Am Cham Worldwide Executive Directors Conference


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Membership marketing – acquiring, engaging, upgrading, and renewing members – is the cornerstone for associations and relationship driven organizations. This presentation outlines the four key strategies needed for success in membership marketing.

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Am Cham Worldwide Executive Directors Conference

  1. 1. How to Develop and Manage a Successful Membership Marketing Program AmCham Worldwide Executive Director’s Conference Presented by Tony Rossell Senior Vice President Marketing General, Inc.
  2. 2. Developing a Membership Strategy <ul><li>“There is nothing like a crisis to clarify the mind. In suddenly volatile and different times, you must have a strategy” </li></ul><ul><li>Richard P. Rumelt, Strategy in a ‘structural break’, Mckinsey Quarterly, December 2008. </li></ul>
  3. 3. What is membership marketing? <ul><li>Membership Marketing is a subset in the field of Relationship Marketing </li></ul><ul><li>Membership is a customer model being adopted by many other industries and organizations. </li></ul><ul><li>Membership Marketing is the process of acquiring, engaging, upgrading, and renewing members. </li></ul>
  4. 4. How to be a Strategic Membership Marketer <ul><ul><li>The four strategic areas for success in membership marketing: </li></ul></ul><ul><ul><ul><li>Economics – Why </li></ul></ul></ul><ul><ul><ul><li>Market -- Who </li></ul></ul></ul><ul><ul><ul><li>Product – What </li></ul></ul></ul><ul><ul><ul><li>Promotion – How </li></ul></ul></ul><ul><ul><li>Goal: Take away at least one key opportunity for your AmCham from each of these four strategies. </li></ul></ul>
  5. 5. Economics <ul><li>Response Rate </li></ul><ul><li>Renewal Rate </li></ul><ul><li>Average Tenure </li></ul><ul><li>Lifetime Value </li></ul><ul><li>Maximum Acquisition Cost </li></ul><ul><li>Steady State Analysis </li></ul>
  6. 6. What is the basic marketing measure? <ul><li>Response Rate </li></ul><ul><li>Response rate measures the number of prospects who responded to a marketing effort. </li></ul><ul><ul><li>Total number of responses / Total number of prospects contacted X 100. </li></ul></ul><ul><ul><li>Example: (50/ 10,000) x 100 = .50% </li></ul></ul>
  7. 7. How many members do we keep? <ul><li>Renewal Rate </li></ul><ul><li>Renewal Rate measures the number of members kept over a given period of time -- usually during a fiscal or calendar year. </li></ul><ul><li>Total Number of Members Today (minus 12 months of new members) / Total Number of Members in Previous Year </li></ul><ul><li>Example: (10,000 – 1000)/9,000 = 90% Renewal Rate </li></ul>
  8. 8. How long do members stay? <ul><li>Average Tenure </li></ul><ul><li>Average Tenure measures how long on average a member stays with an association. </li></ul><ul><li>Reciprocal of Renewal Rate: 1 – Renewal Rate or, 1 - .90 = .10 </li></ul><ul><li>Example: Divide Reciprocal into 1, or, 1 /.10 = an Average Tenure of 10 years </li></ul>
  9. 9. How much are members worth? <ul><li>Lifetime Value (LTV) </li></ul><ul><li>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 LTV </li></ul><ul><li>Maximum Acquisition Cost (MAC) </li></ul><ul><li>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 </li></ul>
  10. 10. Where is membership headed? <ul><li>Membership Steady State </li></ul><ul><li>Annual New Member Input / Reciprocal of Renewal Rate (or Lapse Rate) Shown as a Decimal = Total Membership Steady State. </li></ul><ul><li>For example, 500 New Member Input / .20 Lapse Rate = 2,500 Total Membership. </li></ul>
  11. 11. What’s the best strategy? <ul><li>Focus on acquisition by prioritizing the membership-marketing budget to maintain the current 75% renewal rate and add 800 new members each year. </li></ul><ul><li>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. </li></ul><ul><li>Focus on a balanced approach by prioritizing the membership-marketing budget to achieve an 80% renewal rate and adding 500 new members each year. </li></ul>
  12. 12. Strategy Impacts Outcomes <ul><li>The first option with a 75% renewal rate and 800 new members per year will achieve a total membership of ____ members over time. </li></ul><ul><li>The second option with an 85% renewal rate and 200 new members per year will achieve a total membership of ____ members over time. </li></ul><ul><li>The third option with an 80% renewal rate with 500 new members per year will achieve a total membership of _____ members over time. </li></ul>
