Here is a thoughtful quote on which to end the year.
“There are only two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle.” 1
I wish you and those you care about a peaceful and joyful 2010.
1. Albert Einstein (German born American Physicist who developed the special and general theories of relativity. Nobel Prize for Physics in 1921. 1879-1955)
Clearly the Freemium concept is one that is growing and can make sense depending on your situation. The concept is based on the economics of abundance. Here is a video that outlines this economic concept.
The Freemium Blog lists four characteristics that would indicate if an organization could successfully use the Freemium model.
1. You have to have a quality, free product that people would want.
2. Your product should have little or no marginal cost. For example, offering online only membership might be done with very little marginal cost.
3. You need a big potential audience. Only a percentage of those who take the free offer will convert to a paid membership, so you need to be sure the economics work for you.
4. You have to have premium membership or additional products to upgrade the member to from the free membership.
Here is another article that I thought you might find of interest on calculating the economics behind various types of membership/customer relationships. It is presented from a for profit, web membership perspective.
The article, Using the Freemium Model of Membership Marketing for Business Success, looks at the economics of four types of relationship with a customer.
• Traditional Product Sales – Offering a single transaction to a customer without an ongoing relationship.
• Recurring Membership – Offering a monthly membership fee tied to a purchase.
• Single Payment Membership – Offering an annual membership fee tied to a purchase.
• Freemium Membership – Offering a free initial membership with an option to upgrade to a paid membership.
I am not necessarily recommending any of the strategies above. Although I think that de-bundling from a membership approach to a transactional approach would be unwise. But my thinking in sharing these is to remind us to step back and look at our membership product to see if it still makes sense the way it is configured. Are there other ways of going to market that should be explored?
Feel free to share any of these that you have tried by posting your thoughts here.
Why is membership such a powerful mechanism to build relationship? Because properly understood, membership can build the platform of common vision, values, and valuables to produce belonging.
This desire to belong is beautifully explained by Simon Sinek in his analysis of an old Dr. Seuss story.
“In his 1961 story about the Sneetches, Dr. Seuss introduced us to two groups of Sneetches, one with stars on their bellies and the other with none. The ones without stars wanted desperately to get stars so they could feel like they fit in. They were willing to go to extreme lengths and pay larger and larger sums of money simply to feel like they were part of a group. But only Sylvester McMonkey McBean, the man whose machine puts ‘stars upon thars,’ profited from the Sneetches’ desire to fit in.
As with so many things, Dr. Suess explained it best. The Sneetches perfectly capture a very basic human need – the need to belong. Our need to belong is not rational, but it is a constant that exists across all people in all cultures. It is a feeling we get when those around us share our values and beliefs. When we feel like we belong we feel connected and we feel safe. As humans we crave the feeling and we seek it out.”1
Do you agree that belonging is a basic human need? Is membership a way to help meet this need?
1. Simon Sinek, Start with Why: How Great Leaders Inspire Everyone to Take Action, Penguin Group, 2009, page 53.
As I get started, I would appreciate your feedback on what new benchmarking data might be of help to you and your organization. Some portions of the survey will be repeated from this year to allow for trend analysis, but I also want to add new elements that give you statistical data for questions you might have.
If you would like to take another look at the 2009 Report, here is the link to download a copy: http://www.marketinggeneral.com/accessWp.asp.
My goal is to build the questionnaire over the holidays and your feedback will be a big help.
The article focused on promoting an annual conference, but as we have discussed in previous posts the concepts of content, frequency and channels are applicable to most all marketing efforts.
Walter shared the substantial increase in meeting attendance that he was able to achieve at The Wildlife Society by strategically reallocating his marketing resources.
“In the past, The Wildlife Society had mailed a 32-page pre-conference registration book to members and recently expired members.”1 But this year, he did away with the big mailer. Instead he refocused his budget and initiated three new techniques.
• He launched a conference web site and drove prospects to it using a weekly conference e-newsletter. It started going out ten weeks prior to the meeting and highlighted a different aspect of the event.
• Instead of one mailing, he sent out three low cost direct mail pieces that pushed prospects to the web site.
• Finally, the week that early bird registration was due to close, he sent out daily emails pushing for the sale.
He also expanded his reach by going beyond current members to “deeply lapsed expired members, as well as former non-member attendees.” 2
We all have limited budgets and need to decide how to use them in the most economical way possible. When you have the choice, select more touches in a concentrated timeframe to people who are aware of who you are and what you offer.
1. Darryl Walter, Tips for Promoting your Annual Conference, DMAW Marketing Advents, December, 2009, page 7.
And since you only need 40 opens to give you a pretty good statistical read on what subject line works best, you can test subject lines with a small subset of your email list, read responses, and then deploy the rest of the list using the top performing subject line.
So what are some subject lines that you might want to try testing?
You will find that simple and direct work best. Typically you want to make and offer or give a promise. It also works to present a knowledge gap. Highlight something the recipient should know, but may not know.
The VR Marketing Blog offers “29 Great B2B Subject Lines”. Some of them include the following:
• “Save Money and Look Like a Star to Your Boss
• How to make it onto your buyer's short list
• Complimentary Webinar: [insert webinar name]
• Breakfast & Secrets for How to [insert problem you solve or product you sell]
• Success Tip: 5 Ways to a Better [xxxx]
• Register Today: [inert name of event] Nov. 5 2009
• Entry deadline fast approaching
• New White Paper: Best Practices for [Insert problem and solution here]
• Success Tip #1: [Insert Tip Headline Here]
• Extended for a Day: Get Free Shipping Through Friday
• Your Weekly Alert: [insert topic here]
• Hear Exclusive Research Presented on [insert what your event is about] - Register Now!
• Inside: [hot topic in your newsletter you think will get the most opens]
• Save $200: [insert event here] Early Bird Registration Ends [insert date here]”
What are your best performing subject lines? Please feel free to share them here.
