Please Participate in the 2012 Membership Marketing Benchmarking Report

The questionnaire is now live for the 2012 Membership Marketing Benchmarking Report.  And if you membership professional, I want to invite you to participate in this year’s research.

If you received an email invitation to participate, please use the link provided in the email to access the survey. This will prevent you from receiving follow up requests to complete the survey. However, if you are not on the Marketing General Incorporated email list, you can use this link to fill out the questionnaire. 

Last year over 650 membership organizations took part in this research. Our hope is to increase the quantity of participants this year in order to provide analysis with even finer segmentation than in the past.

Of course I will report many of the findings from our research here on this blog. But for those who complete the survey, we will send a free printed copy of the final, full report.

I look forward to sharing with you the outcomes from this year’s research. Thanks in advance or being a part of the 2012 Membership Marketing Benchmarking Report.

Your Membership Value Equation

Value = Benefits / Costs = (Functional benefits + Emotional benefits) / (Monetary costs + Time costs + Energy costs + Psychic costs)1.

1. Philip Kotler, Marketing Management, Prentice Hall; 11 edition (May 2002)

A “Good” Response Rate in Membership Marketing

Many times I am asked what a good response rate in direct mail is. So I found it interesting when a client shared some data from the DMA Response Rate Trend Report. The report found that “Response rates for Direct Mail have held steady over the past four years. Letter-sized envelopes, for instance, had a response rate this year of 3.42 percent for a house list and 1.38 percent for a prospect list.”

Benchmarking data from other organizations is a good starting point for any analysis. However, real data collected from actual market tests is always the best. That’s because response rates are a comparative measuring tool, not an actual definition of value.

For example, is 72 degrees Fahrenheit a good temperature? It is great if you want to go for a walk, but bad if you are cooking a steak.

Before you determine if a response rate is good or bad, you need to understand the costs and the revenue associated with your membership (what cooking temperature is required). Then you can employ the response rate to define which list, offer, or package meets you minimum response requirements.

In the example below, the response rate varied on 16 different lists from 3.46% to 0.33%. If the revenue associated with the response is very high, then even the lowest responding list might be economically productive. But if the allowable marketing cost is $30, then responses below a 1.79% response rate on list “D” would be unacceptable.

What’s the bottom line on response rates? Do the economic analysis first to understand the costs and revenue associated with your marketing effort. This will tell you what the minimum response rate you need to achieve your outcomes. Then use your response rate as a decision tool to define what is good and what is bad from your marketing efforts.

Must-Have Membership Marketing Tools

As we start a new year, I get a number of requests from clients for membership evaluation and reporting tools. So I thought that I would share some links that may be of help in reporting on and analyzing your membership program. I hope you find them of help.

• Free download of the 2011 Membership Marketing Benchmarking Report
• Membership “Steady State” Calculation to determine where your membership is headed
• Recommended Annual Membership Tracking Dashboard
• Formulas to determine membership renewal rates, average tenure of a member, lifetime value, and maximum acquisition cost

Thanks for reading the Membership Marketing Blog this past year and best wishes for a happy, peaceful, and successful New Year.

How to Recognize a Good Strategy?

In our hearts we know it when we see it. We are told that the organization is going to launch a bold new strategy. But in reality we see that what is being presented is just a new goal with a bow tied around it.

That’s why I enjoyed an article I just read by Richard Rumelt titled, “The Perils of Bad Strategy”. He lays out the characteristics that point to a bad strategy and also what the ingredients are of a good strategy.

In sports, we see the impact of strategy played out in game situatons right before our eyes.  “Like a quarterback whose only advice to his teammates is ‘let’s win,’” Rumelt writes “bad strategy covers up its failure to guide by embracing the language of broad goals, ambition, vision, and values.” All of these items have their place, but they should not be mistaken for a strategy.

On the other hand, a good strategy is when “a talented leader has identified the one or two critical issues in a situation—the pivot points that can multiply the effectiveness of effort—and then focused and concentrated action and resources on them. A good strategy does more than urge us forward toward a goal or vision; it honestly acknowledges the challenges we face and provides an approach to overcoming them.”

Rumelt gives three steps that are important to developing a real strategy that can make a difference.

