The Results from the Association Dues Increase Survey

To help build an understanding of the best practices related to raising membership dues, we did a primary research project this fall of association executives. The results are in and over the next week or two; I wanted to highlight some of the findings from our research and provide some commentary on what we found.

The first portion of the survey that I wanted to take a look at is how often associations raise dues. Here are some of the findings:

  • Two-thirds of association respondents indicate dues are raised as needed.

  • 18% of respondent organizations raise dues annually.

  • 34% of organizations have raised dues this year.

  • Almost 20% last raised dues in 2006 and about 15% last raised dues in 2005.

  • Associations primarily offering organizational memberships are significantly more likely to have raised dues in 2007.
Since the most common answer to when associations raise dues is “as needed”, there does not appear to me to be a pricing strategy employed by most associations. Instead, it looks like dues or price increases are driven by accountants not marketers. If dues are simply raised as needed, then the dues increase serves to back fill program funding needs.

Dues are the “price” that an association charges for membership. And price is one of the 4 p’s of marketing. It is the only one of the 4 p’s that actually generates revenue.

So ideally, dues rates should be part of the marketing equation for an association. They should not be raised simply to fund increase expenses or shortfalls from other programs. Dues should be strategically set to maximize either the number of members (lower prices) or the net revenue to the association (higher prices). This is known as price elasticity. There is an optimum price or dues rate for each association.

Let me know your thoughts on this. Should associations price membership to maximize their strategic goals?

By the way, for those of you who like the statistical backing for the survey, here is the methodology. The survey went to 10,347 association executives and we had 324 responses. The response rate for this project was 3.1%. This sample size of 324 carries with it a margin of error of +/- 5.4 percentage points. That means that if all the recipients were surveyed, we could expect that the results of that survey would not vary more than +/- 5.4 percentage points at a 95 percent confidence level.

Thanksgiving Message

I find it very easy to shift from an attitude of gratitude to one of entitlement. That’s one reason why celebrating Thanksgiving is so important.

This weekend our Thanksgiving church message highlighted this for me. It came from the text:

“What do you have that you did not receive? If then you received it, why do you boast as if you did not receive it?” [1]

What does this mean? I think it points out that life is a gift that we receive. We do not control when we come into the world or the nation where we are born or the basic skills and intelligence we possess. We receive all of them.

When I lived in Honduras, CA, I daily walked past a woman who was blind. She did not speak, but she had her hand out requesting money. Each day that I passed her, I pressed a coin into her hand. I have often thought, “Why did I have the gift of sight and the benefit of being born in this country?” I do not know. But I do know that the blessings I enjoy are things that I “received” and did not earn or deserve. I should be grateful.

[1] 1 Corinthians 4: 7

A Big Membership Decision – College

The past year has been a lot of fun. I have been able to watch my son – who is a high school senior -- be marketed to by hundreds of colleges who want him to “join” them as a student.

Joseph and I talked this weekend about what has worked best to attract him to particular colleges. Here are the three elements that were most effective in encouraging him to actually apply to certain colleges.

  • Consistency – One contact did not work for us. Over the year we have collected a large laundry basket of mailings from colleges. Those who sent one letter got a quick look, but those that had a steady stream of communication were more successful in making us aware of what they had to offer and at least helping us reach a point of considering them for a visit.

  • Personal Contact – Before the process began, there was one in-state school that we wrote off from consideration, but they actually turned us around and my son is applying there for admission. How did they do it? Through personal contact. They consistently had students from the school calling my son urging him to take the next step by requesting an application, scheduling a visit, sending them SAT scores, etc. They won us over by making him feel that they were interested in him as an individual.

  • Enthusiasm – Once the school got us to the campus for a tour or interview, hearing from an enthusiastic speaker or guide and talking with enthusiastic students had a big impact. The presenter at my Alma Mater, Dickinson College, took the prize for the most inspiring presentation. But casual conversations with students who were passionate about what they were studying were also memorable.

As I always argue on this blog, taking the experience of one person and projecting it on everyone is NOT a good idea. However, can any of these sales or marketing elements be applied to get people to join or continue membership with your association?