MGI President Rick Whelan Receives Direct Marketing Association of Washington Distinguished Achievement Award
For over 22 years, I have had the privilege to work with my colleague Rick Whelan. So it was an honor to be a part of the award ceremony this week when he received the Award for Distinguished Achievement. Congratulations Rick!
Here is the press release on the award.
Alexandria, Virginia — Marketing General Inc. (MGI) President Rick Whelan is the 2009winner of the Direct Marketing Association of Washington's (DMAW) Award for Distinguished Achievement (ADA).
The ADA is the highest honor DMAW bestows on an individual and recognizes professional achievement, involvement with DMAW, contributions to furthering industry knowledge, and promoting careers in direct marketing, association marketing, and membership marketing.
Whelan is a DMAW past president and currently serves on the DMAW Educational Foundation board of directors. He has 30 years of experience in marketing and advertising for both non-profit and for-profit organizations and businesses. He is a frequent speaker on association marketing for national associations and has written numerous articles in the field. During his tenure as DMAW president, he brought the Production Club of Washington under the association's umbrella and led the adoption of The DMA Ethics Code of Behavior. In addition, he has also chaired the American Society of Association Executives' Membership Section.
As president of Marketing General Inc., Whelan oversees a company of 60 marketing specialists who together have the responsibility for the day-to-day strategic marketing and creative needs of 45 organizations in 16 states and the District of Columbia.
Whelan's professional expertise is in program development and creative strategies, membership acquisition, program operations, and organizational management. He has worked closely with dozens of education, public service, and health care associations, and has served clients in trade, professional, and fundraising organizations.
O MY GOD,
Thou fairest, greatest, first of all objects,
my heart admires, adores, loves Thee,
for my little vessel is as full as it can be,
and I would pour out all that fullness before Thee in ceaseless flow.
When I think upon and converse with Thee
ten thousand delightful thoughts spring up,
ten thousand sources of pleasure are unsealed,
ten thousand refreshing joys spread over my heart,
crowding into every moment of happiness.
I bless Thee for the soul Thou hast created,
for adorning it, sanctifying it, though it is fixed in barren soil;
for the body Thou hast given me,
for preserving its strength and vigor,
for providing senses to enjoy delights,
for the ease and freedom of my limbs,
for hands, eyes, ears that do Thy bidding;
for Thy royal bounty providing my daily support,
for a full table and overflowing cup,
for appetite, taste, sweetness,
for social joys of relatives and friends,
for ability to serve others,
for a heart that feels sorrows and necessities,
for a mind to care for my fellow-men,
for opportunities of spreading happiness around,
for loved ones in the joys of heaven,
for my own expectation of seeing Thee clearly.
I love Thee above the powers of language to express,
for what Thou art to Thy creatures.
Increase my love, O my God, through time and eternity. Amen 1
1 The Valley of Vision: A collection of Puritan Prayers & Devotions by Arthur G. Bennett
I thought that it might be of interest to share some real world response rates that support the point of working to restore the membership relationship with an expired member.
With one client organization, we regularly market to former members and ask them to reinstate their membership. In fact, we go back to members who expired in the year 2000. These members who have been gone for nine years still produce a very nice return -- 40% margin over marketing costs. On the other hand, for this organization, reaching out to those who have never been a member actually produces a return well below breakeven.
One note to remember, going back to former members only works if there has been good database hygiene practices in place. Running records through National Change of Address (NCOA) which corrects records going back for up to 48 months needs to be done on a regular basis. Also USPS Ancillary Service Endorsements should be used. "Ancillary service endorsements are used by mailers to request an addressee's new address and to provide the USPS with instructions on how to handle undeliverable-as-addressed pieces." There are a number of options available, so take a look at the link.
It is almost always a safe bet to reach out to former members as a first priority over prospects who have never been members.
One of the top resources that I have found in helping an organization focus is a book by Michael Treacy and Fred Wiersema, The Discipline of Market Leaders. I read it many years ago and still refer to it today.
They write, “The message . . . Is that no company can succeed today by trying to be all things to all people. It must instead find the unique value it alone can deliver to a chosen market.”
To help organizations do this analysis, they divide organizations up into three different types of “value disciplines”. The opportunity for us as we plan is to determine the value discipline that best fits the strategy for our organization and then use the characteristics of that discipline to help in building staff and structure.
Here are some highlights of each of the three value disciplines.
1. Operational Excellence (examples Wal-Mart and McDonalds)
- Value Proposition: Best Total Value
- Golden Rule: Variety kills efficiency
- Business Structure: Standardized, simplified, tightly controlled, centrally planned, little discretion for rank and file
- Culture: Abhors waste and rewards efficiency
- People: Team counts, not individual, train them our way
2. Product Leadership (examples Intel and 3M)
- Value Proposition: Best Product
- Golden Rule: Cannibalize your success with breakthroughs
- Business Structure: Loosely knit, ad hoc, ever changing so as to adjust to entrepreneurial initiatives and redirection
- Culture: Encourages individual imagination & accomplishment
- People: Get the talent
3. Customer Intimacy (examples Nordstrom and IBM)
- Value Proposition: Best Total Solution
- Golden Rule: Solve the customer’s broader problem
- Business Structure: Delegate decisions to employees close to the customer
- Culture: Embraces specific (not general) solutions and thrives on deep and lasting customer relationships
- People: Stay at forefront and learn – broad skills and styles
Which value discipline do you identify with of the three? The structure you build will be very different based on where you focus. The Discipline of Market Leaders: Choose Your Customers Narrow Your Focus, Dominate Your Market by Michael Treacy and Fred Wiersema, page xiv
Understanding lifetime value (LTV) is a fundamental calculation that every membership organization should do. It let’s you know how much you can spend to acquire and keep your members. It is the foundation for a membership marketing strategy.
