In the English language – especially in the US -- the word “Membership” carries with it the a power of a special relationship that involves community, being part of the family, and trust. It far surpasses the word “customer” or “buyer”. So the use of the word has exploded. I am a member of my credit card company, my insurance company, church, etc. “ After all, human beings are deeply social creatures. We desire to live, love and work with others whom we know and who know us. And so did our ancestors, whose membership to small groups helped protect them from the weather and from predators. Belonging to a group gave them- and gives us- a chance to thrive.”   Gerda Wever-Rabebl, The Anthropology of Belonging: The Need for Social Inclusion. http://anthropology.suite101.com/article.cfm/the_anthropology_of_belonging#ixzz0DLfuCPRh&A How does this word translate in your nation?
You to can become an all star in your organization by mastering FOUR tools to membership marketing growth. Does all this really work? Story of the Society for Human Resource Management (SHRM) – Growing from 36,000 members to over 250,000 members.
Servicing Cost is the most important number for an organization to agree on. Full Costing OR Incremental Cost is the debate. Story of $1,000 servicing cost for a $500 member.
Option 1 – 3,200 members Option 2 – 1,333 members Option 3 – 2,500 members
Acquisition Response Rate -- .75% Association’s Renewal Rate – 90% Cost to obtain a member -- $40 on total or $100 from campaign “ Lifetime Value” of a Member -- $7,500 “ Maximum Acquisition Cost” -- $5,875 “ Steady State” Membership of ABC Association – 15,000
Do you know your market? Student turning in paper late. Why not measure satisfaction. Let me share with you a quick story. We did some survey research and asked, “How satisfied are you with your membership?” We had a 76% satisfaction level. Then we looked at how the former members had answered the question. We had virtually the same level of satisfaction. Look for loyalty not satisfaction.
Here is an example how data can help segment your market. We matched the membership of companies using aircraft up against a large database with lots of details on aircraft types. We found 5 or 6 key predictors of types of aircraft that matched members.
Access to information – 4.22 Professional Development – 3.91 Network – 3.72 Of those who responded to the survey and had dropped a membership, the primary reason reported by 56.1 percent of the responders said that they dropped membership because they “did not receive the expected value to justify the cost of the dues” (page 81). If members do not join for value, they sure leave for lack of value.
 Society for Marketing Professional Service (SMPS), CLU Apr May Jun 2009
Here are the three biggest mistakes I see in Membership Marketing.
There is an ancient proverb that says, “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” The same is true in members growth.
Four Social Media to consider – Twitter, LinkedIn, Facebook, and Blogs Blogs 25 Things Your Chamber Can Blog About : Newest member, Taxes, Events LinkedIn Group Canada, Belgium, Poland, Thailand, Uzbekistan American Chamber of Commerce in Canada (AmCham Canada) Facebook AmCham China AmCham Nicaragua AmCham Vietnam
Manufacturing is an industry that by every estimate has been hit hard by this recession. But there is an organization that has stemmed a multi-year decline in membership by applying best membership marketing practices stragegies.
How to Develop and Manage aSuccessful Membership Marketing Program AmCham Worldwide Executive Director’s Conference Presented by Tony Rossell Senior Vice President Marketing General, Inc.
Developing a Membership Strategy“There is nothing like a crisis to clarify the mind. In suddenly volatile and different times, you must have a strategy” Richard P. Rumelt, Strategy in a ‘structural break’, Mckinsey Quarterly, December 2008.
What is membership marketing?• Membership Marketing is a subset in the field of Relationship Marketing• Membership is a customer model being adopted by many other industries and organizations.• Membership Marketing is the process of acquiring, engaging, upgrading, and renewing members.
How to be a Strategic Membership Marketer The four strategic areas for success in membership marketing: – Economics – Why – Market -- Who – Product – What – Promotion – How Goal: Take away at least one key opportunity for your AmCham from each of these four strategies.