By the way, thanks to
Matt Baehr for the inspiration for this post. On his blog, he challenges several of us to look at things from a different angle. So I took a look at being marketed to as a consumer instead of marketing for an organization. Good idea Matt.

Wisdom for Human Resource Decisions

We deal with human resource and human relationship issues every day. Here is a good quote from a classic by Peter Drucker.

“Fast personnel decisions are likely to be wrong decisions. . . People-decisions are time-consuming, for the simple reason that the Lord did not create people as ‘resources’ for organization. They do not come in the proper size and shape for the tasks that have to be done in organization – and they cannot be machined down or recast for these tasks. People are always ‘almost fits’ at best. To get the work done with people (and no other resource is available) therefore requires lots of time, thought, and judgment.”

Peter F. Drucker, The Effective Executive, p. 32 & 33

No Good or Bad Renewal Rates

Because of the impact of differing business rules among associations and environmental factors, you cannot compare one association's renewal rate to others. There really is not a good or bad renewal rate. Instead, the purpose of calculating renewal rates is for an association to establish a standard to monitor the improvement or decline of membership retention.

Variables that limit the ability to benchmark renewal rates across associations and determine a "good" or "bad" renewal rate include the following:

  • Individual membership organization versus trade association membership. Associations that offer an individual membership as opposed to associations with institutional or company memberships typically will see lower renewal rates. ASAE reports that the mean renewal rate for is 83% for an individual membership association and 91% for a trade association.[1]

  • Member-paid dues versus company-reimbursed dues. Associations that serve a market where dues are reimbursed or paid for by an employer will see better renewal rates than dues paid out of pocket by individuals. Decision to Join reported that “two thirds of those who are now members of any association and have dropped an association membership in the past say that their employers stopped paying dues.”[2]

  • Growing versus declining memberships. Associations with a rapidly growing membership tend to have lower renewal rates than groups with a steady or declining membership. This occurs because growing associations have a larger proportion of first year of members and first year members typically renew at a much lower rate than longer term members.

  • Incentive-generated members versus full-price members. The stronger the incentive used get members to join an association, the lower the renewal rate will be when compared to members who joined with no incentive. Members who receive a complimentary membership when they attend the annual meeting, for example, will not renew as well as members who join at full price.

  • Transient industry versus stable industry. Associations that serve highly transient markets, where job turnover is high or members are moving out of the industry, will see lower renewal rates than a steady marketplace. A job change for an individual association member or a merger for a trade association member raises the likelihood of not renewing membership.

  • Short membership grace period versus longer grace period. Business rules on when a member is considered lapsed varies between associations. Some associations count members as renewing if they receive payment within 90 days of expiration. Other associations lapse a member on expiration and consider a payment 90 days after expiration to be a membership reinstatement.

Therefore, if an organization has an individual membership where dues are not reimbursed by an employer, is rapidly growing through the use of substantial new member incentives, is focused on an industry that members move in and out of, and has business rules that require ending an unpaid membership on the expiration date, then the association will probably have a what someone might characterize as a very low renewal rate.

But that does not mean the membership marketing staff is doing a bad job of serving and renewing the members. And comparing this organization to others that do not have the same factors is not helpful. Instead the organization should use the current rate as a benchmark and work to put new tests and programs in place to move the rate higher.

[1] 2006 American Society of Association Executives (ASAE) Policies and Procedures in Association Management: A Benchmarking Guide, Volume 1 Membership, p. 36.
[2] DTJ, ASAE and the Center, p.63.

One Thing I Do Not Like about DTJ

As I mentioned in my last post, there is some great insights in ASAE and the Center’s Decision to Join (DTJ).

As you may recall, DTJ is book taken from a survey that included 18 individual membership associations and 16,944 survey respondents. The survey went to the associations’ current members, lapsed members, and prospective members.

However, one finding that I do not agree with is DTJ’s contention that prospects “more important” reason for joining an association is to support the “community of interest”. I think that this conclusion can lead membership marketers in the wrong direction when it comes to asking new members to make a decision to join.

Here is what DTJ says: “the decision to join an association reflects an expanded understanding of what constitutes a benefit. It goes beyond the self-oriented assessment of the value received by the individual making the decision to incorporate a more other-oriented assessment of value generated for the community of interest.” Based on a comparison of two separate questions where personal benefits of joining received a mean score of 3.4 and benefits to the field received a mean score of 3.6, the study concludes “that the benefits for the good of the order are more important than personal benefits” (page 6).