There are some shortcuts that I use these days to get to the numbers a little more quickly, but the article is worth reviewing.
The article was written by Harmon O. Pritchard, Jr., who at the time was senior vice president of membership for the Aircraft Owners and Pilots Association (AOPA). Harmon along with Scott McBride, the founder of Marketing General, Inc. were really the first to apply the LTV concept to membership marketing world.
Here is the link:
Let me know what you think.
It is a smart thing to do because it is so easy in life to get lost in the trees of urgent matters and not see the forest. When we are selling membership, stepping back and seeing the big picture is essential. That’s because members want a clear and concrete reason to join and continue their membership.
So I wanted to share a quick three step group or team exercise that I use to help get re-focused on the big picture and big value that you deliver to your members. Here it is:
- Define and list all the features of membership. Yes, start with the trees not the forest. Put as many features of membership on the list as come to mind. It helps to hold and touch these features. So to help lay your tangible member benefits on the table. For those that are not tangible, print out descriptions of them from you web site to make them more tangible. One feature on your list, for example, might be your job bank another might be the membership social network.
- Assign benefits to the list of features. As a next step, write down the key benefit(s) that the product or service provides to a member. Be specific. For example, a professional association job bank means members access a trusted source to identify jobs specifically in their field. A social network means members can instantly connect with professional colleagues who can assist them with a particular problem or need.
- Connect the dots. Now that you have a long list of features and benefits, the next step is consolidating them into simple and concrete value statements. It is useful to center benefits around one of life’s BIG three motivators: Pain, Gain, and Fear. So, for example, a member can gain by joining because she is in the know about the top jobs in your field and is regularly connected to the prominent networkers in the field who can help her advance her career. Membership helps you get ahead faster.
This value exercise does not need to take a long time. And you do not need to bring in a facilitator. Why don’t you take a few hours to try this with your colleagues and post a comment on how it went?
The first session is at the Alexandria Brownbag lunch on Thursday, October 15, 2009. It begins at 11:30 and concludes at 1:30. The location is Marketing General Inc, 209 Madison Street, Third Floor, (corner of North Fairfax and Madison), Alexandria, VA. Admission is free.
The second is at the Direct Marketing Association of Washington, Association Day Conference on Wednesday, October 28, 2009. The location is the Capital Hilton Hotel, 1001 16th Street NW, Washington, DC. My session is from 3:45. Paid pre-registration is required.
The third is at the October 2009 Reston Idea Swap on Thursday, October 29, 2009. It begins at 3:00 and concludes at 5:00. The location is Veris Consulting, LLC, 11710 Plaza America Drive, Suite 300, Reston, VA 20190. Admission is free.
I would enjoy meeting you if you can make one of these meetings.
The other day, I received a question from one of the readers of this blog about the number of members in loyalty programs. I was able to access some excellent data and wanted to share it with you.
For background, membership loyalty programs are marketing initiatives to retain and reward customers. They can be offered by major retailers or financial service companies or by your local barber shop. The goal of these programs is to move customers from a transactional relationship to a continuity relationship. Loyalty memberships are cousins to association memberships, sharing many of the same strategies, tactics and analytics.
The source of this data is drawn from The 2009 Colloquy Loyalty Marketing Census.
“For those interested in the bottom line, this report reveals that, from 2006 to 2008, U.S. loyalty program memberships increased from 1.341 billion to 1.807 billion—an adjusted growth rate of nearly 25 percent since our last Census. This number translates into 14.1 loyalty program memberships per U.S. household.”
However, since most loyalty memberships do not require a regular renewal, there is a big difference between the actual number of members and those who are actively engaged with the brand. “The percentage of overall active memberships in the U.S.—those memberships that demonstrate some type of engagement within a 12-month period—remains flat at 43.8 percent, with a blended average of 6.2 active memberships per household.”
The census also provided counts for US membership loyalty programs by sectors. The top five are:
- Financial Services – 422.0 million
- Airline – 277.4 million
- Specialty Retail – 191.3 million
- Hotel – 161.9 million
- Grocery – 153.2 million
When I teach about membership marketing, I focus on the five key touch points in the membership lifecycle. Each has its own challenges and opportunities. For many classic membership associations, recruitment is the number one challenge.
Based on this report, the challenge for building loyalty memberships is not so much recruiting new members, but in engaging them and getting them to take advantage of the membership. Using the report’s definition for engagement -- no interaction over the past year -- over 56 percent of the names in a loyalty member database are not active.
If you would like to download a copy of the report, here is the link for registration and download.
The first has to do with channel integration – connecting with a prospective member through multiple media.
We tested this recently using mail and email simultaneously to prospective members. We split our audience into two groups. One group only received a direct mail membership solicitation. The second group received the same direct mail package, but also received a follow up email. The mail only group produced a 1.23% response rate. The combined mail and email group produced a 2.08% response rate. This represents a 69% lift in overall response by adding the email.
I have seen a number of tests combining mail and email in membership acquisition over the past year and in each case the combination has improved response over either channel used in isolation. In adding email to the marketing mix, it is important to remember that email is not free. Often email lists needed to be rented for the promotion and the creation, deployment, and building a companion microsite also involves costs.
A second test included channel integration, but added to the mix exclusive and useful content. I call this content integration.
Here is how this test was structured. The prospect list was split evenly and the relevant touches were sent out at the same time.
The control group received a direct mail solicitation and a follow up membership recruitment email. The email provided a link to a customized microsite with an in-depth presentation of the organization’s membership benefits.
The test group received the same direct mail solicitation, but a series of emails where used to follow up the mailing. The first follow up email offered access to a microsite full of information on how an organization could take advantage of the American Recovery & Reinvestment Act (ARRA). The second email provided a link to another microsite that included a staff presentation again focused on how to access funding from the ARRA.
