. I would say the magazine has little or no impact on renewal but just like those who say it does, I have no statistics that show causal relationship. I would again say that I believe the reason scholastic players quit playing chess is that they find other things to do and no longer want to compete in Scholastic Chess tournamens which require USCF membership. As long as they want to play tournament, they join USCF. When they stop wanting to play tournament, the don’t renew.

As far as advertising goes, no doubt it is effective. The only question I would have is can it be if kids don’t read the magazine and is the cost of the 6 issues of the magazine only $2 per year. That’s all we are charging.
It would seem to me that the magazine is a money loser and we would be better of not selling it unless someone asks for it.

9

“The renewal rates for a 2nd year scholastic or youth membership are both in the 50% range, for a 2nd year economy scholastic memberships it looks like it will be in the 20-25% range.”

Nolan, would there be statistics on overall numbers comparing scholastic memberships to economy scholastic membership. I am curious as to what 50% retention of the total number of economy memberships is compared to 20% retention of economy scholastic membership is in pure numbers.

I know I process many of the renewal memberships of scholastic players in our area and I would guess we are near 15-1 with renewals being economy scholastic to regular scholastic memberships. It seems that the customers are voicing their opinion with their checkbooks. Of course no one here is selling USCF memberships for any other purpose than allowing kids to play chess and have a rating.
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10

The logic that was used in setting the base rates as well as the affiliate commission and online discount is that the base rates are where the incremental differences are taken into account.

Thus, since six issues of Chess Life cost roughly $6, the base rate for the scholastic membership is $19, or $6 higher than the $13 economy scholastic membership. Add another $6 and you get the youth membership rate of $25, which includes 12 magazines.

Anything less than a $2 affiliate commission doesn’t seem to be worth the effort. Similarly, the $2 online discount comes close to approximating our cost savings and is also probably the minimum that would have much impact. Also, it takes roughly the same amount of work to process any membership transaction, regardless of what membership type it is. That’s true for the affiliate/TD as well as for the USCF office.

As I have already noted, the decision not to offer an affiliate commission or an online discount on the economy scholastic membership was more of a political issue than an economic one, and there was considerable hand-wringing in the scholastic community about that, especially when the alternative was to eliminate the category completely.

Personally, I think the family membership plans are a much better deal, and for any family with more than two chessplayers in it there can be a significant savings beyond the cost of individual memberships.

Getting one or more existing memberships plus additional family members signed up and all converted over to a family plan (where all memberships expire at the same time) can take a bit of figuring, but I think in the long run we are a much more ‘family friendly’ Federation than we were before. :slight_smile:

11

Fantastic!!! Online is definately the way to go. Do you have statistics of those processed by mail and phone for scholastic vs. economy scholastic and for those handled online for scholastic vs. economy scholastic. I think if you even gave a $1 discount online for economy scholastic you would dramatically improve the percentage of “scholastic” memberships done online.

12

Do I have statistics? I’m hurt that you think I don’t! :slight_smile:

Of the mailed-in memberships, 425 were adult, 627 were full scholastic, 864 were economy scholastic, 304 were youth, 167 were senior. (It is worth noting that mailed in memberships included memberships from numerous large tournaments where the TDs are not yet using the online system, including the national K-12 championships in Orlando. It is sad that the USCF chose not to use online technology for one of it’s premier national events. I don’t believe that mistake will be repeated for Supernationals III.)

Of the phoned-in ones, 335 were adult, 189 were scholastic, 138 were economy scholastic, 77 were youth, 48 were senior.

Of the webstore ones, 700 were adult, 470 were scholastic, 329 were economy scholastic, 233 were youth, 45 were senior.

Of the TD/A ones, 185 were adult, 441 were scholastic, 463 were economy scholastic, 144 were youth, 9 were senior.

13

You are good!!!

Would it be safe to say that overall the most popular category of membership would still be the economy scholastic membership, even without an affiliate incentive to process this type membership? Just think how much office time would be saved and would be more available to more productive activities if only $.50 or $1 would be offered to affiliates to process online batch economy scholastic membership.

14

You’re missing the whole point.

USCF policy is to actively encourage TDs to have people buy a FULL scholastic membership.

As a result, it doesn’t make sense from a policy perspective to offer economic incentives for economy scholastic memberships.

The policy appears to be working. In early 2004 economy scholastic memberships were about 65% of combined scholastic memberships, now they’re more like 55%.

At the time the economy scholastic membership was created, prominent members of the scholastic community were predicting that economy scholastic memberships would not be more than 25% of combined scholastic memberships. That prediction took less than 4 months to fail.

In many cases it makes more economic sense for a family to purchase a family membership plan, but I’ve already been on that soapbox once tonight. :slight_smile:

It wouldn’t surprise me if there is another move made at the 2005 USCF Delegates Meeting to abolish the economy scholastic membership category completely again, or to curtail its availability somehow. (The success of such a move is far from certain, of course.)