Economics• Response Rate• Renewal Rate• Average Tenure• Lifetime Value• Maximum Acquisition Cost• Steady State Analysis
What is the basic marketing measure?Response Rate• Response rate measures the number of prospects who responded to a marketing effort. – Total number of responses / Total number of prospects contacted X 100. – Example: (50/ 10,000) x 100 = .50%
How many members do we keep?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: (10,000 – 1000)/9,000 = 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 US $1,000 / Year Dues and US $500 / Year in Non- Dues Revenue · (Dues + Non-Dues Revenue) x Average Tenure = LTV · Example: ($1,000 + $500) x 10 = $15,000 LTVMaximum Acquisition Cost (MAC)• Assume Incremental Servicing Costs = $200 and Cost of Goods Sold = $250 · (Dues + Non-Dues Revenue) - (Incremental Servicing Costs + Costs of Goods Sold) x Avg. Tenure = MAC · Example: (($1,000 + $500) - ($200 + $250)) x 10 = $10,500 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, 500 New Member Input / .20 Lapse Rate = 2,500 Total Membership.
What’s the best strategy?• Focus on acquisition by prioritizing the membership-marketing budget to maintain the current 75% renewal rate and add 800 new members each year.• Focus on renewals by prioritizing the membership-marketing budget to achieve an 85% renewal rate and maintain the current level of 200 new members who join during the year.• Focus on a balanced approach by prioritizing the membership-marketing budget to achieve an 80% renewal rate and adding 500 new members each year.
Strategy Impacts Outcomes• The first option with a 75% renewal rate and 800 new members per year will achieve a total membership of ____ members over time.• The second option with an 85% renewal rate and 200 new members per year will achieve a total membership of ____ members over time.• The third option with an 80% renewal rate with 500 new members per year will achieve a total membership of _____ members over time.
Case StudyThe AmCham ABC last year had 10,000 members.This year 1,500 new members were added to theassociation. 600 of these new members wereattributed to two direct mail campaigns of 40,000pieces each. Membership acquisition mailings cost$750 per thousand pieces mailed. Themembership now stands at 10,500. Membershipdues are $500 a year. The average non-duesrevenue is $250 a year per member. Incrementalservicing costs average $100 per member. Onaverage, the cost of goods sold is 25 percent of thesales price.
Exercise - NumbersPlease determine the following forAmCham ABC: – Acquisition Response Rate – Association’s Renewal Rate – Cost to obtain a member – “Lifetime Value” of a Member – “Maximum Acquisition Cost” – “Steady State” Membership of ABC Association
Exercise -- Strategy• Based on the member economics, what would you recommend as a strategy going forward for this organization? Some possible recommendations are: – Move monies from acquisition to retention. – Increase member acquisition. – Stay the course. Don’t change anything.
Market• Serve a Market, Not a Product (What do members use and value?) – Awareness – Usage – Importance – Loyalty (not satisfaction)• Use behavior and characteristics to segment your market• Spend time, energy, and resources on top prospects.
Product Gap Analysis Academic Practitioner Overall Both Student Only OnlyImproving my research Importance 3.25 3.74 2.83 3.26 3.53skills Meeting needs 2.55 2.72 2.56 2.56 2.56Enhancing my professional Importance 3.45 3.04 3.41 3.17 3.94credentials/capabilities Meeting needs 2.37 2.57 2.30 2.45 2.37Providing information on Importance 2.78 2.83 1.99 2.80 3.55graduate training programs Meeting needs 3.09 3.04 3.14 3.12 2.95Providing test prep/support Importance 2.54 1.89 2.42 2.05 3.19for licensing Meeting needs 1.96 2.26 2.01 1.99 1.84Enhancing my performance Importance 3.80 3.22 4.02 3.47 3.78by providing information on best practices Meeting needs 2.43 2.62 2.31 2.43 2.63Improving my consulting Importance 3.40 2.44 3.55 2.89 3.75skills Meeting needs 2.00 2.34 1.91 2.03 2.16 Red=statistically significant decrease Blue=statistically significant increase
Potential Acquisition Market Segments Former Members Like Associations Subscribers Directories
Market Segmentation Through Data Modeling 80% of responses with 20% of the market
Look for Thriving People, Companies, and Sectors“Prosperity, success and happiness atwork encourage association membership,because associations are where thewinners meet in many professions.” – 79% of association members “very happy in job” – 49% of association members “very happy in job”Arthur C. Brooks, PhD., Where the Winners Meet: Why Happier, More SuccessfulPeople Gravitate toward Associations, The William E. Smith Institute for AssociationResearch, January 2008, page 13.