The third and final email replicated the control email from above and provided a link to the microsite outlining the membership benefits.
So the test really focused on the use of free, exclusive and relevant content to engage the prospective member.
The test group was the decisive winner. Allowing for a statistical margin of error, the test group outperformed the control group by over 300%. It did over three times better in both the number of members and in dues revenue.
What can we learn from these tests? One lesson is that intensity is important in marketing. More touches with valuable content in a short period of time gets a prospects attention. In addition, all of the communications pushed toward a sale.
Feel free to post your questions or observations about these tests here.
I think everyone will agree that the world is changing, but I am not ready just yet to put association membership in the grave.
Here are several of reasons.
First, in our Membership Marketing Benchmarking Report, 45 percent of association executives reported that membership had increased over the past year. Only 35% saw a decrease. That is pretty good considering the economy—it beat the stock market.
Additionally, 49 percent of association executives reported an increase in new member input over the past year. While only 21% saw new member input fall. The survey had over 500 participants.
Finally, I think that there is a more important indicator out there related to health of membership model. If the concept of membership is in decline then why are for profit companies running full speed toward a membership business model? I believe that they are doing it because it makes economic sense.
In the past, I have highlighted this strategic embrace of the membership concept among companies and organizations. Here are some of the posts discussing this trend.
Corporations Coop Membership Marketing – For profit marketers argue that every company should offer membership.
Costco Membership Up 30,000 per Week and Renewals at All-Time High of 87% -- Costco does not seem to be having a problem selling membership.
A Wake-Up Call for Associations – Magazines are offering association membership services
Exploring Alternative Membership Models -- Everyone from insurance companies to museums to retailers now offer membership.
So perhaps the issue is not that association membership is dying, but that association membership needs to be more effectively presented and managed.
One of the goals of this blog is to help membership marketers more effectively use this customer relationship called membership. I continue to believe that membership is an ideal model for an organization that provides good value and services to customers and wants to strengthen that relationship.
As marketers, we tend to continually refine and focus our segmentation. But what if we took the opposite approach and looked for larger commonalities in the marketplace?
That’s what Kim and Mauborgne recommend in their book. The authors write:
“Typically to grow their share of market, companies strive to retain and expand existing customers. This often leads to finer segmentation and greater tailoring of offerings to better meet customer preferences. . . As companies compete to embrace customer preferences through finer segmentation, they often risk creating too-small target markets. To maximize the size of their blue oceans, companies need to take a reverse course. Instead of concentrating on customers, they need to look to noncustomers. And instead of focusing on customer differences, they need to build on powerful commonalities in what buyers value. That allows companies to reach beyond existing demand to unlock new mass customers that did not exist before.”
Here are a couple of other unconventional solutions from Blue Ocean Strategy.
The authors claim that extensive customer research may not be the best method of opening up new strategies and markets.
“Our research found that customers can scarcely imagine how to create uncontested market space. Their insight also tends toward the familiar ‘offer me more for less’. And what customers typically want ‘more’ of are those product and service features that the industry currently offers.”
So what is one way a company can evaluate a new strategy? They recommend, “A good way to test the effectiveness and strength of a strategy is to look at whether it contains a strong and authentic tagline.”
If you cannot put your promise into a clear and concise tagline then you should question whether or not it is a viable offering.
 W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, Harvard Business School Press, 2005, page 101 and 102.
 Ibid. page 27.
 Ibid. page 40.
But how do these concepts apply to the frequency of contact when looking at membership recruitment or acquisition? Is there a correlation between the number of new member solicitations and the likelihood of a prospective member joining?
We asked this question recently and set up a test to help find the answer. Here is what we did.
With one membership marketing client that uses fairly static prospecting lists that we have compiled, we went back in our data to identify the number of times we had sent a mailing to the prospective member over the past three years. We then tagged prospective members by the number of contacts.
Then in a subsequent campaign, we defined our lists by the number of mailings that the potential member had previously received and tracked back our responses to these “lists”. Here is how responses broke out.
Clearly our analysis highlights that for this group there is an erosion of response from people who have been mailed multiple times. So with this organization, to maximize net revenue and work with tighter budgets, we dropped the prospects who had been contacted more than seven times from some upcoming campaigns. By eliminating these prospects, we saw response rates jump up. However, after resting these records for several campaigns, we will re-introduce them in future promotions.
In the coming months, I will be doing more analysis with mailers who have a longer history and higher frequency of contacts.
Last week ASAE and the Center for Association Leadership released their newest book, 199 Ideas: Membership Recruitment and Retention.
You will find it a very practical resource that membership professionals should keep handy and use as a checklist for the basics of membership marketing.
As the title suggests, 199 Ideas, is presented in a readable format as tips by topic area: Recruitment Basics, Where to Find New Members, How to Get Prospects to Join, and Retention Basics.
Here is a sampling of some of the tips:
- “Tracking is everything. Want to really know what works for recruiting new members? Remember that all of your applications should be coded so that you can track where [they came from] (page 14).”
- “New members can be found in lots of places, but the easiest sources are people who already know your association (former members, nonmembers who have attended you convention or purchased your services) or know your members (page 15).”
- “By far, it [direct mail} is the most effective and fastest way to grow your membership, if numbers are what you’re after. Direct mail can be costly overall, but after you’ve been at it for a while (testing and analyzing, that is) you’ll be able to pick lists like a pro and you’ll learn which copy and offers will work and which won’t. This form of marketing allows you to pinpoint success – or failure -- with real numbers and thereby lets you control how much it costs you to get a member (page 19).”
- “Every membership professional who engages in direct marketing must understand two things: 1.) that every mailing is an opportunity to test new ideas; and 2.) never ‘roll out’ . . . until you’re satisfied that the test works (page 22).”
- “It’s important to have a well thought out renewal campaign with multiple touch points. You should consider a blended approach in your communications that includes email, direct mail, telephone calls, and web based tools )page 63).”