“1. A diagnosis: an explanation of the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as being the critical ones.

2. A guiding policy: an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.

3. Coherent actions: steps that are coordinated with one another to support the accomplishment of the guiding policy.”1.

As we start the New Year, take a look at the strategies that you have in place. Do they address the real problem or challenge your organization is facing? Is the strategy actionable? Does it provide a road map so each member of the team knows how they can achieve the strategy? If not, now may be a good time to step back and re-evaluate what your strategy should be.

1. Richard Rumelt, The Perils of Bad Strategy, McKinsey Quarterly, the business journal of McKinsey & Company, June 2011.

Non Dues Revenue and Affinity Programs for Members

Lists can be helpful to get brainstorming going on what additional products and services can be provided to members. My research shows that with each additional purchase from an organization the loyalty and tenure of a member increases.

So here is a quick list of possible non-dues revenue and affinity products that I have put together to get your thinking going. Please feel free to add any that I have missed in the comments section below.

1. Advertising
  a. Ad Sales
  b. Directory Sales
  c. Exhibits
  d. List Management
  e. Sponsorship

2. Association Products and Services
  a. Books, directories, periodicals
  b. Continuing education – seminars, webinars, meetings
  c. Conventions

3. Credit Card

4. Hotel Discounts

5. Insurance
  a. Auto Insurance
  b. Dental Insurance
  c. Disability Insurance
  d. Home Owners or Rental Insurance
  e. Hospital Insurance
  f. Identity Theft Insurance
  g. Life and AD&D Insurance
  h. Pet Insurance
  i. Professional Liability Insurance
  j. Travel Insurance
  k. Vision Insurance

6. Investments and Banking

7. Job Bank

8. Legal Services

9. Logo and Insignia Items

10. Medical Alert

11. Overnight Shipping Discounts

12. Prescription Program

13. Rental Car Discounts

14. Shopping Discounts
  a. Dining
  b. Flowers
  c. Fuel
  d. Office supplies
  e. Technology

Membership Marketing News You can Use

Here are a couple of news items that you may find of help.

First, the USPS will be increasing postal rates effective January 22.

• First Class Letter rate is increasing to $0.45 (up from $0.44)
• First Class Postcard rate is increasing to $0.32 (up from $0.29)
• Standard A Letter rate is increasing to $0.281 (up from $0.276)
• Non-Profit Letter rate is decreasing to $0.172 (down from $0.174)

Also, here are links to some job opportunities with membership marketing organizations that you may want to explore.

• Director of Membership at a leading education association
• Director of Membership and Marketing at national membership organization
• Account Managers at leading direct marketing agency
• Director of Marketing at a top membership association

Customers Love ‘Em or Lose ‘Em

A friend of mine, Vinay Kumar, just published a book focused on customer service.  The title is, Customers Love ‘Em or Lose ‘Em.  The book includes 57 tips on how to better serve your customers.  I found it full of helpful reminders and practical suggestions. 

Here is an example of one tip from the book.

“Tip No. 13

Communicate! Communicate!

Don’t keep ‘em guessing. No one likes to be in the dark. When customers don’t know what’s happening, they imagine the worst, causing them anxiety and worry. While this is human nature, you don’t want to be the source of their worries. It won’t serve you. Keep your customers updated on your progress on their assignments and requests. Communicating regularly demonstrates your accountability, conveys your customer satisfaction emphasis, and that you’re dedicated to serving them. Along similar lines, if something isn’t going quiet as planned, customers do understand, provided you inform with them within a reasonable time frame rather than surprising them with bad news at the last minute. Therefore, when you do have to convey some “bad” news, at the same time, be sure to also let them know what you are doing to make it right, get it back on track. Your customers will appreciate it. Finally, when in doubt, it’s better to over communicate then under.”

You can download an inexpensive copy of the book from Scribd.  You may find it helpful to share with your membership staff or customer facing colleagues. 

Five Steps to Building a Membership Recruitment Strategy

I just responded to a question on how an organization should put together a membership recruitment strategy.  The question reminded me that sometimes it is a good idea to step back and look at the fundamentals of what we are doing. 

So here are five basic elements that I think are important to consider in putting together a membership recruitment program.