Product• Value Proposition• Product Line Extension (Increasing share of wallet) – Product Packaging (Don’t sell a “black” Ford)• Pricing – Maximizing revenue through the inelastic dues demand of membership
Product -- 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 -- Value Proposition What separates you from all Vision other organizations? ASAE’s Decision to Join -- research of 16,944 members and Reward Relationship former members from 18 associations -- highlights these components of value that a member is looking to receive.
Product -- Defining Elements• Vision – When we cast a vision for members that together we can do more than we can do alone, we create a compelling answer to the question, “Why belong to this organization?”• Reward – Members want tangible value to support their continued membership with product that makes a difference in their lives or career. This answers the question, “What’s in it for me?”• Relationship – We are a communal people. We want to be around people that we can help and that can help us. Relationship can be with staff or other members and face to face or electronic. It answers the question, “Who can I connect to here?”
Sample Value Proposition“SMPS is a community of marketing and businessdevelopment professionals working to secureprofitable business relationships for their A/E/Ccompanies. Through networking, businessintelligence, and research, SMPS members gain acompetitive advantage in positioning their firmssuccessfully in the marketplace. SMPS offersmembers professional development, leadershipopportunities, and market-ing resources toadvance their careers. SMPS is the onlyorganization dedicated to creating businessopportunities in the A/E/C industry.”
Product -- Exercise• Discussion of value proposition• Drafting a value proposition for your organization• Sharing your value proposition
Product Line Extension“Product line extension -- addingdepth to an existing product line byintroducing new products in thesame product category; product lineextensions give customers greaterchoice and help to protect the firmfrom a flanking attack by acompetitor." The Marketing Dictionary
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
Product -- Pricing Increases• Association Dues Increase Research – Association memberships will support an increase as high as 11% to 20%. – Associations in the study raising dues by 11% to 20% had the highest percentage of revenue increase, no reported revenue decrease and the lowest percentage of stagnant revenue. Full Dues Increase Study can be found at http://tinyurl.com/mmduesincrease
Product – Price Points A New Zealand study found the following:• 87% of prices were defined as odd prices• 60% of prices ended in the digit 9• 30% of prices ending in the digit 5 Judith Holdershaw, Philip Gendall and Ron Garland, The Widespread Use of Odd Pricing in the Retail Sector, Marketing Bulletin, 1997.
Promotion• Flawed Strategies – “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 – Stop marketing in a bad economy.
Another View“It is well documented that brandsthat increase advertising during arecession, when competitors arecutting back, can improve marketshare and return on investment atlower cost than during goodeconomic times.”John Quelch, Marketing Your Way Through a Recession, Harvard Business School,March 3, 2008
PromotionThree Foundations of Promotion1. 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 connection? – Can we simplify? – Can we substitute? – Can we reverse? – Can we copy (adapting best practices)? Bob Stone, Successful Direct Marketing Methods.
