Membership Growth Principles: Best Practices in Membership Marketing

1. Membership Growth Principles:
Best Practices in Membership
Marketing
Presented by
Socious, Inc. and
Tony Rossell
Senior Vice President
Marketing General, Inc.

2. 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

3. Growth in a Recession?
The Upside of Down
The Upside of Down
(Associations Now,
February, 2009)
focused on four
organizations:
•SHRM
•ASCD
•SME
•Costco

4. 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

5. 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.

6. 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

7. 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."

8. 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
1. Getting started applying the four
tools of membership marketing?

9. 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

10. 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

11. 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

12. 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.

13. 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

14. Potential Acquisition Market Segments
Former Members
Like Associations
Subscribers
Directories

15. 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.

16. “Where the Winners Meet” Research

17. 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

18. Product
• Value proposition
• Product Packaging
– Product line extension (Don’t sell a “black” Ford)
• Pricing
– Maximizing revenue through the inelastic dues demand of
membership

19. Building a 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 the membership
value proposition.

20. 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

21. 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

22. Pricing
• MGI Conducted a major Dues
Increase Study
• Free Copy on
Membership Marketing Blog
• Easy link:
– http://tinyurl.com/mmduesincrease

23. 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

24. 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.

25. 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

26. Making your Case 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...

28. 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

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

30. Membership Lifecycle
Reinstatement
Renewal Awareness
Engagement Recruitment

31. 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

32. Recruitment
• Definition: The process of inviting
new members to join your
organization.
• Push vs. Pull Products --
Membership is a “PUSH” product

33. 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

34. 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.

35. 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

36. 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”.

37. 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.

38. 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

39. 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.