1.               The Target Market – who you want to reach – this includes determining what are your primary markets and acquiring or building lists of these prospects. 

2.               The Membership Offer – what a member will receive – this includes how you package your membership product and what special offers you will make in your promotions to attract new members.

3.               The Marketing Message – why a member should join – this includes defining your value proposition and presenting solutions and benefits to members that are compelling.

4.               The Promotional Tactics – how a member will be reached – this includes selecting the best marketing channels like personal sales, direct mail, email, telemarketing, etc. and the frequency and timing of promotions.

5.               The Testing and Tracking – where to take future efforts – this includes trying variations of the four points listed above and recording which lists, offers, messages, and channels produce the best ROI and number of new members.

Even if you are an experienced marketing pro, take a moment now to look at your membership program.   Chances are one of these five points is underdeveloped in what you are doing and could have big results with some additional focus. 

Case Study: A Thriving Membership Organization

One of the membership organizations that I like to follow is Costco. It is a good example to show to people who argue that membership is no longer a viable go to market strategy.

Costco has enjoyed exceptional membership growth over the years. The chart below from their 2010 annual report shows membership at the end of their fiscal year in August 2010. They reported 22.5 million Gold Star Members and 5.7 million Business Members.

As of the end of August 2011, Costco reported 25.0 million Gold Star Members and 6.3 million Business Members. That means Gold Star Membership has seen a five year growth rate of 44 percent and Business Members have grown by almost 21 percent.

A piece by Forbes about Costco that came out yesterday reports, “The renewal rates are approximately at the 89-plus percent range in the U.S. and Canada and 86% worldwide. Costco is also experiencing increasing penetration in the executive membership.” Forbes added that “in Q4 2011, the new member sign-ups witnessed an increase of 22% as compared to a year ago.”

Interestingly, Costco is upping membership fees by 10 percent on November 1. Prices will go from $50 to $55 for Gold Star members and $100 to $110 for Executive Members.  We will have to see if this impacts their membership numbers going forward. 

Obviously, every membership organization cannot be like Costco. However, it is a good reminder that when you deliver good value and market effectively, there are many millions of individuals who are ready and willing to sign up as members to participate in an organization.

The Impact of a Membership Dues Increase on Renewal Rates

It has been my observation that the demand for membership renewals is fairly inelastic of price. In other words, a percentage increase in dues rates generally does not translate into an equal or greater percentage drop in renewals rates. The demand for the membership holds. At least up to a point.

Some data from our recent Membership Marketing Benchmarking Report supports this premise. For example, 82% of organizations that raised dues by between 1% and 10% reported renewal rates of 70% or better after the increase. Similarly, 83% of organizations that raised dues by between 11% and 20% also report renewal rates of 70% or better after the increase.

However, this pattern falls apart with dues increases over 21%. In this case, only 68% of organizations that raised dues by more than 21% reported renewal rates of 70% or better.

The chart below provides the data on percent of dues increase and renewal rates.

The bottom line -- based on the the aggregate data -- it appears if an organization can keep a dues increase to under 20% there will not be a drop in overall renewal rates. But going over a 20% dues increase may errode renewal numbers.

The 25 Most Important Lessons in Membership Marketing

One of the sections that I find most interesting in our benchmarking research is the responses to our open ended question about lessons learned. We asked:

In your own words, what are the most important lessons you have learned in the area of membership marketing?

This year, we had over three hundred and eighty participants take the time to share their thoughts on lessons learned. I went through them and pulled out a representative sample of 25 responses.

Here are the insights that your fellow membership marketing professionals shared.

1. Recruitment and retention efforts require more "touches" than ever, and certainly more than, say, ten years ago. Associations must work to break through their members' "clutter."

2. Focus on the numbers. Construct and regularly monitor membership metrics to guide decision making and expenditures.

3. You can't grow without an acquisition program. A retention program simply maintains the membership or perhaps has a decline as people leave the profession or die.

4. The profession we support is going through a period of redefinition. The membership structure that has served us well for many years is now obsolete. What I have learned is the biggest barrier is that in volunteer run association, business decisions take too long and there we are not nimble as an organization in our ability to respond to the changes in our market with changes to our own business model.

5. You have to keep in there pitching every day. There is no "silver bullet" - direct mail, email, social media, events, member get a member. They all have their place.