Promotion – How to Validate?2. 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 Graphics3. Tracking – Benchmarking success
Promotion“Successful companies are learningcompanies. They collect feedback from themarketplace, audit and evaluate results, andtake corrections designed to improve theirperformance. Good marketing works byconstantly monitoring its position in relationto its destination.”Philip Kotler, Kotler on Marketing, page 34
Membership Promotional Strategy Applied“Don’t Push Growth;Remove the FactorsLimiting Growth.”Peter Senge, The Fifth Discipline
Awareness• Defined: The process of establishing your brand in the minds of prospective members.• Members do not join an organization they do not know, so “90% of success is just showing up.” – Search Engine Optimization (SEO) – Free Email Newsletter – Online PR Releases (i.e. PR Web) – Word of Mouth Marketing – Social Media (LinkedIn, Twitter) – Development and Participation in Blogs• Goal – Build Mind Share (and Prospect Database)
Free Email NewsletterA key step tobuilding adatabase ofprospectivemembers andmaking themaware of yourorganization andactivity is to offer afree emailnewsletter.
Recruitment• Definition: The process of inviting new members to join your organization.• Push vs. Pull Products -- Membership is a “PUSH” product
7 Top Recruitment Tips1. Begin each and every campaign by thinking creatively and asking “WHO MIGHT BE INTERESTED IN JOINING?” Then search out lists that contain these potential members.2. Develop a special offer to answer your prospect’s question: “WHY JOIN NOW?” • Dues Discount • No-Obligation • Guarantees • Installment Billing1. Carefully develop a strong Unique Selling Proposition (USP). The USP answers the prospect’s question of “WHY THIS MEMBERSHIP?”
Why People Buy Pain In trouble and want to get out of it. A Present Present Future Future Fear GainSee trouble coming Can visualize something greatand want to avoid it. and want to experience it. B C
Your USP for MembershipAs employment and consumer spending slows, manufacturingprofessionals are concerned. So how can you prepare for change, buildyour skills and position yourself for career success? See details inside...
7 Top Recruitment Tips4. Build your promotion around a metaphor -- something a prospect will recognize and know what to do with. Try using an invitation, survey, certificate, or temporary membership card format.5. Write your promotion in terms of a conversation between a salesperson and a prospective member. Ask and answer the questions any prospective member would ask (e.g., “IT SEEMS TOO EXPENSIVE”, or "I’M NOT SURE IT WILL BE USEFUL TO ME.")6. If you are using direct mail, make the investment in a computer-personalized format (i.e., lasering the name and address on the letter and reply).7. Before you send out your promotion, be sure to set up a system to accurately track responses.
Engagement• Definition: The process of moving members from observers into users of the resources made available by your organization.• The first year of membership is the “Conversion Year”• Members Who Interact Convert
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.• The number one reason members give for not renewing is: “I FORGOT” – Renewal keys: Frequency, Intensity, Duration
Renewal Frequency and Timing Month Activity 1 Renewal Acknowledgment e-mail 2 New Member “Special Offer” 3 4 New Member Survey 5 NCOA/fax/email/phone append 6 7 8 Pre-renewal “Early Bird” Email 9 Mail notice # 1 & Email 10 Mail notice # 2 & Email 11 Mail notice # 3 & Email 12 Expire email or fax renewal 13 Telemarketing 14 Mail notice # 4 & Email
Reinstatement• Definition: The process of re-introducing yourself to your former 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 hundreds of members just waiting to return.
What Lapsed Members SayLikelihood to Renew Membership in the FutureAmong lapsed members Very/Somewhat Unlikely Very Likely 25% 25%Neither Likely nor Unlikely 16% Somewhat Likely 34%
Growth Strategy “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 RossellTony serves as the senior vice president ofMarketing General, Inc., an Alexandria, Virginia-based firm that specializes in membershipmarketing solutions for associations. A frequentwrite and speaker on marketing topics, Tony is acontributing author to two books, MembershipMarketing (ASAE 2000) and MembershipEssentials (ASAE 2008). He writes theMembership Marketing Blog. Contact Tony at 703-706-0360 or Tony@marketinggeneral.com.