Does participation drive retention?

There were some very thoughtful comments on the July 25th post related to the connection between membership participation and membership retention.

The posts raised questions like:
  • Are participation and retention connected or do members just renew out of a sense of duty?

  • Will that sense of duty be compelling enough to keep the rising generations engage as members?

These questions reminded me of a study we had done for a client a while back. We used data analytics to compare member activity against renewal rates. The reason I love data analytics is that it is research with a 100% response rate. It measures real behavior instead of attitudes or intentions.

In analysis we ran a multi-linear regression analysis comparing members who renewed with those of lapsed.The findings were fascinating because in every case, an interaction or transaction (participation) was a positive predictor of renewal for this association.

  • If a member was part of an optional local chapter, he or she was more likely to renew.

  • If a member joined a special interest group, he or she was more likely to renew.

  • If a member attended an annual convention, he or she was more likely to renew. In fact, the more conventions attended, the higher the renewal rate.

I have found this pattern repeated with other associations.

Karen Gebhart of the Aircraft Owners and Pilots Association (AOPA) spoke with me at an ASAE meeting and noted a corresponding pattern among their 400,000+ members. AOPA member record tracking found that members who called the association’s '800' number compared to those who did not showed an improved retention rate.

The bottom line is that research shows that an important predictor of membership retention is some level of participation or interaction with the association. A sense of duty to be a member is not enough to keep a member now and will not likely be enough in the future.

An association that actively engages members -- at almost any level -- is one that is more likely to enjoy higher membership retention.

Racing to Win

Last week I started reading Joe Gibb’s book, Racing to Win: Establish Your Game Plan for Success. Joe Gibbs is the only coach in history who has won major championships in two world-class sports. His teams have won the NFL's Super Bowl three times and NASCAR's Winston Cup twice.

Two early impressions from the book are Gibbs focus on humility and teamwork.

While he was coaching the Redskins to Super Bowls, he was on the verge of bankruptcy because of some real-estate partnerships that went bad. He attributes this failure to being over confident in an area where he knew very little and not seeking the advice and involvement of his wife and financial advisors.

His focus on teamwork is the second impression that jumped out of me from the book. Gibbs success seems to be directly related to his ability to build effective teams. In the paper today, for example, it was described how he just worked through a conflict with his racing team. He said: “At times things are going to happen, but good teams and good teammates work through it.” TWP July 29, 2007, E3

Lessons for me from the book so far? A good dose of humility and teamwork will go a long way.

How much are you spending?

Back on July 5th, we had some dialog on my post related to how much an association in theory could spend to acquire a new member – the Maximum Acquisition Cost (MAC). The MAC calculates the long term margin a member generates and in theory one could spend the entire margin to acquire a new member.

I though it would be interesting to take a look and see what individual membership organizations (IMO) and trades actually spend on membership marketing. To find out, I took a look at ASAE’s Policies and Procedures in Association Management, Vol. 6.

According to the book, the median percent of the total budget allocated to all marketing is 4% for IMO’s and 5% for Trades. Of this budget, 20% goes to “Membership Marketing”. Membership marketing is not defined as acquisition, retention, or renewal.

Based on this data, we can calculate that IMO’s are only spending 0.8% of their budgets on membership marketing and Trades are spending 1%.

I am surprised that any organization can sustain itself, let alone grow with this level of spending on new members (or for for-profits) on new customers.

What do you think?

The Ageless Question

In our continuing research on why people join, I recently came across an interesting scholarly article on the average number of memberships held in voluntary organizations based on a member’s age.

It sheds some interesting light on the ageless association questions of getting “younger” members and also on the generational influences on membership patterns.

To generate their analysis, the authors aggregated data from 12 national surveys done over a 20 year period – 1974 to 1994. After reviewing each survey, they concluded that the pattern of the relationship between age and number of membership held by an individual has not changed. In other words, different generations during this time frame did not display different joining patterns.

However, from this aggregated data, the researchers did find that the likelihood to be a member did follow an age pattern. Not surprisingly, the average number of membership held by an individual was lowest from ages 18 to 29 and also for those over age 70.

From age 18, the average number of membership held by an individual rose steadily to a peak at ages 40-44. However, when the study controlled “for gender, self-perceived health, education, work status marital status, presence of children in the household and race” there was an interesting shift in the data.

When controlling for these factors, the peak age of membership rose to 55-59 and remained high through age 85. So for example, those who remained healthy and employed, continued their memberships.