As useful as the book is, I would take issue with a couple of the points made in 199 Ideas.
First, I think that recruitment basics chapter overemphasizes research and analysis. If all the research that was recommended in the book was done then there would not be time to actually do the recommended marketing. Often a better approach is to attempt some marketing efforts early on and let the market speak to you through the responses you get. Yes, research is good, but I also believe in the “just do it” approach to marketing.
Secondly, setting the expectation that your “response is usually somewhere between 2 and 5 percent (page 22)” for direct mail acquisition is unrealistic. Of course we would all love to mail 100,000 pieces of mail for $70,000 in cost to sell our membership at $200 in dues and get back $1,000,000 (5 percent return), but don’t promise that to anyone if you want to keep your job!
The book was developed by the Membership Section Council of ASAE and the Center. Key contributors to the book were Linda Brady of the International Society for Pharmaceutical Engineering, Tip Tucker Kendall from the Women’s Basketball Coaches Association, Michael C. McGough (a former colleague of mine) from the National Investment Relations Institute, and Miriam Miller from the United Fresh Produce Association.
By the way, the book also includes a "Share My Tip" form where you can contribute your thoughts for the next version of the book.
 199 Ideas: Membership Recruitment and Retention, by ASAE & The Center's Membership Section Council, 2009, 88 pages.
One quote in the piece jumped out at me from the inventor Thomas Edison who said, “We don't know a millionth of 1% about anything."
Human nature seems to say that we know it all. But the wise course may be to humbly put ourselves in the place of being a learner.
As the old proverb says, “Whoever trusts in his own mind is a fool, but he who walks in wisdom will be delivered.”
 BusinessWeek, The Case for Optimism, August 13, 2009
I wanted to thank those who participated in our formal presentation of the report Monday, at the ASAE Annual Convention.
Please feel free to share the report with others in your organization. Post your comments here on this site and please let me know if you have any questions. I look forward to your thoughts and feedback. Here is the link.
This has been one of the more interesting projects that I have worked on in a long time. I hope you find it a help in your membership marketing efforts.
If you think about it, our society has moved to a month by month financial focus. Your cell phone, internet, car payment, and service contracts are paid each month. In fact, our likelihood to purchase these products would be greatly diminished if we were required to pay for the year in advance. We are also more likely to continue the services when the payments are automatically debited from our credit card or bank account.
However, most membership organizations do not offer the opportunity to pay monthly. A member is typically required to pay the full dues up front.
Over the past several years, we experimented with making monthly installment billing available to members. I wanted to share with you today a case study from one organization that has tried this program.
Let me start out by admitting that putting this type of program in place is an administrative challenge. Credit cards expire and have transaction fees. In the case of electronic funds transfers (EFT), bank accounts open and close. So this type of change will require staff time and programming time. The higher the dues payment, the more beneficial this type of program will be.
For my case study group, the idea to test installment billing was first raised as a method to increase response rates on membership acquisition mailings. Research showed that the $225 price tag for dues was an impediment for members to join.
So we built a head to head acquisition test for this organization. The control offer with the $225 price went to 37,640 prospects and the same package offering the additional option of an automatic credit card payment of $18.75 a month went to 37,623 prospects. The results were impressive. The control package generated 436 new members for a 1.16% response rate. However, the test package with the installment option produced 657 members fro a 1.75% response rate.
Clearly many prospects were more willing to join if they had the option to pay monthly.
The next question was how will members who select the monthly installment renew compared to members who pay up front. Our latest data reports on members who renewed on time. The on time renewal rate for members NOT on the installment plan is 55.7%. However, the on time renewal rate for members participating in the installment plan is 82.0%. The non-installment member rate will probably rise to 70% when late renewal payments are included. But even when late payments are included, a potential twelve point lift in renewals is a major improvement.
The bottom line for this organization is that making an installment dues option available to members has caused an increase in the work load for staff, but it has helped produce more new members, more revenue and a better renewal rate. It may be something that more membership organizations should test.
Here are some ways that we can connect.
First, my firm, Marketing General, Inc., will release the final report of our 2009 Membership Marketing Benchmarking Survey. If you would like a printed copy of the report, please stop by our booth – number 113 -- in the exhibit hall and ask for me. (Click here to read a summary of the Top Five Findings of that study).
Secondly, on Monday August 17, from 2:00 to 3:00 pm in room 802A of the Toronto Convention Center: I will be co-presenting an “un-session” on the report. The session is titled, How do You Compare? Benchmark Your Association against Industry Research in Membership, Marketing, Meetings and More.
In addition, Marketing General Inc. is pleased to again sponsor the Membership Section's Reception at this year's Annual Meeting. Join me from 5:00 to 6:30 PM on Sunday, August 16, in Ballroom A of the InterContinental Toronto Centre Hotel.
Finally, on Sunday August 16 at 1:30, I will be attending a session by my colleague Erik Schonher who will be part of a panel of membership executives and association CFOs to explore how to facilitate communication between the association's membership department and their finance department's leadership.
My hope is that I will be of help to your membership program and at the same time learn from what you are doing and get some more material for fall blog posts.
If you are interested, I have set aside some time slots for next week and will allocate them on a first come first serve basis.
You can connect with me either through LinkedIn or my contact information to the right on this blog.
I look forward to speaking with you.
We will be releasing the report at the ASAE and the Center for Association Leadership Annual Conference. If you are at the conference, you are invited to participate in a session that I will co-present on this research along with research from my friend, Sheri Jacobs, CAE. She will highlight her updated research on the state of the association economy. On this blog, I previously reported on the original edition of her research and I am sure her updated data will be very valuable.
We have titled the session: How do You Compare? Benchmark Your Association against Industry Research in Membership, Marketing, Meetings and More. The session is on Monday, August 17 at 2:00 in room 802A of the Toronto Convention Center.
