What is my Career? Membership Development is Relationship Marketing

Do you work in membership development, membership retention, or membership marketing? If you do, you may have trouble explaining what you do to others, including prospective employers outside the non-profit or association fields.

I believe the answer to the question, “what is my career?” is that you are a professional engaged in “relationship marketing”.

The textbook description of relationship marketing from Philip Kotler follows.

“Relationship marketing has the aim of building long-term mutually satisfying relations with key parties – customers, suppliers, distributors – in order to earn and retain their long-term preference and business . . . The ultimate outcome of relationship marketing is the building of a unique company asset called a marketing network. A marketing network consists of the company and its supporting stakeholders (customers, employees, suppliers, distributors, retailers, ad agencies, university scientists, and others) . . . The operating principle is simple: Build an effective network of relationship with key stakeholders, and profits will follow.”[1]

If that sounds familiar it is because that is what we do.

Kotler goes on to describe the progression in relationship marketing as moving people through eight stages of relationship starting with “Suspects” and moving to “Partners”.[2] Here are his stages.

  • Suspects
  • Prospects
  • First Time Buyers
  • Repeat Customers
  • Clients
  • Members
  • Advocates
  • Partners

All of these stages have relevance in membership development. However, in membership we tend to shorten the cycle and bring people into the membership relationship sooner. The relational marketing progression that I have recommended to use for associations is pictured below. You can read about it in my post titled, Five Phases of the Membership Life Cycle.

Here is the bottom line. If you are involved in membership marketing, you have a very valuable and transferable skill. You have developed hands on experience of establishing, building, upgrading, and retaining a customer. You are a relationship marketer.

[1] Philip Kotler, Marketing Management, Prentice Hall, page 13.
[2] Philip Kotler, Marketing Management, Prentice Hall, page 50.

Glossary of Direct Marketing Membership and Circulation Terms

In membership marketing, we have picked up many terms that had their origin in circulation development. So today we use terms like “doubling date”, “soft offer”, “CPM”, “CPO”, “nixies” and “conversion”.

I just came across a good glossary of these terms that are very helpful to know and use. It is more effective for us to speak the same marketing language. The glossary was put together by Circulation Management Magazine.

Take a look at it and see how many of them you use or know.

Membership Development Relies on Providing a Valuable Product

As a marketing professional, it is often a temptation to focus on promotional solutions to growth impediments. However, keep in mind that one of the four P’s of marketing is product.

You need to deliver value to succeed.

That’s why I like a quote I just read from Google’s CEO, Eric Schmidt. He says, “Innovation has nothing to do with downturns. A hot product will sell just as well in a recession as it will in a nonrecession . . . The strong companies understand this, and during a recession, they invest.”[1]

Speaking of recessions, my colleague Erik Schonher (he is the Erik pictured above) just published an excellent White Paper entitled, Ten Tips for Membership Marketing in a Recession. It provides some very helpful advice. I will highlight it in an upcoming post. But if you would like me to send you an electronic copy now, let me know.

[1] BusinessWeek, May 12, 2008, page 54.

2008 Marketing & Membership Conference

If you find this blog helpful, you may want to consider attending the 2008 Marketing and Membership Conference. As of today, it looks like registration is still open on the ASAE web site.

The conference is May 29 and 30 and is being held in the Baltimore Convention Center, Baltimore, MD.

I will be there and would enjoy meeting you. I still look like my picture (right). Marketing General, Inc. will have a table top booth at the event, so you can connect with me there.

What is Preventing Growth in your Organization?

In my May 6th post, I spoke about a recent workshop I ran with a group of non-profit religious organizations. My first point was to focus on the need for organizational growth and how marketing can be a tool that can help establish growth.

Our next area of discussion was how do we get an organization growing?

For one helpful perspective, we turned to Peter Senge. In his seminal book, The Fifth Discipline, one of his major themes is, “Don’t Push Growth; Remove the Factors Limiting Growth.”

I liken Senge’s concept to the garden with tomato and pepper plants I planted last week. My experience is that if I have properly prepared the soil and then water, weed, and fertilize the plants, then they will grow. However, if I neglect any of these, I will impede the growth or even kill my garden.

For my workshop audience I also shared a text from St. Paul which reads, “I planted, Apollos watered, but God gave the growth. So neither he who plants nor he who waters is anything, but only God who gives the growth” (1 Corinthians 3: 6-7). In other words, we are responsible for tending the garden, but we cannot “make” it grow.

Here is a real life example of what it looks like to remove the impediments to growth.

I met with an association this week that is experiencing a decline in membership. One of the programs that we have helped them with is to reinstate departed members. When I went through the results with them, immediately the impediment to their growth jumped out to us. The mailings that we did to recently lapsed members were generating between a 3.8% and a 4.9% response rate. And the telemarketing was producing over 10% response rates in paid credit card orders.

This meant that somewhere between 10% and 15% of their lapsed members did not actually want to leave!

What do you think their impediment to membership growth is?

Clearly there is not a problem of member value (lot’s of members wanted to come back), nor is it a problem of new member input (they added 30,000 members this past year). Their impediment was not effectively asking members to renew. Their renewal system had a leak and was draining growth potential from the organization.

I have found a secondary benefit of enabling growth by removing impediments is the focus it creates. An individual or an organization which is focused on solving one problem can usually do this effectively. We get lost when we try to do too many things.

Do you have any comments on this concept of removing impediments to enable growth?

Using Discounts to Enhance Membership Retention

The other day on the ASAE List Serv, Scott Oser shared some interesting experiences from his previous employment at National Geographic. He outlined the results of marketing tests this organization had done on moving new members through the first couple years of membership.

Here is what he reported.