6. The current economy has made everyone take a serious look at value for member dues. The abstract notion of "affiliation" is no longer enough. The surge of technology has caused a social media explosion that is difficult to keep up with and challenging to imitate. The bar has been raised in the areas of networking and providing up-to-date and exclusive information. We can no longer be a vague "something for everyone"; we need to develop a well-defined value proposition that resonates in today’s environment.

7. Surveying the membership base on a regular basis and always requesting and listening to feedback is extremely important to the association. Never assume the membership base wants or needs the benefits you feel they need/want.

8. In a down economy, it's more important than ever to stay in the marketplace and keep brand awareness strong. Do whatever it takes to maintain budget levels and continue solicitation efforts. That's key in ensuring you'll be well positioned once the economy begins to turn...and always continue to test - new efforts, offers, ideas, messaging, lists, etc.

9. That there is an actual discipline to it that needs to be followed, studied, and consistently applied.

10. Integrated marketing is key - no one channel is guaranteed for recruitment or renewal. I need to use direct mail, email, telemarketing and social media for each campaign.

11. Keep testing, even after you think you have found the magic bullet. Know your market and your competition. Understand your organization's business objectives and tie them to your membership marketing programs.

12. Reaching out to new members about 3 months after they've joined has won us good will. We talk about free member services and make sure they know how to take advantage of them and ask if they have any questions about their membership. They really seem to appreciate the check in.

13. Old programs such as branch/chapter, member get a member worked in the 80's and 90's. Need to sunset those, and fulfill needs of younger generation: quick turnaround, fewer hierarchies, ease of renewals, instant information, and willingness to engage.

14. Value is key to membership retention. Marketing is key to membership growth.

15. Having a clear message from leadership regarding the vision and purpose of the organization. It is key that all members understand and be able to share with others the purpose and value of the organization

16. Successful membership means instituting and implementing consistent processes and procedures for renewals, testing new membership techniques and messages, and always pursuing lapsed members.

17. You need to continue to try new things and track what works and what doesn't.

18. Clearly define goals, test the offer and meticulously record the results.

19. Investments in marketing pay off.

20. Multiple contacts are very important.

21. Membership should work with marketing to actually create a campaign.

22. Success depends on building relationships with our member companies, "drilling down" and developing relationships with multiple contacts at the member company and regularly communicating the value that the association provides to each member in multiple ways

23. Be persistent, circumstances can change regarding interest in membership. Every prospect has a "sweet" spot; you just have to find it.

24. We are not competing with other associations; we are competing for member dollars with for profit service providers and personal expenditures.

25. Times have changed - Members are looking at Association memberships much more carefully than they used to. The VALUE has to be there for the member to renew.

Feel free to add your own thoughts on lessons learned in the comments section below.  Which insights listed here do you agree with and with which do you disagree? 

ASAE’s Associations Now Interactive Extra Focuses on Membership Matters

The October edition is now available from ASAE of the Interactive Extra for Associations Now. The focus is “Membership Matters”. Some of the article titles include:

1. What Membership Means Around the World

2. Retaining Members, From Year One to Retirement

3. 7 Tips for Dealing with Angry Members

4. Recruitment, Retention, and Engagement Trends

5. Build a Better Member Survey

It is a very well done supplement. Here is the link if you would like to take a look at it.

The End of Membership as We Know It

In her book, The End of Membership as We Know It, Sarah Sladek, makes important points – based on best practices in membership marketing -- that membership professionals should take to heart in order to grow a successful program.

Her fundamental thesis is that “three key shifts in our society have caused a decline in membership: economic rescission, demographic shifts, and rapidly changing technology. [And] while the economy is likely to rebound sooner or later, the other two influences are here to stay.” 1.

Sladek proposes a number of solutions to help in meeting these membership challenges.

The first is to focus on offering members’ better benefits. She maintains that “your association’s success hinges on one thing: member benefits. . . Members join your association because they believe in your ability to solve a problem for them. They renew their membership when you are successful at solving the problem.”2.

In order to identify and develop better benefits, she advises that you “survey members or host focus groups regularly to keep your finger on the pulse of any changing needs among your membership. Nothing can replace the open, honest feedback you receive from members.”3.