If you are one of the more than 400 survey participants, you are scheduled to receive your personal copy of the research report the first week of August. For those who did not participate, we will provide copies to those who attends the session.
This presentation is done with the permission of ASAE, but is designated as an "unsession". It will be promoted exclusively through word of mouth and social media. So feel free to jump the fence to attend and share the date and time with others.
Companies moving into the traditional association marketplace are eager to fill any vacuum that they can profitably find in the markets you serve.
That’s why developing or hiring expertise in membership marketing is more important today than ever for associations.
Here is one example, Merion Publications; the publisher of ADVANCE Newsmagazines. They provide a magazine, current job listings, education/events, job fairs, and communities to professionals in the following fields.
Imaging & Radiation Oncology
Directors in Rehabilitation
Physical Therapists & PT Assistants
Occupational Therapy Practitioners
Speech-Language Pathologists & Audiologists
Long-Term Care Management
Respiratory Care & Sleep Medicine
Administrators of the Laboratory
Medical Laboratory Professionals
Health Information Executives
Health Information Professionals
I do not want to communicate that there is anything unethical with companies moving into the realm traditionally owned by non-profits. They see a market opportunity and have taken advantage of it using the marketing and sales expertise that they have honed over the years.
The questions associations should ask themselves are: How well prepared are we to deal with for-profit competition? Should this be a wake up call for our association? Is business as usual sustainable?
As I have shared on this blog, building the membership relationship is driven by making prospective members aware of who you are, actively recruiting these prospects, engaging new member in the organization, and effectively renewing them.
Agree or disagree, please let me know your thoughts on this.
In our Membership Marketing Benchmarking Survey, we asked “when does your organization finish renewal efforts” by months from expiration. We then cross tabulated this against their reported membership renewal rates.
The data appears to indicate that organizations that stop their renewal process earlier are more likely to have membership renewal rates under 80 percent. However, those that continue in their efforts to renew members are more likely to have membership renewal rates over 80 percent.
In fact, those who say that they “don’t stop contact” are 83% more likely to be in this higher renewal grouping than those who stop contact earlier.
Using the same cross tabulation, this trend also appears to be true when we asked in the survey how long a member is “graced” with the continuance of membership benefits after expiration. Organizations with longer grace periods tended to report renewal rates of over 80 percent. In fact, groups that grace member benefits three or more months are nearly three times more likely to have renewal rates over 80% (9% compared to 26.5%).
For those of you who follow the association industry closely, you will not be surprised that trade associations show higher renewal rates compared to individual membership associations. Associations with smaller memberships also report better renewal rates.
As always when I report on renewal rates, I add the disclaimer that comparing renewal rates is a challenge because there are many variables from association to association including business rules, dues amounts, and marketing environments.
One question that we asked in the survey was to list all of the communications methods that were in use to engage or onboard new members. Here are the top ten as reported by survey respondents starting with the most used.
In addition to the most used methods, some of these engagement techniques also correlated with organizations that reported higher renew rates in the survey. (Please note, I am not saying that they caused higher renewal rates, but that they were more likely to be practices of groups that reported better renewal rates.)
The methods that correlated with higher renewals are what I would call “high touch’ contacts and include mailed welcome kits, volunteer or staff welcome calls, new member surveys, and a new member reception.
What is also of interest to me is that the associations with larger membership counts were the more likely to report on using volunteer or staff calls to new members compared to other sized groups. I had assumed that it would be associations with smaller memberships who could handle these personal calls.
Methods that were very rarely used to engage new members were telemarketing welcome calls, early bird or “At Birth” renewals, and a using custom new member renewal series.
Thanks for reading and stay tuned for additional Membership Marketing Benchmark Survey findings.
The paper defines how associations can “build a strong brand by outlining the power of a brand, the mistakes associations make in developing their brand, the key measurements that lead to the strongest brand for an association, and the appropriate steps to identify and promote an association’s unique and ultimate brand.”
I particularly like the member centric view of brand that the paper presents. To assess your brand, the paper asks how your members would answer these questions.
“What does the association stand for that is important to me?”
“What can I do now that I could not do before I became a member?”
“What does this association do that no other association can do?”
“How does the association fulfill its mission so that I can easily enjoy all of the benefits I need?”
You can download a free copy of this whitepaper and others produced by my company using this link. If you have questions on branding, you can reach Bill Jerome through LinkedIn.
So as part of our Membership Marketing Benchmarking Research, we asked what recruitment offer was most effective in getting the most new members. We also cross tabulated their answers with renewal rates.
Respondents reported that the best recruitment offer was a “discount on first year dues”. This did not come as a surprise to me, because I have tested a discount many times and with a variety of organizations. It has consistently tested well.
But here is a BIG SURPRISE. Some marketers claim they do not use a discount because it will hurt renewal rates. However, the research shows that of those who offered a new member dues discount 75% had renewal rates of over 80% and 25% under 80%. This outperforms the overall respondent base with 68% having renewal rates over 80%. In other words, new member discounts actually correlate with higher membership renewals.
Here is how respondents report the “most effective offer in getting more new members”.
Based on responses from our membership marketing benchmarking survey, direct mail still tops the list with 31.7 percent of respondents saying it was the most effective source for attracting new members.
Here are the channels that were rated as top performers to get new members.
Interestingly, the following registered at less than one percent: Paid Search Advertising, Online Ads, Public Relations, Social Networking, and Print Ads.
I have always maintained that membership is primarily a “push” product. It must be proactively sold. So it is interesting that highly targetable and direct to customer methods are rated as the best in recruiting new members from this research.
Here is some additional data that you might find of interest. The Research Brief Blog reports that "Direct mail's share of total advertising spending has been on a strong upward trend for most of the past 17 years. Since 1999, the direct mail share has risen steadily reaching 22% in 2008. Direct mail has maintained its large ad share even with the introduction of new, fast-growing ad markets such as the Internet."
