Membership Growth Principles: Best Practices in Membership

Marketing

Presented by Socious, Inc. and

Tony RossellSenior Vice President

Marketing General, Inc.

Is There Hope?

“Reflecting the economic turmoil of the industries they represent, many national trade associations based in Washington are hemorrhaging members who either have lost their jobs, run a financially distressed business or said they need to spend their dwindling discretionary dollars on necessities rather than dues.”

By V. Dion Haynes, Washington Post Staff Writer, Trade Groups

Regroup, Monday, December 15, 2008; Page D01

Growth in a Recession?

The Upside of Down

The Upside of Down (Associations Now, February, 2009) focused on four organizations:

•SHRM

•ASCD

•SME

•Costco

Can your association be the solution?

“When looking at marketing response data from a broad array of associations, a very different story is emerging. It is a story of individuals and companies turning to membership in associations for security, services, networking, and professional development. This means that right now is perhaps the best time in recent memory to acquire new members.”

Tony Rossell, The Upside of Down, Associations Now, February, 2009

Current Economic Environment

Recent survey results from over 300 Associations:

• 53% of IMO’s indicate a decrease in the number of members renewing of these 35% report a moderate to severe decrease.

• 77% report no change or an increase in new member inquiries and 23% report lower member inquiries of these 22% report a moderate to severe decrease.

Survey by Whorton Marketing and Research, January 12, 2009.

Wider Business Perspective

“It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”

John Quelch, Marketing Your Way Through a Recession, Harvard Business School,

March 3, 2008

Baseball’s Five Tools of Success

1954 World Series Leo Durocher, said of Mays: "He could do the five things you have to do to be a superstar: hit, hit with power, run, throw, and field. And he had that other ingredient that turns a superstar into a super superstar. He lit up the room when he came in. He was a joy to be around."

How to be an All-Star in Membership Marketing

1. The four areas of expertise you need for success in membership marketing:

– Economics -- Why– Market -- Who – Product – What – Promotion – How

2. Getting started applying the four tools of membership marketing?

Economics

Renewal Rate• Renewal Rate measures the number of members

kept over a given period of time -- usually during a fiscal or calendar year.

• Total Number of Members Today (minus 12 months of new members) / Total Number of Members in Previous Year

• Example: (105,000 – 15,000)/100,000 = 90% Renewal Rate

How long do members stay?

Average Tenure• Average Tenure measures how long on average a

member stays with an association. • Reciprocal of Renewal Rate: 1 – Renewal Rate or,

1 - .90 = .10 • Example: Divide Reciprocal into 1, or, 1 /.10 = an

Average Tenure of 10 years

How much are members worth?

Lifetime Value (LTV)• Assume $100 / Year Dues and $50 / Year in Non-Dues

Revenue· (Dues + Non-Dues Revenue) x Average Tenure = LTV· Example: ($100 + $50) x 10 = $1,500 LTV

Maximum Acquisition Cost (MAC)• Assume Incremental Servicing Costs = $20 and Cost of Goods

Sold = $25· (Dues + Non-Dues Revenue) - (Incremental Servicing Costs + Costs of Goods Sold) x Avg. Tenure = MAC· Example: (($100 + $50) - ($20 + $25)) x 10 = $1,050 MAC

Where is membership headed?

Membership Steady State• Annual New Member Input / Reciprocal of Renewal Rate (or

Lapse Rate) Shown as a Decimal = Total Membership Steady State.

• For example, 20,000 New Member Input / .25 Lapse Rate =

80,000 Total Membership.

Market

• Serve a Market, Not a Product– Research your market

– Build Database “Mindshare” of your market

• Behavior is the best predictor for recruitment and retention

Potential Acquisition Market Segments

Former Members

Like Associations

Subscribers

Directories

Match Behavior

“Prosperity, success and happiness at work encourage association membership, because associations are where the winners meet in many professions.”

Arthur C. Brooks, PhD., Where the Winners Meet: Why Happier, More Successful People Gravitate toward Associations, The William E. Smith Institute for Association Research, January 2008, page 13.

“Where the Winners Meet” Research

Market

“To remain competitive, you must figure out how to keep your customers longer, grow them into bigger customers, make them more profitable, and serve them more effectively. And you want more of them.”

Don Peppers and Martha Rogers, Return on Customer

Product

• Value proposition • Product Packaging

– Product line extension (Don’t sell a “black” Ford)

• Pricing – Maximizing revenue through the inelastic dues demand of

membership

Building a Value Proposition

Vision

RelationshipReward

What separates you from all other organizations?

ASAE’s Decision to Join -- research of 16,944 members and former members from 18 associations -- highlights these components of the membership value proposition.