  13. 13. Case Study <ul><li>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 sales price. </li></ul>
  14. 14. Exercise - Numbers <ul><li>Please determine the following for AmCham ABC: </li></ul><ul><ul><li>Acquisition Response Rate </li></ul></ul><ul><ul><li>Association’s Renewal Rate </li></ul></ul><ul><ul><li>Cost to obtain a member </li></ul></ul><ul><ul><li>“ Lifetime Value” of a Member </li></ul></ul><ul><ul><li>“ Maximum Acquisition Cost” </li></ul></ul><ul><ul><li>“ Steady State” Membership of ABC Association </li></ul></ul>
  15. 15. Exercise -- Strategy <ul><li>Based on the member economics, what would you recommend as a strategy going forward for this organization? Some possible recommendations are: </li></ul><ul><ul><li>Move monies from acquisition to retention. </li></ul></ul><ul><ul><li>Increase member acquisition. </li></ul></ul><ul><ul><li>Stay the course. Don’t change anything. </li></ul></ul>
  16. 16. Market <ul><li>Serve a Market, Not a Product (What do members use and value?) </li></ul><ul><ul><li>Awareness </li></ul></ul><ul><ul><li>Usage </li></ul></ul><ul><ul><li>Importance </li></ul></ul><ul><ul><li>Loyalty (not satisfaction) </li></ul></ul><ul><li>Use behavior and characteristics to segment your market </li></ul><ul><li>Spend time, energy, and resources on top prospects. </li></ul>
  17. 17. Product Awareness and Usage 49.6% 38.3% 44.4% Used* 50.2% 29.3% 37.7% Aware PRESS Plus 22.7% 32.1% 28.0% Used* 48.7% 38.1% 42.4% Aware E-tools for Boards and Districts 42.9% 34.0% 38.5% Used* 61.5% 39.6% 48.4% Aware Administrative Procedures Project 46.2% 38.6% 41.9% Used* 67.8% 47.4% 55.6% Aware School Board Policies Online 49.8% 47.3% 48.4% Used* 79.5% 64.5% 70.5% Aware Policy Manual Update 91.0% 72.1% 81.6% Used* 93.4% 61.4% 74.2% Aware Policy Reference Education Subscription Service (PRESS) 69.0% 67.3% 68.0% Used* 90.8% 77.8% 83.0% Aware Policy Manual Customization Superintendent Board Member   Position Total   Service
  18. 18. Product Gap Analysis Red =statistically significant decrease Blue =statistically significant increase 2.16 2.03 1.91 2.34 2.00 Meeting needs 3.75 2.89 3.55 2.44 3.40 Importance Improving my consulting skills 2.63 2.43 2.31 2.62 2.43 Meeting needs 3.78 3.47 4.02 3.22 3.80 Importance Enhancing my performance by providing information on best practices 1.84 1.99 2.01 2.26 1.96 Meeting needs 3.19 2.05 2.42 1.89 2.54 Importance Providing test prep/support for licensing 2.95 3.12 3.14 3.04 3.09 Meeting needs 3.55 2.80 1.99 2.83 2.78 Importance Providing information on graduate training programs 2.37 2.45 2.30 2.57 2.37 Meeting needs 3.94 3.17 3.41 3.04 3.45 Importance Enhancing my professional credentials/capabilities 2.56 2.56 2.56 2.72 2.55 Meeting needs 3.53 3.26 2.83 3.74 3.25 Importance Improving my research skills Student Both PractitionerOnly AcademicOnly Overall
  19. 19. Potential Acquisition Market Segments Former Members Like Associations Subscribers Directories
  20. 20. Market Segmentation Through Data Modeling 80% of responses with 20% of the market
  21. 21. Look for Thriving People, Companies, and Sectors <ul><li>“ Prosperity, success and happiness at work encourage association membership, because associations are where the winners meet in many professions.” </li></ul><ul><ul><li>79% of association members “very happy in job” </li></ul></ul><ul><ul><li>49% of association members “very happy in job” </li></ul></ul><ul><li>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. </li></ul>
  22. 22. Product <ul><li>Value Proposition </li></ul><ul><li>Product Line Extension (Increasing share of wallet) </li></ul><ul><ul><li>Product Packaging (Don’t sell a “black” Ford) </li></ul></ul><ul><li>Pricing </li></ul><ul><ul><li>Maximizing revenue through the inelastic dues demand of membership </li></ul></ul>
  23. 23. Product -- Value Proposition <ul><li>“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.” </li></ul><ul><li>Treacy and Wiersema, The Discipline of Market Leaders , page xiv </li></ul>
  24. 24. Product -- Value Proposition Vision Relationship Reward 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 value that a member is looking to receive.