“While I was at National Geographic, we looked at renewals many ways but one was as follows:

  • New subscribers--any one who had been a subscriber for less than a complete year

  • 2-3 year subscribers--anyone who had already renewed once but less = than 3 times

  • Renew b-4s--anyone who had already renewed more than 3 times

We created those groups based on the renewal trends we saw when analyzing response rates. Our most worrisome group was obviously the new subscribers. Their renewal rate was traditionally the lowest because the publication was not yet part of their regular life. The second most at risk group was the 2-3 year subscribers and obviously the highest retention occurred within the last group.

As with most publishers we offered a pretty deep discount to get new subscribers in the door. Through testing we found that hitting these people with a full price offer in their first year as a subscriber significantly hurt renewal rates. We therefore developed a step up pricing schedule where depending on source we held the low price the same for the first renewal, increased it slightly for years 2 and 3 and then increased it even more for all of the renew b-4s. I realize it sounds kind of crazy, but we were charging our most loyal subscribers the highest price because we knew they would pay it.”

Do you have any comments or feedback on this strategy?

Are Growth and Marketing Bad?

It might seem odd to start out a marketing workshop with this question, but it was how we got underway several weeks ago in a presentation I did.

That’s because, as I interact with the staff of some non-profits, I hear more often these days statements like, “we need to improve our services to our current members before we pursue growth”, “we already have the members who matter”, or related to marketing, “we don’t want to sell to our prospects and members they will be drawn to us by word of mouth if we only provide value.”

There is a kernel of truth in each of these statements, but they can also become the road to organizational disaster because they make stagnation and decline permissible instead of a warning sign it should be.

Here is the case that I made for growth in my presentation. Since the leaders I was speaking to were all associated with religious organizations, I decided to begin my discussion by drawing from the wisdom of some ancient religious texts.

The first taken from the Jewish Tanakh (an acronym for “Torah, Prophets, and Writings”) or the Christian Old Testament says: “And God said to them, ‘Be fruitful and multiply and fill the earth and subdue it and have dominion over the fish of the sea and over the birds of the heavens and over every living thing that moves on the earth.’”[1]

This is one of the first recorded commands. But even more, fruitfulness and growth almost seem to be woven into the DNA of mankind.

The second text says, “Now after a long time the master of those servants came and settled accounts with them. And he who had received the five talents came forward, bringing five talents more, saying, ‘Master, you delivered to me five talents; here I have made five talents more.’ His master said to him, ‘Well done, good and faithful servant.”[2]

Again, there is calling to take what we have been given and not bury it in the sand, but generate a good return or producing growth.

In a modern day context, Michael Treacy in his book Double Digit Growth puts the issue of growth this way, “Companies decay when they stop growing”.

I also shared with this group that there are some very practical reasons why growth is important. I highlighted some of these in my post Characteristics of Growing and Declining Associations.

When we look at marketing instead of growth issues, everyone can site poor, unethical, or ugly marketing examples. But these examples do not define marketing. Marketing is actually a tool – like a hammer. A hammer can be used to build a beautiful home or it can be used as a weapon. So the tool of marketing should not be judged by how one person or organization uses it.

Here is my operative definition of marketing: Marketing is the discipline of establishing a product and communicating it using the best message, to the best market segments, with the best marketing channels and techniques to maximize the return on investment.

Putting the best product in the best person’s hands in the best way should make sense for any organization.

Well that is my short defense of growth and marketing. Feel free to point out other perspectives.

[1] Genesis 1:28

[2] Matthew 25: 19 - 21

What to do about Declining Association Membership?

As I mentioned in my post, You Gotta Have Growth!, I just had the opportunity to do a seminar for a network of small non-profits at their annual meeting.

Based on the background I had received, I knew before I came to the meeting that many in this groups were struggling. The network was made up of committed and passionate leaders of organizations, but most were facing hard times.

But I really did not need the background. I seem to meet with non-profits and associations that are facing no growth or decline regularly. Lack of growth seems to be a virus that has infected the non-profit sector.

Tom Hood provided some compelling statistics that highlight this trend in his chapter in ASAE and The Center’s book, Membership Essentials.

“According to the U.S. Census Bureau, the average annual growth rate for associations was 3.8 percent – barely above the 3.2 percent real growth in the U.S. Gross Domestic Product (GDP) for the 10-year period between 1992 and 2002.”

He also noted that “The U.S. Chamber of Commerce’s Survey on the Future of the Completive Association found that 62 percent of associations actually performed below the average GDP rate, with a total growth rate below 20 percent for the same 10-year period. Yet the for-profit commercial sector grew by more than 52 percent during the same time frame.”

Tom concluded by saying, “While a few fast-growing nonprofit organizations are exceptions to this rule, most are struggling to maintain flat or slightly declining memberships.”[1]

In fact just this week, I read an ASAE post by Mike Van Alstine the Growth Coordinator for The National Exchange Club (NEC). He shared, “For the past 20 years the NEC has been on a consistent downward trend in membership of significant size, on average 1,000 members a year. So, if you follow that back to 1987, our membership was a little over 48K.” NEC membership now stands at 26,000 members.

Fortunately, for NEC, Mike reported that he had arrested this decline in membership (more on what he did later). But I have no doubt that it was a painful ride down to that point.

So what did I share with this network of discouraged non-profit leaders. I spoke on the topic of “Marketing Principles to Grow Your Non-Profit” and covered four topics.

1. Are marketing and growth bad?
2. Why do I need to grow my non-profit?
3. What is preventing my non-profit from growing?
4. How then do I grow my non-profit?

In the next couple of posts, I will go over what I shared and some of the feedback that I received.

[1] Membership Essentials, ASAE and The Center for Association Leadership, 2008, page 121.