Here is what I found.
As I noted yesterday, 47% of responding associations reported overall membership growth over the past year. And of those reporting growth, 77% had renewal rates of 80% or better.
While of the 36% who reported a drop in overall membership over the past year, only 55% reported renewal rates of 80% or better.
What is counter intuitive is that not only are higher renewing associations more likely to be seeing overall growth, but higher renewing associations are also more likely to be seeing a higher percentage increase in new member input. This is counter intuitive because typically new members renew at a lower rate than longer term members, so you might expect that groups adding more new members might see lower renewal rates.
Of the 54% of associations who reported a growth in new member input over the past year, 71% of them had renewal rates of 80% or better. While of the 22% who reported a decline in new member input, only 47% of them had renewal rates of 80% or better.
Overall, here is how associations reported their current renewal rates.
By the way, I do present these renewal rates with one major caveat. Comparing one association’s renewal rate to your association is not an exact science because each association operates in a different environment and uses different business rules to count a renewed member. So I am using this renewal data in a broad sense to highlight that renewal rates are correlated to both overall membership growth and even new member growth.
The article looks says “numerous studies have shown that companies that keep spending on acquisition, advertising, and R. & D. during recessions do significantly better than those which make big cuts.”
The article is worth reading and could be useful in arguing against the budget cuts that are being imposed on so many of you who I talk to about this. Let me know what you think.
 James Surowiecki, Hanging Tough, The New Yorker, by April 20, 2009
As you may recall, I am analyzing data from over 400 associations that participated in our membership marketing benchmarking survey this spring. We inquired about growth over the past year and over the last five years.
Here is what we are finding. Over the past year, 46% of associations are reporting that they have seen their total membership grow. While 16% have remained the same and 35% have seen a decline in membership numbers. The numbers do not add up to 100 because some respondents were not sure whether membership grew or declined.
The numbers show a stronger picture when looked at over the past five years. During this time period, 60% of respondents reported growth. And 26% of the associations had membership growth of over 10%. At the same time, 8% reported no change and 26% reported a decline.
In addition to seeing strong growth in overall membership, the data indicates that new member input has also been strong over the past year with 54% reporting an increase in new member input. While 22% have seen a decline and 24% have remained the same.
Although we did not ask for trend data on renewals, we might infer from the data that since new member input is up over the past year at a higher rate than overall membership growth, renewal rates must be lower on average for associations.
From my initial review of the data there are many surprises and confirmations of what I expected.
My first surprise was how little associations are using the web opportunities to acquire members compared to other membership marketing channels.
We asked participants to highlight what channels they use to get new members and how they allocate their membership marketing budgets over these channels. The results showed that some commonly used web channels for acquisition see limited very use by associations and make up a very small portion of their budgets. For example:
- Only 8.3% of those who responded use search engine advertising to acquire members and this channel only made up 0.29% of membership marketing budgets.
- Only 12.2% use banner ads and links on others web sites to market membership and this only made up on 0.13% of the survey participants’ overall membership marketing expenditures.
On the other hand, 35.2% are using social networking to help attract members. Still this only makes up 0.78% of membership marketing budgets. Interestingly, 26.8% of associations who report using social media to attract members reported a decline in new member acquisition compared to 21% of the total respondents.
Does this mean that necessity is the mother of invention and these groups are giving social media a try or that social media diverts resources from more productive acquisition opportunities?
The vast majority of respondents -- 84.8% -- use their association website and this only makes up 3.2% of membership marketing budgets.
By the way, just a reminder that the world is changing and we need to keep pushing the envelope. Here is a post card promoting my grandfather’s Chrysler dealership. He is pictured on the left.
So it was interesting when I met the other day with a talented marketer who joined a group that presented him with a clean slate for membership marketing. Since almost nothing was in place, he had to build the membership marketing program from the ground up.
It got me to thinking, what if I was in the same place? What if my only mandate was to grow membership based on sound marketing principles? What would my membership marketing program look like?
Well here is my take on the programs that I would put in place to get membership moving.
1. Build Awareness - My first action would be to harness the web. Awareness is the first step to any purchase. And the leading source for information for most people has become the Web. So membership development begins with using search engine optimization, search engine advertising, ad networks, and social media to help people who are seeking solutions provided by an association to find me. Tracking traffic sources and the effectiveness of keywords will help me identify the people and the value that my prospects are looking to find.
Anyone coming to my web site would be encouraged to register for a free association newsletter. This allows me to add the prospect to my database.
2. Recruit New Members - The fastest growing membership associations still rely on test-driven membership acquisition campaigns as the workhorse for gaining new members. Ineffective membership recruitment is the single biggest marketing reason for declining or stagnant memberships. So my second step would be to establish regular mail and email promotions to both house and outside lists, And because these promotions will typically be the largest outreaches that the association will do, they statistically lend themselves to head-to-head market tests. Testing will tell me the best lists, offers, messages, and packages to use going forward.
3. Engage New Members - Once a new member joins my association, he or she becomes the most likely member not to renew. Almost all associations show first year members as the lowest renewing cohort. The first year is therefore referred to as the conversion year for new members.
So once I get a flow on new members coming to the association, I would establish a conversion program. This type of effort is a multiple step orientation that helps the member to become engaged in the association. A sound conversion program certainly orients the member to the products, services, and opportunities provided by an association. It also should generate a second interaction with the member. This might be as simple as having the members complete a survey, but it optimally leads to a second purchase by the member of a product or attendance at a meeting. For example, sending new members a dollars off voucher for their first purchase can help them engage the organization as both a member and a customer.
A member who makes a second purchase from an association before it is time for the first renewal is much more likely to renew than the non-buying member.