  25. 25. Product -- Defining Elements <ul><li>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?” </li></ul><ul><li>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?” </li></ul><ul><li>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?” </li></ul>
  26. 26. Sample Value Proposition <ul><li>“ 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 market­ing resources to advance their careers. SMPS is the only organization dedicated to creating business opportunities in the A/E/C industry.” </li></ul>
  27. 27. Product -- Exercise <ul><li>Discussion of value proposition </li></ul><ul><li>Drafting a value proposition for your organization </li></ul><ul><li>Sharing your value proposition </li></ul>
  28. 28. Product Line Extension <ul><li>“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 competitor.&quot; </li></ul><ul><ul><li>The Marketing Dictionary </li></ul></ul>
  29. 29. Product Line Extension <ul><li>Express Membership -- $29: online only services </li></ul><ul><li>Basic Membership -- $49: online services plus subscriptions to the monthly periodical and newsletter </li></ul><ul><li>Comprehensive Membership -- $89: basic benefits plus 5 association books shipped as they are published </li></ul><ul><li>Premium Membership -- $219: all of the above plus an additional newsletter, four additional books and a $100 professional development voucher </li></ul><ul><li>Institutional Membership -- $899: a package that includes one Premium membership and 10 Basic memberships </li></ul>
  30. 30. Product -- Pricing Increases <ul><li>Association Dues Increase Research </li></ul><ul><ul><li>Association memberships will support an increase as high as 11% to 20%. </li></ul></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>Full Dues Increase Study can be found at </li></ul></ul>
  31. 31. Product – Price Points <ul><li>A New Zealand study found the following: </li></ul><ul><li>87% of prices were defined as odd prices </li></ul><ul><li>60% of prices ended in the digit 9 </li></ul><ul><li>30% of prices ending in the digit 5 </li></ul><ul><li>Judith Holdershaw, Philip Gendall and Ron Garland, The Widespread Use of Odd Pricing in the Retail Sector , Marketing Bulletin, 1997. </li></ul>
  32. 32. Promotion <ul><li>Flawed Strategies </li></ul><ul><ul><li>“ If you build it, they will come” – Field of Dreams </li></ul></ul><ul><ul><li>“ If someone comes to you with a 'great' product that just needs some marketing, the game is probably already over.” -- Seth Godin’s Blog </li></ul></ul><ul><ul><li>Stop marketing in a bad economy . </li></ul></ul>
  33. 33. Another View <ul><li>“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.” </li></ul><ul><li>John Quelch, Marketing Your Way Through a Recession , Harvard Business School, March 3, 2008 </li></ul>
  34. 34. Promotion <ul><li>Three Foundations of Promotion </li></ul><ul><li>Hypothesizing – Start each promotion with the question, “What cool stuff can we do?” </li></ul><ul><ul><li>Can we combine? </li></ul></ul><ul><ul><li>Can we add? </li></ul></ul><ul><ul><li>Can we eliminate? </li></ul></ul><ul><ul><li>Can we make an connection? </li></ul></ul><ul><ul><li>Can we simplify? </li></ul></ul><ul><ul><li>Can we substitute? </li></ul></ul><ul><ul><li>Can we reverse? </li></ul></ul><ul><ul><li>Can we copy (adapting best practices)? </li></ul></ul><ul><li>Bob Stone, Successful Direct Marketing Methods . </li></ul>
  35. 35. Promotion – How to Validate? <ul><li>2. Testing – Reveals 1,000% Variance in Response </li></ul><ul><ul><li>Lists </li></ul></ul><ul><ul><li>Channel (mail, email, FAX, phone, face to face) </li></ul></ul><ul><ul><li>Offers (discounts, trials, premiums) </li></ul></ul><ul><ul><li>Messages (gain, fear, pain) </li></ul></ul><ul><ul><li>Payment Options (ACCR and installment billing) </li></ul></ul><ul><ul><li>Format Graphics </li></ul></ul><ul><li>3. Tracking – Benchmarking success </li></ul>
  36. 37. Promotion <ul><li>“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.” </li></ul><ul><li>Philip Kotler, Kotler on Marketing, page 34 </li></ul>
  37. 38. Membership Promotional Strategy Applied <ul><li>“ Don’t Push Growth; Remove the Factors Limiting Growth.” </li></ul><ul><li>Peter Senge, The Fifth Discipline </li></ul>
  38. 39. Membership Lifecycle Awareness Recruitment Engagement Renewal Reinstatement