15

Nolan, I really respect your opinion, I just think you are entirely wrong. I believe you may be in danger of losing the scholastic chess community. I believe you are inviting competitive rating services to “steal” scholastic chess from the USCF. Maybe, you should consider a completely autonomous Scholastic division of USCF and allow it to flourish!!!

In Illinois, alternatives have already been discussed, and if I’m not mistaken, many of the city schools of Chicago have already voted with their membership to use an alternative rating service. The High School Association of Illinois does not allow USCF ratings to be used at all in their competition.

Why do you want to sell a magazine to people who overwhelmingly don’t want it for a difference of $2 when it cost $6 to give it to them?

You are right, I am missing the whole point!!!

Why would people want to pay for something they don’t want and why would you want to give it to them at less than it costs you to give it to them. ($15 with magazine vs. $13 without magazine) It just makes no sense to me at all.

If you want to encourage affiliates to process membership online, then give them financial incentive to do it with the majority of the memberships they sell.

16

Do like the family membership plan. If the parent(s) and scholastic player join up, it could lead to higher USCF memberships. At this time only know of 4 familys it would be ideal. One is a master with a daughter in scholastic chess; the other is a family with a active father and three active siblings; the other two are father and son. The problem if they join the family membership, they do not have the same experation date of their membership. How would a family plan work with different experation dates?

17

When there are pre-existing current USCF memberships, the office comes up with a pro-rated first year dues for the family membership based on the residual value left in those memberships, eg, how many months until they lapse. This results in either an adjusted dues amount or a blended expiration date, possibly both.

They’re supposed to then adjust all of the current memberships as well as any new members that are part of the family plan so that all of those memberships expire on the same day. Right now that’s a manual adjustment that the office has to do, eventually that will be something that is more automated.

18

I’m just stating what I believe to be current USCF policy and the reasons behind it.

For the most part I agree with that policy and those reasons, because I have a growing body of statistical evidence that young players who get a magazine are more likely to remain active players and are more likely to improve as players than those who do not get a magazine.

I think our pricing policies encourage what is in the best long term interests of those players and thus the USCF overall. Can you really say that paying as little as $2 more creates a severe economic hardship for most of those young players?

I don’t agree with abolishing the economy scholastic membership completely.

If you don’t like USCF policy then work to change it. Contact members of the Executive Board and/or your USCF Delegates and give them your reasons for why the policy should be changed, to what, and what positive impact you think that would have.

It would be relatively easy to modify the online system to support an online discount for the economy scholastic membership, but that change would have to come after a policy decision is made by those who set that policy.

Believe it or not, I don’t set policy, but I do implement it with the programming that is being developed. (TDs are going to start learning about that the hard way, as the new ratings system is enforcing a number of requirements for rating events that have not been rigidly adhered to recently, such as requiring that the chief TD be a current USCF member, a currently certified TD, and that the submitting affiliate be current.)

19

Actually, I think the economy scholastic membership works quite well for those students who want to play chess but don’t find the magazine helpful. Instead, they rely on getting what they need from the online chess community, which is free, or from books they buy. Also, there is the consideration of money. I have four students myself who would rather be on the economy scholastic side because they find it affordable. Now you say what is $13/year? True, it’s cheap, but at that age you might find you don’t have the money when you need to pay the dues. Or your parents might not have the money. Believe it or not, but many of my 5th-8th grade students don’t always have that much money, or parents who would give it to them. But if they want to play rated chess, they know this is what it’s going to cost them. And having to pay a hefty entry fee is considered an extra cost.

Right now my students are planning on going to Nashville in April. And there’s a USCF rated tournament coming up before then. They stand to pay $56 in entry fees and the economy scholastic membership combined, which to them and to many others is a large sum of money to play chess. Don’t charge them any more or they will not do it at all!

I have to admit I don’t understand the FamilyPlan 2 membership. It seems an adult could get that membership and add their child along with it, whether they play chess or not, and avoid paying the adult membership, thereby getting the benefits cheaper. What am I missing here? The Economy plan is $20 cheaper and there aren’t any magazines cluttering up the house!

I understand your argument about the power of advertising. So the big question I have always wanted to ask is, when is the USCF going to make a push to put the magazine on the newsstand racks? The only time I see it in public is when someone is carrying their copy around,w hen there should be more exposure on the stores.

Radishes

20

All members in a Family Plan #2 must be under 20 years old. (The system DOES require and check birthdates for family plans.)

Chess Life has newsstand sales, but they’ve never been more than a few thousand copies a month despite some SERIOUS dollars put into trying to promote it to magazine brokers and newsstand vendors.

I think they even tried a regional marketing campaign with Barnes & Noble once, and got about 99% of them back as returns.

My sister-in-law runs a bookstore, she carries Chess Life and most months sells at most 1 copy in a community of around 250,000 people.

Newsstand vendors don’t want to deal with low volume magazines, and that’s all Chess Life will ever be to them, unfortunately.