Another key opportunity to improve membership Sladek says “comes down to marketing.” The four aspects of marketing that are highlighted include differentiating your association from its competitors, providing a guarantee to members, identifying your core benefits, and determining your target market.

Sladek also recommends building online communities as a key to solving the threats to membership. “Throughout history, she writes,” community has been defined as a social group of any size whose members reside in a specific locality, share government, and often have a common culture and history. That definition has changed in recent years, partly because of demographic shifts and economic dips but largely because of technology. Technology has given us access to the world and the opportunity to network with anyone, anywhere, anytime.” 4.

Another important solution that Sladek recommends is examining your membership model. She notes that “For hundreds of years association memberships have been cut from the same cloth. With few exceptions, people paid dues once a year for access to a full year’s worth of membership. Today, membership associations are introducing a variety of operational models and revenue streams. Innovation is a must:”5. I call this tendency of offering only one membership option the “black Ford” syndrome. As Henry Ford famously stated, “you can have any car color you want as long as it is black”.

Some of these membership models that you might want to consider include what I call tiered membership, Freemium membership, online membership, and group membership.

Here is why I believe The End of Membership as We Know It is an important contribution to the literature on membership marketing. Complacency in membership marketing is the contagion that is most likely to hold back a membership program. This book serves as a wakeup call to remind marketers of the need to continue to research, innovate, test, and improve and to give those who do not see the need for change a warning of what could happen without action.

1. Sarah L. Sladek, The End of Membership as We Know it, ASAE, page 94.
2. Ibid. page 45.
3. Ibid. page 56.
4. Ibid. page 92.
5. Ibid. page 95.

Is There a Membership Gene?

The future of membership is often debated in associations, non-profits and local communities. Is membership a concept that’s time has passed and we are looking to a societal future of “bowling alone”? Or is membership and association with others something that is at our core as humans?

I tend to think that although how we associate will certainly change, there seems to be a consistent recognition across the ages of this human characteristic of coming together around common interests. From Aristotle to Alexis de Tocqueville to Dr. Suess, there seems to be recognition that we need each other.

The Greek philosopher Aristotle (384 BC – 322 BC) wrote, “For men journey together with a view to some particular advantage, and to provide something that they need for the purposes of life; and it is for the sake of advantage that the political community too seems both to have come together originally and to endure.”1.

In addition, Alexis de Tocqueville saw the particular expression of this membership tendency in America. He wrote, “In no country in the world has the principle of association been more successfully used, or more unsparingly applied to a multitude of different objects, than in America. Besides the permanent associations which are established by law under the names of townships, cities, and counties, a vast number of others are formed and maintained by the agency of private individuals . . . in the United States associations are established to promote public order, commerce, industry, morality, and religion; for there is no end which the human will, seconded by the collective exertions of individuals, despairs of attaining.”2.

Finally, in a lesson that Simon Sinek draws from no one less than Dr. Suess, he writes, “Dr. Suess explained it best. [There is a] very basic human need – the need to belong. Our need to belong is not rational, but it is a constant that exists across all people in all cultures. It is a feeling we get when those around us share our values and beliefs. When we feel like we belong we feel connected and we feel safe. As humans we crave the feeling and we seek it out.”3.

As membership professionals, our key to success is better understanding how to meet this “need to belong” and harness this desire for “collective exertions” for some “particular advantage”.

1. Nicomachean Ethics by Aristotle book viii 9
2. Democracy in America, Volume 1 by Alexis de Tocqueville, chapter 6 “Political Associations in the United States”
3. Start with Why: How Great Leaders Inspire Everyone to Take Action, Simon Sinek,Penguin Group, 2009, page 53.

The 2011 Membership Marketing Benchmarking Report Now Available as a Free Download

It is my pleasure to announce the release of the 2011 Membership Marketing Benchmarking Report. A free download of the full report is available, with site registration, using this link.

As readers of this blog know, this marks the third year that we have surveyed membership organizations to better understand the strategies and tactics used to recruit members, engage new members, renew existing members, and reinstate former members.

And each year we add questions to explore new areas of membership marketing. This year the report features new data on the practices around increasing membership dues, engaging members with products and services, membership chapters, and the key impediments that hold back membership growth.

