Five Reasons We will Avoid Depression II

To keep my mind active, I spend time reading in three interest areas, economics, history and sports. So here is a chart that incorporates two of them -- history and economics. We have had and will continue to have some challenging economic times. But this table highlights why it will not be a reply of Depression II.

You can click on the picture to get a larger view.

Does the Washington Post have the Full Story?

The Washington Post headlined the struggles of associations today on the front page of the Business Section. The article presented a pretty dire story faced by many associations. The Post says,

“Reflecting the economic turmoil of the industries they represent, many national trade associations based in Washington are hemorrhaging members who either have lost their jobs, run a financially distressed business or said they need to spend their dwindling discretionary dollars on necessities rather than dues.” [1]

Clearly, associations serving industries in decline have a tougher road than others.

But it is also good to keep in mind that applying best membership marketing practices and meeting member needs during challenging times can and does still result in growth.

Here is one example spotlighted in a press release about the exceptional growth this year for the Society of Human Resource Management (SHRM). Membership has gone from 36,000 in 1992 to 250,000 this year making them one of the largest U.S. associations.

In part, SHRM attributes this rise in membership to the aggressive membership acquisition program that they launched in 1992 and have consistently maintained and improved over the years.

I think that Michael Treacy says in well, “Growth endures not because of fortuitous demand, a hot product, or any single tactic. Growth endures when management follows a portfolio of disciplines to ensure that a broad set of growth opportunities are identified and captured as routinely as costs are controlled and processes are improved.” [2]

Is your organization disciplined in it approach to growth?

[1] By V. Dion Haynes, Washington Post Staff Writer, Trade Groups Regroup, Monday, December 15, 2008; Page D01
[2] Michael Treacy, Double-Digit Growth.

Costco Membership Up 30,000 per Week and Renewals at All-Time High of 87%

Retailers have been hit particularly hard this season, but not retailers who offer membership. Costco is reporting big membership gains and strong membership renewals.

“At quarter-end on November 23, our paid executive membership topped eight million, an increase of almost 400,000 or 5% just in the last 12 weeks or about 30,000 per week increase in the quarter so again its still has been a big success for us. . . In terms of renewal rates as I said they continue strong, essentially our all-time high renewal rate. At Q1 2009 the numbers both for business, Gold Star end total were the same as they were at fiscal year end and rounding up a percentage point versus a year ago, business coming in at 92%, Gold Star at 86%, and total a shade about 87.0%.“[1]

How can you replicate this success in your organization?

[1] Costco Wholesale Corporation F1Q09 (Qtr End 11/23/08) Earnings Call Transcript

The Word on the Street

I have enjoyed emailing and talking with a number of marketers over the last few weeks. The constant question that I am asked is, “what are you seeing out there with other associations?”

It is a smart question, because according to McKinsey and Company,” the broader forces at work in the global economy mean that the underlying economics of strategies could continue shifting with unprecedented speed and scale. Such extreme uncertainty demands constant attention.”[1]

So here is what I am hearing from you and your colleagues. Exhibits, sponsorship, and advertising are being hit hard with sales declines and cancellations. Interestingly, I have yet to speak to anyone who is having a downturn in their membership results or budgets from the last few months of turbulence. In fact, most groups are on or above budget for membership.

I have heard one thing that concerns me. It appears some organizations are stealing from Peter to pay Paul. In other words, they are cutting membership marketing budgets to compensate for losses in other areas. I understand the reality of budgets, but I continue to maintain that winning and keeping members during the tough times is a solid strategy.

Again from McKinsey and Company, “To weather the storm, it will be necessary to identify anew who and where the profitable customers are and to prioritize the most effective marketing and sales vehicles for reaching them.” Or in other words, do not take money from what is working.

Please feel free to share what you are experiencing.

[1] David Court, The downturn’s new rules for marketers: The old recession playbook won’t work this time around, The McKinsey Quarterly, DECEMBER 2008.