Membership Marketing Planning for 2008

As the New Year begins, I thought it might be useful to outline the marketing planning methodology that I use to brainstorm and develop strategies for the associations for whom I do consulting. .

I presented this to my good friend, Chris Rogers, President of CDR Communications, at breakfast the other day and he also felt it was a good tool that would serve in his communications work for non-profits. So here it is.

We are all familiar with the four P’s – Product, Price, Place, and Promotion. They are established tools in marketing to help define strategy, but I find that they do not serve non-profits as well.

So I have adapted these for the association world to the following:

  • Market – Answers the question, “WHO?”

  • Product – Answers the question, “WHAT?”

  • Promotion – Answers the question, “HOW?”

  • Economics – Answers the question, “WHY?”

Let me make a few quick comments about each of these.

First, any sound marketing strategy needs to look at “Who” we want to reach. I have found it helpful to break most markets down visually using a triangle or pyramid.
At the top of the triangle are the best prospects for the product that we are offering. If properly defined, this is almost always the smallest segment. As we work our way down to less qualified prospects, we have increasing numbers of potential members or customers – hence the wider triangle. The goal of course is to be sure that we flow our scarce marketing funds first to the best prospects and then down the triangle to generate the best ROI.

Taking the time to carefully define who is in each market segment and how many people are in the segment is fundamental to planning.

Next, define “What” you are offering. Should your product be bundled or sold a la carte? What are your best price points? What is your unique selling proposition (USP) to each market segment? What enhancements can be made to the product to make it unique or more valuable? How does your product compare to the competition?

The third element is promotion or “How” we go to market. Unfortunately, many marketers start at this point without doing the earlier leg work. I sometimes, for example, hear that “direct mail doesn’t work for our organization.” It is possible, but it is more likely that the channel is not to blame, but the message went to the wrong person. You cannot sell ice to Eskimos.

Promotional decisions look at how best to connect the product and the market. What marketing channel should you choose (personal sales, telemarketing, direct mail, space ads, broadcast FAX, email, search engine ads, or retail)? Each channel offers unique advantages, cost structures, and response rates.

Finally, marketing planning requires an answer to the question, “Why”. Does the plan make economic sense? This involves looking at realistic projections of revenue and costs and calculating the Life Time Value, Cost of Goods Sold, and Maximum Acquisition Cost for a member or customer. I provided these calculations in a membership marketing context in my post, Know the Numbers on Membership Marketing.

I hope that these thoughts get your strategic marketing juices flowing. I wish you a joyous and peaceful New Year!

I will return to the Five Phases of Membership Marketing in January.

Membership Life Cycle – Part II

Most associations have done a good job at building market awareness. Over the years, members and prospective members learned about the association from doing research, a professor, or a colleague.

After awareness, recruitment is the second part of the membership life cycle. It is the process of getting a member to join your association. Or perhaps better described, it is the process of getting a member to 'try' your association.Membership in professional associations is typically what marketers call a 'push' product rather than a 'pull' product.

A 'pull' product is best defined by the famous statement made in the movie Field of Dreams 'if you build it, they will come.' There are some products that consumers will spend hours seeking out. They do not need a lot of marketing. There are web sites dedicated to tracking down a “pull” product like the Nintendo Wii .

As opposed to the Wii, membership tends to be something that needs to be sold or pushed in order to get returns. Did you ask for a professional membership for Christmas?

A pro-active plan needs to be put in place in order to attract large numbers of new members to an association.

I believe that the single biggest reason that many associations are not growing membership is because of this lack of focus and funding for membership recruitment. I looked at this issue in more detail in an article that I did for ASAE and Center’s Associations Now.

When membership recruitment is done properly, most groups can see their membership blossom and grow.

The National Middle School Association is a good example of the importance of 'push,' or active recruitment.

Jeff Ward, the Deputy Executive Director of NMSA said ‘the association believed that it had a high level of awareness in the school market, but for many years we had experienced a flat membership.'Then the association settled on an aggressive membership recruitment program designed to take membership over a five-year period from 17,000 members to over 31,000. Once the acquisition program was launched, numerous tests were made to optimize both to the NMSA membership product and renewal system. The end result was that over this five-year period, NMSA indeed grew by over 80% and reached the new membership level of 31,000 members.

