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