Beyond cataloging membership practices, the Benchmarking Report also takes these practices and cross-tabulates them with the membership results membership groups are experiencing. The comparison of practices and outcomes in membership provides strong directional information on what strategies might be added or dropped to help improve an organization’s membership program.

I hope that you find the 2011 Report of help as you seek to maximize the membership results for your organization.

Six Components to Building Your Membership Model

Membership models are a hot topic these days. I am speaking with a number of clients about options on how to build new memberships or adapt current categories.

Instead of trying to build an exhaustive list of the different membership models now being deployed, I thought that it might be of more value to outline the components that go into and can be changed to form a new membership.

I have identified six levers that an organization can adjust in a membership product. By thinking through and making decisions in each of these areas you can define the membership model that best fits your organization and the needs in the market.

Here are the six elements that go into building a membership model.

1. Participants – Who do you want as participants in the membership? This can be defined as specific markets or market segments. It can also be defined as whether the membership is for individuals or groups of people in organizations or companies.

2. Value – What products and services are desired by your market that you are able to deliver to the membership? Providing value involves both understanding the need for content, community, savings, etc. and also your knowledge and ability to deliver what is needed.

3. Term – When do you want the membership to start and to end? For many organizations the standard term of membership is a year. But many memberships – like health clubs – offer a monthly membership term. Others require multiple years of membership tied to an event like certification

4. Fulfillment – Where do you want to deliver membership benefits? There is a growing shift from providing a paper based or in localized in-person membership to an electronic only membership.

5. Price – How much, if anything, do you want to charge for the membership? Memberships can range from tens of thousands of dollars to just a few dollars a year. And increasingly, the concept of ‘Freemium” membership is being tried by organizations where membership is used to build community or engagement as part of a larger economic strategy.

6. Purpose – Why do you want to create the membership? The ability to create a membership model and an economic plan to sustain it are very important in planning, but Tom Collins also points to doing what you are deeply passionate about as a foundation for success.

To build your new membership model, I suggest that you look at each of these membership components and list all of the options under each that are available to you. How you mix and match each of these options will form the outline for the membership model that best fits your organization and the needs in the marketplace.

Please feel free to post a comment here if you think that I have missed any important membership components here.

Yes Marketing Works

The other day, I received a comment from the CEO of an organization that basically said, “Hey, your marketing didn’t work”.

Marketing done properly provides statistically projectable outcomes that can be done with great precision. If variables are held constant, a mailing list or direct mail package that worked in the past will continue to perform more or less at a predictable level when you allow for some statistical flux.

For marketers, the challenge comes when you do not have a marketing history on which to build your projections. You do not know what lists, offers, messages, or timing are best for a given product or organization. It is like a doctor doing a diagnosis without any of the tools of modern medicine.

You need to set some goal or outline an expected return, so you use results gathered from similar organizations or experiences. You ground your projections with the best information that you have at the time.

But basing projections solely on other organizations and experiences is a very poor substitute for real response data. On any new product or client launch without historical data, you are jumping into the unknown. You are taking a risk. It usually is better to try something than to do nothing, but it is a risk.

You may hit a home run, but you also better be prepared to hear, “your marketing doesn’t work”.

Solutions to a Declining Membership

Back in April, I wrote a post titled, “What are the Biggest Impediments to Membership Growth?”

However, I did not talk through potential solutions to these impediments. So here we go with some thoughts on what to do about a declining membership.

I have been doing membership consulting for over twenty five years. During this time, I have noticed that organizations tend to react to membership declines with two types of responses.

The first response is to demand action now. An organization might say, “Our membership numbers are down. We need to send out emails tomorrow to get the numbers up for the month!”

The second reaction that I see is avoidance. “Our membership numbers are down. But I cannot get the staff, chapters, or board to do anything about it.”

Neither of these reactions tends to bring long term solutions to a membership problem. What I have found works best is to help an organization step back and see the big picture and then develop a systemic solution to fixing the problem.

A classic treatise that speaks to these organizational tendencies is a book by Peter Senge titled, The Fifth Discipline: The Art and Practice of The Learning Organization. In the book he applies the concept of systems thinking to help organizations respond effectively to the challenges that they face.