  39. 40. Awareness <ul><li>Defined: The process of establishing your brand in the minds of prospective members. </li></ul><ul><li>Members do not join an organization they do not know, so “90% of success is just showing up.” </li></ul><ul><ul><li>Search Engine Optimization (SEO) </li></ul></ul><ul><ul><li>Free Email Newsletter </li></ul></ul><ul><ul><li>Online PR Releases (i.e. PR Web) </li></ul></ul><ul><ul><li>Word of Mouth Marketing </li></ul></ul><ul><ul><li>Social Media (LinkedIn, Twitter) </li></ul></ul><ul><ul><li>Development and Participation in Blogs </li></ul></ul><ul><li>Goal – Build Mind Share (and Prospect Database) </li></ul>
  40. 42. Free Email Newsletter <ul><li>A key step to building a database of prospective members and making them aware of your organization and activity is to offer a free email newsletter. </li></ul>
  41. 43. Recruitment <ul><li>Definition: The process of inviting new members to join your organization. </li></ul><ul><li>Push vs. Pull Products -- Membership is a “PUSH” product </li></ul>
  42. 44. 7 Top Recruitment Tips <ul><li>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. </li></ul><ul><li>Develop a special offer to answer your prospect’s question: “WHY JOIN NOW?” </li></ul><ul><ul><li>Dues Discount </li></ul></ul><ul><ul><li>No-Obligation </li></ul></ul><ul><ul><li>Guarantees </li></ul></ul><ul><ul><li>Installment Billing </li></ul></ul><ul><li>Carefully develop a strong Unique Selling Proposition (USP). The USP answers the prospect’s question of “WHY THIS MEMBERSHIP?” </li></ul>
  43. 45. Why People Buy Pain In trouble and want to get out of it. A Present Future Present Future B C Fear See trouble coming and want to avoid it. Gain Can visualize something great and want to experience it.
  44. 46. 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... Your USP for Membership
  45. 47. 7 Top Recruitment Tips <ul><li>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. </li></ul><ul><li>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 &quot;I’M NOT SURE IT WILL BE USEFUL TO ME.&quot;) </li></ul><ul><li>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). </li></ul><ul><li>Before you send out your promotion, be sure to set up a system to accurately track responses. </li></ul>
  46. 48. Engagement <ul><li>Definition: The process of moving members from observers into users of the resources made available by your organization. </li></ul><ul><li>The first year of membership is the “Conversion Year” </li></ul><ul><li>Members Who Interact Convert </li></ul>
  47. 49. Impact of Interaction <ul><li>Data Analytics for one association on engagement. </li></ul><ul><ul><li>Members who attended an association meeting in the past year were 19% more likely to renew than those who did not attend a meeting. </li></ul></ul><ul><ul><li>Members who attended four or more meetings were 30% more likely to renew than members who never attended a meeting. </li></ul></ul><ul><ul><li>Members who placed a product order in the past year were 28% more likely to renew than those who had not placed an order. </li></ul></ul><ul><ul><li>Members who upgraded their membership in the past year to a higher level of service were 12% more likely to renew. </li></ul></ul>
  48. 50. Renewal <ul><li>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. </li></ul><ul><ul><li>Renewals are the members chance to “vote” on the value of what you have provided to them. </li></ul></ul><ul><li>The number one reason members give for not renewing is: “I FORGOT” </li></ul><ul><ul><li>Renewal keys: Frequency, Intensity, Duration </li></ul></ul>
  49. 51. Renewal Frequency and Timing Mail notice # 4 & Email 14 Telemarketing 13 Expire email or fax renewal 12 Mail notice # 3 & Email 11 Mail notice # 2 & Email 10 Mail notice # 1 & Email 9 Pre-renewal “Early Bird” Email 8   7 6 NCOA/fax/email/phone append 5 New Member Survey 4 3 New Member “Special Offer” 2 Renewal Acknowledgment e-mail 1 Activity Month
  50. 52. Reinstatement <ul><li>Definition: The process of re-introducing yourself to your former member. </li></ul><ul><li>Reinstatement programs test the effectiveness of your renewal program. </li></ul><ul><ul><li>&quot;Look not where you fell, look where you slipped.&quot; - African Proverb </li></ul></ul><ul><li>Many organizations are sitting on hundreds of members just waiting to return. </li></ul>
  51. 53. What Lapsed Members Say Very Likely 25% Somewhat Likely 34% Neither Likely nor Unlikely 16% Very/Somewhat Unlikely 25% Likelihood to Renew Membership in the Future Among lapsed members
  52. 54. Growth Strategy <ul><li>“ 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.” </li></ul><ul><li>Michael Treacy, Double-Digit Growth </li></ul>
  53. 55. Tony Rossell <ul><li>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 </li></ul>