A solid recruitment plan requires an ongoing learning mindset that uses testing strategies to optimize three key areas:

  • The marketing message - To determine what value proposition is most attractive to prospective members.

  • The membership offer - To determine what price points, benefit packages, and special incentives will attract members.

  • The target market - To determine what market segments or lists of prospective members are most responsive to the message and offer.

Next we will take a look at what you do with the new members once you get them.

Five Phases of the Membership Life Cycle

We have just put out a new white paper titled the Membership Marketing Life Cycle. It highlights the five major phases in the membership lifecycle:
  • Awareness
  • Recruitment
  • Engagement
  • Interdependence
  • Renewal
Over the next few posts, I would like to highlight each of these phases in the membership lifecycle.

First, let’s take a look at awareness. Membership marketing starts with one very important question. Do prospective members know who you are?Awareness is the measure of how successful your branding efforts have been to gain share of mind in your target audience. Until someone knows you, they are not likely to become a member or a customer. Or put another way, how does the bee find the flower?
Good direct marketing alone is not the best or most effective tool to build awareness. For example, the United Professional Sales Association (UPSA), desired to expand its strong and thriving local organization beyond the Washington, DC area. Members of UPSA attended meetings and established meaningful networking relationships.
However, when UPSA conducted a national membership development campaign, the results were less than they hoped to receive. The promotion was targeted to an audience that tracked with local membership. The challenge appeared to be one of awareness. The market that they sought to reach did not know and recognize their brand.

Fortunately, there are some tools available to membership marketers to help build awareness. These include:
  • Search engine optimization
  • Search engine ads
  • Public Relations
  • Word of Mouth Marketing
And when awareness is raised in key constituencies, results will follow. The U.S. Naval Institute (USNI) provides a good example this. USNI just completed a very strong membership growth year, but this growth was supported by a series of videos titled, Americans at War that highlighted the real life stories of their members. These video testimonies were so powerful that they went from You Tube to being picked up on run on PBS stations across the country.

How do you know if awareness is the challenge facing your membership marketing? The best way to find out may be to conduct a small test marketing effort to the prospects that you feel would be interested in joining your organization. If the returns are acceptable, there is enough awareness to move forward. If not, it might be time to cultivate a higher level of awareness before investing funds in selling.

Frequency of Contact in Membership Marketing

In my earlier post this week on Sensible Branding, I emphasized the importance of frequently communicating your brand to your target audience.

I thought that it might be helpful to follow that up with some actual test results.

Earlier this year, we conducted an A/B split membership acquisition test for an organization where we added a follow up email promotion two weeks after our mailing dropped to a portion of the file. The email carried the same graphics and special offer that was included in the mailing.

Here is what we found. The prospects who receive only the mailed membership invitation responded at a .57% response rate. Those who received both the mailing and the follow up email generated a total response rate of .97%.

Adding the email cost very little, but raised overall response rates by 68%. That’s adding 3.9 members for each thousand contacts. Let’s say the dues rate is $200, then the additional email generated $780 more dues revenue for each thousand people contacted. Not bad.

Within reason, good membership marketing requires frequent contact with prospects, ideally using multiple channels.

Sensible Branding

I have to confess something. I have developed negative feelings toward “branding”. Here’s why. With some associations, branding has become an excuse to return to the deadly practice of “if you build it they will come”.

The branding process can stop pro-active marketing in its tracks or can become the end instead of the means to communicating with members and prospects.

After all, who wouldn’t rather spend time focusing on all of their attributes and what members and non-members “really” think about them instead of selling.

It reminds me of the humorous saying: “Enough about me talking about me. What do you think about me?”

But flying back from The Great Ideas Conference and catching up on my reading I was greatly encouraged to read an article that presented a very sensible and smart perspective on branding.

The article appeared in the December issue of Associations Now and was written by one of keynote speakers at Great Ideas Conference, Bruce Turkel.

Turkel defined branding this way, “A brand is not a name, a logo, or a masthead. A brand is the promise of a relationship—the relationship that you build with your customers when they agree to do business with you (page 28).” In many cases, the brand can be described in just a word or two.

He goes on to emphasize that of course you must deliver a top notch product as a baseline for success, but beyond having top products “the most important thing you have to do is to make your customers feel good about the time and money they spend [with you].”