Finally, the study excluded union and church related memberships to see if these memberships impacted the age curve and it was determined that the age tendency were consistent with and without the inclusion of these membership categories.

What are the implications of this research on membership marketing?

I have two thoughts, but am interested in what you think

1. It may indicate that we worry too much about recruiting younger members. The research would indicate that the likelihood to join an association is associated with a season in life. Twenty year olds might never be big joiners.

2. The research indicates that different generational groups did not display different joining tendencies. The same age groups that joined in the early 80”s as joined in the late 90’s.

The article this information was drawn from follows.

The Effects of Membership in Church-Related Associations and Labor Unions on Age Differences in Voluntary Association Affiliation

The Gerontologist
Vol. 41, No. 2 250-256
Jon Hendricks, PhD, and Stephen J. Cutler, PhD

Back in the Swing of Things

We enjoyed a great week away with family and friends. I think that I was 2 for 3 in softball.
This week, I will have some interesting information to post related to a 20 year review of membership surveys and what they show us about the typical age of members. Has the age of members changed over time?
Stop back and see what one researcher has reported.

How to Arrest a Membership Decline

For a long time, I have wanted to write a piece on the four big challenges that associations face in growing their membership. So I was really pleased when ASAE asked me to write on this topic for the July issue of Associations Now. They titled it, Marketing Meltdown No. 1: How to arrest a membership decline.

I have attached a link to the article below. Please pass on your feedback.

Membership is Good for You!

One of the questions that we ask around the topic of membership marketing is: “Why do people join?”

I believe that there are practical reasons members will join – information, discounts, and advocacy. But I also think we all realize that there are deeper “soul” issues of why we come together. What does membership and community offer at a deeper level than material benefits?

A colleague and I are beginning to look at this issue more systematically.

Today, I came across a scholarly article entitled: Continuous Participation in Voluntary Groups as a Protective Factor for the Psychological Well-Being of Adults Who Develop Functional Limitations. The authors determined that continuous participation in certain types of voluntary groups can help ease the negative psychological effects of the onset of functional limitations.

The study looked at participation in three types of voluntary organizations (recreational, religious, and civic) and how each helped with well-being.

The study specifically noted that men who were engaged in recreational groups and both men and women who were engage in religious groups showed less symptoms of depression and better levels of feelings of personal growth, respectively.

What are your thoughts on the concept of membership and well-being?

Journal of Gerontology: Social Sciences
2007, Vol. 62B, No. 1 S60-S68
Emily A. Greenfield and Nadine F. Marks

Gathering Data through Market Testing

In addition to data analytics and market research, successful associations also let members and prospects vote with their wallets by maintaining a sound promotional test strategy. They let the market drive strategy and tactics.

Marketing tests provide real data that can substantially impact results and strategies. A test can help an association define the most effective messages, promotional schedules, pricing, marketing media, and product packaging.

One association, for example, recently concluded a test on the impact of a new-member dues discount. The association evenly split prospects in a membership acquisition mailing. Half were offered membership at full price and the second half received a $10 dues discount. The group receiving the discounted membership dues offer had a 40 percent higher response rate than the group offered the full dues rate. This added response more than paid for the discounted dues.

But the association examined the data beyond the front-end response rate. They tracked the members in both the full price and discount group over two full renewal cycles. After two years, they found that the discount group still out numbered those originally joining at full price by 35 percent.

By capturing, analyzing, and using data the association was able to effectively boost its membership acquisition program by more than 35 percent.

My question to you is, why don't more associations incorporate tests into their membership marketing plans?

Research for Membership Marketing

Once a solid membership benchmarking tool is established (see post on July 9), the second major function for capturing data for an association should be research Well-run associations are full of questions. Three major techniques are useful for associations to capture actionable research data from the market.

1. Primary Research

Primary research involves listening to members and prospects through formal quantitative research techniques such as surveys and through qualitative tools such as executive interviews, focus groups, and even conversations over a cup of coffee. This helps an association understand the attitudes of members. In 7 Measures, for example, staff members from Associated General Contractors explain the benefit of posting surveys on AGC’s website that ask members a variety of questions about potential products and services. “We know who the product is for, who the market is, before production even begins,” (p. 42) said one employee.

2. Secondary Research

Secondary research focuses on scanning the environment for new trends and opportunities. At the American College of Cardiology, two groups conduct environmental scanning. The staff group tracks trends in five major areas including demographics and economics. A member group then adds insights and perspectives to this analysis to help develop annual initiative and long-term strategic goals for the college (p. 40).