Clearly, we all are influenced in decisions for joining or buying any product in part because what the decision will mean for society. But I believe value, price, and usefulness are influencers that impact our buying decision more than joining for the good of others.

I’ve come to this conclusion based on what the decision to join research actually reported and on the results of membership marketing efforts for many associations over the years.

Here are statistics from DTJ that would support this value based joining contention.

  • Of those who responded to the survey and had dropped a membership, the primary reason reported by 56.1 percent of the responders said that they dropped membership because they “did not receive the expected value to justify the cost of the dues” (page 81). If members do not join for value, they sure leave for lack of value.

  • When asked how important various personal benefits to joining were, “access to the most up to date information” received a 4.22 rating and “professional development” received a 3.91 rating. This compares to a 3.85 rating for “”promoting standards” as the highest rated item for joining for the benefit of the profession (page 82 and 83). So information and professional development were the top rated reasons for why members joined.

  • One could argue that the highest rated “benefits to the field” as defined by DTJ are really personal benefits. To do their job, members need someone to provide “standards and guidelines” and the “gathering analyzing, and publishing data on trends in the field”.

In addition to what DTJ reported, my experience in testing messages in new member solicitations also supports the value based membership appeal. Regularly – typically at a board’s direction – we create messaging around joining an association for the good of the profession. And regularly this message loses in head to head tests to a benefits oriented theme focused on “here is how membership can benefit you in your career.”

Let me conclude with a couple of caveats to my point. First, I always include an altruistic message in membership solicitations. Joining for the good of the field is an extra benefit that warrants mention and can serve as an additional motivator to joining. Secondly, I believe that the longer a member remains with the association and the more involved the member becomes, the more likely he or she becomes to staying with the association for the good of the community. However, in DTJ, we are not asking why an involved member stays, but what the basis of the decision to join is.

I believe the bottom line is that we sell membership on value. Do you agree with me?

Six Things I Like about DTJ!

Over the past couple of months, I have had the opportunity to look at ASAE and the Center’s Decision to Join with colleagues and clients.

There are a number of continuing questions that come up in discussions about association membership that this book helps to clarify. Here is my list of the issues where DTJ provides some help and confirmation to what I have also seen in the marketplace.

  1. DTJ says that those who are involved as volunteers in an association are much more enthusiastic about the value provided than are those who are not involved. “Those who are not involved lie perilously close to former members in their overarching assessments of the value they derive from associations. If former members are thought of as being dead, the uninvolved are close to comatose.” (Page 4) As you will note in my post yesterday (Growth through Membership Retention), this finding rings true with other data that I have seen and is an encouragement to get members involved as volunteers and customers with an association.
  2. DTJ says the “approximately half of them [lapsing members] indicate their reasons had more to do with career and other life changes than with the performance of the association. This means that those who worry about their retention rates get a 50 percent discount on their current distress levels.” (Page 3) In other words, no one will ever renew everyone and a plan is needed to add new members -- The Cost of the Wrong Membership Marketing Strategy.
  3. DTJ says not to worry about younger members. “A considerable body of evidence indicates that entry-level people have always been slow to appreciate the value that associations off until their career pursuits settle in as they reach their late 20s.” (Page 4) See my post and the debate related to this titled: The Ageless Question.
  4. DTJ says that in rank order the magazine or journal, conference or meetings, e-newsletter, or association web site is where current, former, or never members “prefer to receive information about your profession or field.” (Page 23) Members still want paper.
  5. DTJ says that the single biggest reason for dropping membership is that the member “did not receive the expected value to justify the cost of dues.” (Page 24) This finding emphasizes the need to provide excellent member benefits in order to keep members with the association -- Tangible Benefits Matter.
  6. DTJ says that the three most important personal benefits in your decision to join are: “a. Access to the most up to date information available in your field, b. Professional development or education program offerings, c. Opportunities for you to network with other professionals in your field.” (Page 82). This sounds like the classic information, professional development, and networking that we all include in our membership solicitations.

    What did you find helpful in DTJ?