Furthermore, he says, “In order to keep your brand vital to your members, your organization has to be the cauldron where the great new ideas are always bubbling. Like the mama bird catching fat worms to drop into the waiting mouths of her hungry hatchlings, it’s your job to search the world for the best practices and bring them back to your members, often before they even realize they need what you’re offering (page 29).”

Essentially, Turkel is describing great, innovative products and experiential customer service.

But here is the part where some organizations fail and where I think Turkel get’s it right. He emphasizes that once you have a brand, “You must constantly and consistently communicate your brand value. Only a constant message will break through the clutter of all the communicators trying to get your target’s attention. And only a consistent message will present your message reliably enough to stick. Ironically, this doesn’t give you license to be repetitive. Instead you have to regularly refresh your message so it doesn’t bore the very people you’re trying to excite.”

He has it right. A brand does not magically make the world come to your door. Instead, it is the foundation from which to market. Once you have a sense of the promise you can make to your members and prospects in products and experience, you need to aggressively take it onto the street, test it, adjust it, and frequently communicate it.

Ultimately it is not your brand that funds your mission. It is the dues and member purchases that allow you to fulfill your purpose.

What do you think?

More Dues Increase Findings

I wanted to share a few more items related to the dues increase survey research that we conducted this fall.

First let’s take a look at how associations justify raising dues to their members?

  • 54% of associations indicate keeping up with inflation is the justification used to support the dues increase.

  • 48% report that the addition of new programs or services is the justification used to support the increase.

  • Close to one-quarter mention increasing advocacy as justification for an increase in dues.

Directionally, the proportion of associations offering inflation as justification for a dues increase decreases as the percentage of the dues increase grows. However, associations citing the additions of new programs and services are significantly more likely to raise dues 11% to 20% and to have provided a special offer as an incentive to renew.

Next, let’s look at how the dues increase announced to members?

  • 44% of associations have announced their most recent dues increase through a letter or e-mail to the association and/or through a letter in the renewal notice.

  • 40% of associations announced the increase through an article in the association newsletter or publication.

  • If the announcement was made via some form of written communication, associations are significantly more likely to provide a special offer for joining/renewing.

Finally, here is how associations handled the timing of the dues increase and notification of members.

  • About one-half of the associations made the dues increase known to the membership within three months of it taking effect.

  • 30% of associations announced the change in dues four to six months before it was implemented.

  • Only about 10% of associations made members aware of the increase a minimum of six months ahead of time.

  • Associations planning to raise dues by 21% to 30% are more likely to announce this increase much further in advance.

  • Only about 16% of associations provided some type of special offer to lessen the impact of the dues increase. Those who offered an incentive were significantly more likely to be implementing a dues increase of 11% to 20%.

My goal in conducting this research was to provide associations with a benchmark to consider when raising dues. Clearly, every association is different and needs to consider the environmental and political factors that they face. I hope you find this information helpful if you are considering a dues increase.

Surprises from the Dues Increase Survey

I wanted to share the biggest surprise coming out of our dues increase survey that we completed this fall. The study shows that there is a far greater price inelasticity in dues levels than is commonly believed.

As I mentioned in my last post, these results are from responses of 324 association professionals who completed our dues increase survey.

In the verbatim responses to the survey, the vast majority of responders recommended a dues increase strategy of small regular increases. This is something that I would probably also have recommended to associations.

However, the data from the survey revealed a different outcome on the impact of dues increases when looking at membership counts. As the chart here shows:

  • Associations raising dues by 11% to 20% overall were most likely to report membership growing by over 10% than those who had lower or higher dues increases

  • Associations raising dues by 11% to 20% overall were the least likely to see a decline in membership of under 10%.

The survey did show that there is a limit to the increase that a membership can sustain.

  • Associations raising dues by dues by 21% to 30% were most likely to report a membership growing by over 10%.

  • Associations raising dues by 21% to 30% were most likely to see a decline in membership.

Not surprisingly, the best revenue outcomes were also associated with dues increases of 11% to 20%. These findings show that association membership will support a dues increase as high as 11% to 20% and not negatively impact membership counts or revenue. However, anything over 20% shows a diminishing rate of return, with larger decreases in membership and acquisition rates, and declining renewal rates.

The lesson is to rely on the data, not just our intuition, when establishing pricing or any other marketing initiative. It also shows that associations that raise dues at lower percentages may be sub-optimizing their revenue.

By the way, if you would like a copy of the dues increase report, please send me an email and I will be happy to forward it to you.