Systems thinking highlight the inadequacies from the response that says “do something now” or simply work harder to solve the problem. This organizational response generally results in just kicking the can down the road. System thinkers call this “just push harder” reaction “compensating feedback”. This is “when well intentioned interventions call forth responses from the system that offset the benefits of the intervention. We all know what it feels like to be facing compensating feedback – the harder you push, the harder the system pushes back; the more effort you expend trying to improve matters, the more effort seems to be required.”1

In fact, Senge maintains, “pushing harder and harder on familiar solutions, while fundamental problems persist or worsen, is a reliable indicator of nonsystemic thinking – what we often call the ‘what we need here is a bigger hammer’ syndrome.”2

Systems thinking also speak to the avoidance or victim response to organizational challenges by helping to uncover high leverage solutions to a problem.

A basic premise of The Fifth Discipline is that organizations, economies, and people naturally grow as long as the things preventing that growth are removed. Senge says, “Don’t push growth; remove the factors limiting growth.”

“Systems thinking shows that small, well-focused actions can sometimes produce significant, enduring improvements, if they’re in the right place. Systems thinkers refer to this principle as ‘leverage’. Tackling a difficult problem is often a matter of seeing where the high leverage lies, a change which – with a minimum of effort – would lead to lasting and significant improvement. The only problem is that high-leverage changes are usually highly nonobvious to most participants in the system.” 3

So from a practical perspective instead of treating just the symptoms of a membership problem or being in denial what should one do? How do you bring a systems thinking solution to the problem?

A tool that I recommend to help diagnose a membership challenge from a systems thinking perspective is using a concept called the membership lifecycle.

The lifecycle breaks down each stage of the membership relationship. What I find is the most membership problems exist in one of the five lifecycle stages of awareness, recruitment, engagement, renewal, or reinstatement. Identifying the root membership problem can lead to a highly leveraged or efficient solution.

You can download a free whitepaper that outlines this concept using this link.

There is hope for a declining membership. Don’t give up. Step back and identify the key impediment to growth and work on fixing that nonobvious problem first.

1. The Fifth Discipline: The Art & Practice of The Learning Organization, by Peter M. Senge, p 58.
2. Ibid. p. 61
3. Ibid. p 63-64

Using Market Segmentation in Membership Marketing

Everyone talks about the importance of market segmentation, but I find that not everyone knows what they mean when they use the term.

Let’s start out by saying that market segmentation is a tool not an end in and of itself. You use market segmentation to help accomplish an objective like improving response rates by targeting messages or providing differentiated value to a certain group of members to enhance retention.

So before jumping into segmentation, the first step is to define what you want to accomplish and then see if the tool of market segmentation will help you achieve your goal.

If you determine that segmenting your market is appropriate, then it is helpful to further define what segmentation will be practical and useful to accomplish your objective.

Here is one way to classify the segmentation options available.

1. Linear Segmentation – This is as simple as splitting your market into two groups. For example, it probably would not be practical to create hundreds of versions of a monthly print magazine, but you might create two versions to serve some natural split in your membership like students and professionals, owners and operators, manufacturers and distributors. You might describe this as a “one to two” segmentation strategy.

2. Group Segmentation – This segmentation splits your market into specific groups or buckets of people. For example, based on state and local issues, you might provide separate marking messages driven by geography to enhance relevance. Or your segmentation might be driven by categories of products previously purchased. You might describe this as a “one to some” segmentation strategy.

3. Granular Segmentation – This type of segmentation results in unlimited options for your market. For example, based on a purchasing history an algorithm can be built to push a shopping cart of specific items that would be customized for each individual – think Amazon book offerings. Each member could receive a unique offering based on their preferences or previous behavior. Many marketers describe this as a “one to one” marketing strategy.

Granular segmentation is obviously more complex than linear segmentation. But that does not mean that one is better than the other. Remember, as with any tool, the key is using the correct tool for the job.

Segmentation can add to incremental costs for marketing or servicing a member. It also takes time to craft and maintain variable messages, services, and fulfillment operations. So before embracing a segmentation model, it is wise to evaluate both the positive effects it could have and the added costs it will create.

What examples do you have of successful segmentation programs? Feel free to share them here.