3. Data Mining

Data mining takes advantage of the directional information found in the associations database through the tracking of purchasing and behavior patterns. What members actually do, instead of what they say they will do is some of the most predictive research an association can gather.

The Society for Human Resource Management, for example, uses extensive database analysis. “We look at what books they’re buying, what they’re doing, what questions they’re asking, what resources they use", (p 41) said one member of the SHRM staff.

Benchmarking Your Membership Marketing Program

As I mentioned on Friday, ASAE & the Center for Association Leadership in the book 7 Measures of Success documented that remarkable associations collect and use data to build success. One measurement tool that I believe is fundamental, but not fully utilized in the membership area, is benchmarking.

There are five key benchmarks for a membership program that should be captured each month and they can be presented on a single sheet of paper in what is called a “Membership Dashboard.”

Just like a car dashboard gives the driver the key data that’s needed to keep the car on the road moving forward in a safe manner, a membership dashboard highlights key statistics for an association.

The membership dashboard includes the key items that drive the growth or possible decline of an association’s membership. These will include:
  • Total Membership
    Current Membership
    Membership the same month in the previous year
    Percentage increase or decrease in year-to-year membership
  • New Members by MonthCurrent New Members
    New Members the same month in the previous year
  • Membership Conversion (Renewal of First Year Members) by MonthFirst year members eligible to renew
    First year members who actually do renew
    Conversion renewal rates (renewing new members / eligible to renew new members)
  • Year Two and Subsequent Renewals (Y2+) by MonthY2+ members eligible to renew
    Y2+ members who actually do renew
    Y2+ renewal rates (renewing members / members eligible to renew)
  • Total Renewals by Month
    Total members eligible to renew
    Total members who actually do renew
    Total renewal rates (see post from July 5th for assistance with calculating renewal rates)
If an association has different levels or types of membership, the top level of the dashboard can show the aggregate membership of the association. However, the dashboard also can include additional spreadsheet tabs for other categories of membership.

Once a dashboard is in place, a wealth of information will jump off the page of each month’s report. For example, the dashboard will identify where membership is “leaking” members. Is it first-year members or multiyear members? And why is membership growing? Is it because new members’ input is up or because of increased renewal rates?

I have put together a sample dashboard that you can access with the link below or you can e-mail me for a clean Excel spreadsheet of the dashboard.

(Click here for a sample membership dashboard.)

What are you doing 07/07/07 at 7:07 tonight?

Here is something interesting. A friend of mine, Steve Whitacre, shared the following on his Blog: "Tonight, on July 7, we will witness an interesting numerical moment: at seven seconds after 7:07pm (if we watch closely), the time could be written like this:"

07:07:07, 07/07/07

Improving Marketing with Data

The work released earlier this year by ASAE & the Center for Association Leadership in the book 7 Measures of Success has found a clear correlation between successful associations and those that built the organization around the collection and use of data. The book reported, “If there’s one phrase that sets remarkable associations apart from their counterparts, it’s ‘Data, data, data.’ They gather information, analyze it, and then use it to become even better (p 38).”

For most association membership and marketing professionals, the empirical findings of the power of data have confirmed what we have been saying for years. Associations work best when leaders build them on a strong data foundation.

The renowned marketing professor Philip Kotler, in his book Kotler on Marketing (The Free Press, 1999), expressed this truth best. He said, “Successful companies [or associations] 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.”

In fact, this concept of analyzing and using data goes back far before Kotler. In 1923, Claude C. Hopkins wrote Scientific Advertising (NTC Business Books, 1991), in which he declared, “The time has come when advertising has in some hands reached the status of a science.”

His fundamental thesis: “We learn the principles and prove them by repeated tests. This is done through keyed advertising by traced returns…We compare one way with many others, backward and forward, and record the results. When one method invariably proves best, that method becomes a fixed principle.”

As we strive to build our organizations, what data should we collect and use?

I believe that there are at least three three major categories of data collection that successful associations should use. We can look at them over then next few days. Feel free to add your recommendations also.

Know the Numbers on Membership Marketing

'Know the numbers' is the best advice that anyone can give you when it comes to membership marketing. Knowing the numbers can help answer key marketing questions like: 'What is the value of a member?', 'How much can I afford to spend to obtain a member?', and 'What is my membership retention rate?

The following formulas are provided as a handy reference tool for membership marketers to help them take a strategic look at the economics of membership.

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 - 15)/100 = 90% Renewal Rate
Average Tenure
  • How long on average do members stay 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

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