Value Proposition

“The message . . . Is that no company can succeed today by trying to be all things to all people. It must instead find the unique value it alone can deliver to a chosen market.”Treacy and Wiersema, The Discipline of Market Leaders, page xiv

Product Line Extension

• Express Membership -- $29: online only services• Basic Membership -- $49: online services plus

subscriptions to the monthly periodical and newsletter

• Comprehensive Membership -- $89: basic benefits plus 5 association books shipped as they are published

• Premium Membership -- $219: all of the above plus an additional newsletter, four additional books and a $100 professional development voucher

• Institutional Membership -- $899: a package that includes one Premium membership and 10 Basic memberships

Pricing

• MGI Conducted a major Dues Increase Study

• Free Copy on Membership Marketing Blog

• Easy link:– http://tinyurl.com/mmduesincrease

Promotion

• “If you build it, they will come” – Field of Dreams

• “If someone comes to you with a 'great' product that just needs some marketing, the game is probably already over.” -- Seth Godin’s Blog

Promotion

• Hypothesizing – Start each promotion with the question, “What cool stuff can we do?”– Can we combine?

– Can we add?

– Can we eliminate?

– Can we make an association?

– Can we simplify?

– Can we substitute?

– Can we reverse?

Bob Stone, Successful Direct Marketing Methods.

Promotion

• Testing – Reveals 1,000% Variance in Response– Lists

– Channel (mail, email, FAX, phone, face to face)

– Offers (discounts, trials, premiums)

– Messages (gain, fear, pain)

– Payment Options (ACCR and installment billing)

– Format Graphics

Tracking – Benchmarking success

As employment and consumer spending slows, manufacturing professionals are concerned. So how can you prepare for change, build your skills and position yourself for career success? See details inside...

Making your Case for Membership

Promotion

“Successful companies are learning companies. They collect feedback from the marketplace, audit and evaluate results, and take corrections designed to improve their performance. Good marketing works by constantly monitoring its position in relation to its destination.”Philip Kotler, Kotler on Marketing, page 34

Applying the Four Tools

“Don’t Push Growth; Remove the Factors Limiting Growth.”Peter Senge, The Fifth Discipline

Membership Lifecycle

Awareness

RecruitmentEngagement

Renewal

Reinstatement

Awareness

• Defined: The process of establishing your brand in the minds of prospective members.

• Members do not join an organization they do not know

• “90% of success is just showing up.”– SEO– PR– Word of Mouth Marketing– Social Networks– Blogs

Recruitment

• Definition: The process of inviting new members to join your organization.

• Push vs. Pull Products -- Membership is a “PUSH” product

Engagement

Definition: The process of moving members from observers into users of the resources made available by your organization. – Members Who Interact Renew

• New Member Orientation• Convention and Meetings• Product Purchases• “800” number• Web site usage• Surveys

Impact of Interaction

• Data Analytics for one association on engagement.– Members who attended an association meeting in the

past year were 19% more likely to renew than those who did not attend a meeting.

– Members who attended four or more meetings were 30% more likely to renew than members who never attended a meeting.

– Members who placed a product order in the past year were 28% more likely to renew than those who had not placed an order.

– Members who upgraded their membership in the past year to a higher level of service were 12% more likely to renew.

Renewal

• Definition: The process of confirming the value that has been delivered to the member over the past year and requesting the continuance of the relationship. – Renewals are the members chance to “vote” on the

value of what you have provided to them.

– Renewals can only be benchmarked against your own organization

Renewal

• Benchmark overall renewal rate, but also monitor if there are any particular market segments that underperform (i.e. new members).

• The number one reason members give for not renewing is: “I FORGOT”.

Reinstatement

• Definition: The process of re-introducing yourself to your member.

• Reinstatement programs test the effectiveness of your renewal program. – "Look not where you fell, look where you slipped." -

African Proverb

• Many organizations are sitting on thousands of members just waiting to return.

Growth System“Growth endures not because of fortuitous demand, a hot product, or any single tactic. Growth endures when management follows a portfolio of disciplines to ensure that a broad set of growth opportunities are identified and captured as routinely as costs are controlled and processes are improved.” Michael Treacy, Double-Digit Growth

Tony Rossell

Tony serves as the senior vice president of Marketing General, Inc., an Alexandria, Virginia-based firm that specializes in membership marketing solutions for associations. A frequent write and speaker on marketing topics, Tony is a contributing author to two books, Membership Marketing (ASAE 2000) and Membership Essentials (ASAE 2008). He writes the Membership Marketing Blog. Contact Tony at 703-706-0360 or Tony@marketinggeneral.com.