Am cham worldwide executive director's conference cairoPresentation Transcript
How to Develop and Manage a
Successful Membership Marketing
AmCham Worldwide Executive Director’s Conference
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
Richard P. Rumelt, Strategy in a ‘structural break’, Mckinsey Quarterly, December
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
The four strategic areas for success in
– 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.
Maximum Acquisition Cost
Steady State Analysis
What is the basic marketing
• 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 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: (10,500 – 1,500)/10,000 = 90% Renewal
How long do members stay?
• 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 NonDues Revenue
· (Dues + Non-Dues Revenue) x Average Tenure = LTV
· Example: ($1,000 + $500) x 10 = $15,000 LTV
Maximum 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
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
• For example, 500 New Member Input / .20 Lapse Rate = 2,500
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
• 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
• The second option with an 85% renewal rate
and 200 new members per year will achieve
a total membership of ____ members over
• The third option with an 80% renewal rate
with 500 new members per year will achieve
a total membership of _____ members over
The AmCham ABC last year had 10,000 members.
This year 1,500 new members were added to the
association. 600 of these new members were
attributed to two direct mail campaigns of 40,000
pieces each. Membership acquisition mailings cost
$750 per thousand pieces mailed. The
membership now stands at 10,500. Membership
dues are $500 a year. The average non-dues
revenue is $250 a year per member. Incremental
servicing costs average $100 per member. On
average, the cost of goods sold is 25 percent of the
Exercise - Numbers
Please determine the following for
– 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
Exercise -- Strategy
• Based on the member economics,
what would you recommend as a
strategy going forward for this
organization? Some possible
– Move monies from acquisition to retention.
– Increase member acquisition.
– Stay the course. Don’t change anything.
• Serve a Market, Not a Product
(What do members use and value?)
Loyalty (not satisfaction)
• Use behavior and characteristics to
segment your market
• Spend time, energy, and resources
on top prospects.
Product Awareness and Usage
E-tools for Boards and
Policy Manual Customization
Policy Reference Education
Policy Manual Update
School Board Policies Online
Product Gap Analysis
Enhancing my performance
by providing information
on best practices
Improving my research
Enhancing my professional
Providing information on
graduate training programs
Providing test prep/support
Improving my consulting
Red=statistically significant decrease
Blue=statistically significant increase
Potential Acquisition Market
Market Segmentation Through
80% of responses with
20% of the market
Look for Thriving People,
Companies, and Sectors
“Prosperity, success and happiness at
work encourage association membership,
because associations are where the
winners meet in many professions.”
– 79% of association members “very happy in
– 49% of association members “very happy in
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.
• Value Proposition
• Product Line Extension (Increasing
share of wallet)
– Product Packaging (Don’t sell a “black” Ford)
– Maximizing revenue through the inelastic dues demand of
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
ASAE’s Decision to Join -research of 16,944 members and
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 business
development professionals working to secure
profitable business relationships for their A/E/C
companies. Through networking, business
intelligence, and research, SMPS members gain a
competitive advantage in positioning their firms
successfully in the marketplace. SMPS offers
members professional development, leadership
opportunities, and market-ing resources to
advance their careers. SMPS is the only
organization dedicated to creating business
opportunities in the A/E/C industry.”
Product -- Exercise
• Discussion of value proposition
• Drafting a value proposition for your
• Sharing your value proposition
Product Line Extension
“Product line extension -- adding
depth to an existing product line by
introducing new products in the
same product category; product line
extensions give customers greater
choice and help to protect the firm
from a flanking attack by a
The Marketing Dictionary
Product Line Extension
Express Membership -- $29: online only services
Basic Membership -- $49: online services plus
subscriptions to the monthly periodical and
Comprehensive Membership -- $89: basic benefits
plus 5 association books shipped as they are
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
Product -- Pricing Increases
• Association Dues Increase
– 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
Product – Price Points
A New Zealand study found the
• 87% of prices were defined as odd
• 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.
• Flawed Strategies
– “If you build it, they will come” – Field of
– “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.
“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
John Quelch, Marketing Your Way Through a Recession, Harvard Business School,
March 3, 2008
Three Foundations of Promotion
1. 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
Channel (mail, email, FAX, phone, face to face)
Offers (discounts, trials, premiums)
Messages (gain, fear, pain)
Payment Options (ACCR and installment billing)
3. Tracking – Benchmarking success
“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
Membership Promotional Strategy
“Don’t Push Growth;
Remove the Factors
Peter Senge, The Fifth Discipline
• Defined: The process of establishing your
brand in the minds of prospective
• Members do not join an organization they
do not know, so “90% of success is just
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
Free Email Newsletter
A key step to
aware of your
activity is to offer a
• Definition: The process of inviting
new members to join your
• Push vs. Pull Products -Membership is a “PUSH” product
7 Top Recruitment Tips
1. 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
• Installment Billing
1. Carefully develop a strong Unique Selling
Proposition (USP). The USP answers the
prospect’s question of “WHY THIS
Why People Buy
In trouble and want to get out of it.
See trouble coming
and want to avoid it.
Can visualize something great
and want to experience it.
Your USP for Membership
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...
7 Top Recruitment Tips
4. 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.
• Definition: The process of moving
members from observers into users
of the resources made available by
• The first year of membership is the
• Members Who Interact Convert
Impact of Interaction
• Data Analytics for one association
– 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
• 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
– Renewal keys: Frequency, Intensity, Duration
Renewal Frequency and Timing
Renewal Acknowledgment e-mail
New Member “Special Offer”
New Member Survey
Pre-renewal “Early Bird” Email
Mail notice # 1 & Email
Mail notice # 2 & Email
Mail notice # 3 & Email
Expire email or fax renewal
Mail notice # 4 & Email
• 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
• Many organizations are sitting on
hundreds of members just waiting to
What Lapsed Members Say
Likelihood to Renew Membership in the Future
Among lapsed members
Neither Likely nor
“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
Michael Treacy, Double-Digit Growth
Tony serves as the senior vice president of
Marketing General, Inc., an Alexandria, Virginiabased 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 703706-0360 or Tony@marketinggeneral.com.