4. Upgrade Members - Ideally, association membership should not be a static product. Just as car companies have introductory models, family models, and luxury models to fit the changing needs and desires of buyers, an association is wise to offer members different service packages.
So I would put in place an upgrade (or up-sell) program to move members from one membership tier or product package to the next higher one. It might be as simple as moving student members to a professional membership, adding additional periodicals to the membership package, or including newly published books as a part of the membership.
5. Renew Members - The days of the three-part mailed renewal series has come to an end. Instead, effective renewal systems are now built on multi-media contacts using a combination of mail, email, phone, and fax integrated with a Web renewal tool.
One of the reasons that I would put an integrated program in place is because survey research reveals the startling reality of why most members fail to renew—they simply forgot! It’s not because members have become more forgetful. It is because the competition for their attention has increased.
The use of multiple media and higher frequency of contact helps to break through the clutter that prevents the renewal message from getting through.
6. Reinstate Members - The most likely member to come back to an association is the one who most recently left. So a reinstatement or “win back” program is also a key practice that I would put in place. Win back lends itself to an integrated media approach. Since there is an established business relationship with the former member that hopefully includes an email opt in, mail, phone, and email are all acceptable channels to use in communicating with a former member. The messages to lapsed members will highlight the outstanding content that the member has missed in the last few issues of the magazine and upcoming networking opportunities that he or she might want to take advantage of with a renewed membership.
The win back program provides an important secondary benefit. A portion of members will leave an association each year, but a well run win back program serves as a report card on the effectiveness of the renewal system. A successful program highlights a leaky renewal system. An unsuccessful win back program announces that your renewal program has captured all the members who still had a desire to stay with the association.
As you can see, my focus for all the steps that I would put in place is primarily results driven. My goal in building a membership program from the ground up would be to initiate a relationship and work to retain it. Clearly there are product, services and value issues with every association that need to be addressed. These are important, but beyond the scope of what I am trying to address here.
However, I find that in many cases associations provide great value. They enjoy a loyal and continuing membership. Marketing is the missing ingredient to membership success.
Please share the items that you would add or subtract from my list of what your membership marketing program would look like.
She tells me that from her perspective the number one priority is to”Know what’s valuable to your members. There are so many competing forces seeking to grab your member’s attention. Direct your members to the products and services that are significant to them and articulate ‘what’s in it for me’.”
I like her thinking. In fact, in a post about member engagement I also wrote about the importance of providing value and reward to members. Thanks to everyone for contributing.
In many ways, Kelly’s perspective underlines why I enjoy writing this blog. I hear from many of you that you have found what I have shared of benefit.
My sincere hope is that as you read and use the ideas and experiences here your membership marketing will be more effective.
I appreciate your feedback. Please let me know if I can be of further help to you.
Kevin Kelly, Wired Magazine, http://www.wired.com/culture/culturereviews/magazine/17-06/nep_newsocialism?currentPage=all
In direct marketing, the 'who' is defined by the mailing and email lists—and the selects within those lists—that you choose to reach.
Since the person who gets your promotion is so key to your results, it pays to follow time-tested strategies to find and use the best marketing lists to maximize your success. Here are five strategies you may want to consider the next time you are ready to order lists for a promotion.
Strategy #1—Test lists regularly in all your promotional activities and track the results.
It is remarkable how many marketers ignore this basic strategy. If list selection is the single biggest factor in the effectiveness of a promotion, it makes no sense to test offers, formats, copy, and graphics until you know that you are reaching the prospects who are the most likely to respond. Even if you are 'happy' with the response you are getting now, testing is essential because any list that you are promoting to will fatigue over time.
Even in marketing efforts sent to current customers, it makes good sense to include tests to identify key response characteristics for various segments of your file.
Strategy #2—Research lists effectively by using available published data, professionals in the field, and your professional network.
To begin your search for new marketing lists, there are some outstanding on-line databases that are excellent tools to help you identify specific files. The two most recognized on-line sources are Nextmark and SRDS DirectNet. SRDS also publishes a print directory called the Direct Marketing List Source that includes most commercially available lists.
You will also want to take a look at where organizations like yours advertise and exhibit. Chances are that the subscribers or members of these organizations will also be good prospects for you. Likewise, if an organization is renting your list, it is a good bet that their customer list will also have good prospects for you.
Help from list professionals is also very valuable. A good mailing list broker will help you find the lists that have worked successfully for other organizations with a similar product or offer. They also have subscriptions to the major list databases and experience in using them. List brokerage services are provided at no cost to the list user. They are compensated for their time by the list owner, so it is appropriate to have the broker who did the research for you place the order. Your list costs are the same whether you buy direct or through a broker.
When you select an outside list from a third party provider, your order of the list for direct mail usage will be provided to you in the format you prefer, labels, excel, tape, etc. The rental price allows you to use the list one time. If you order an email list, the manager or owner of the list will send out the email to the list on your behalf. You will supply the text or the HTML content for the email.
Strategy #3—Test marketing lists strategically by testing list categories.
Breakthrough growth for an organization comes from finding a new market segment or category of prospects. When you find this new group of prospects it is not unusual to see the number of responses double or triple compared to what you would ordinarily expect.
For association marketers, some major categories worth testing are:
- Membership lists of compatible organizations
- Subscribers to other industry periodicals
- Seminar or convention attendees
- Supplementary book and audio-visual buyers
- Compiled lists selected by job title
- Former customers/donors/members by year lapsed, and
- Referrals and inquiries by year received.
Strategy #4—Test lists efficiently by trying only the best segments of a new list first.
Begin your list testing by using the best segment or select from a list first. If this select does not work, then you can assume that the remaining portions of the file are unlikely to generate an acceptable response.
But how do you know what the best segments of a list are?
Even if you know very little about a list, you can be fairly certain that you are receiving the best portion of the list by remembering three letters, 'RFM,' and incorporating them into your list selections.
- The 'R' stands for recency (i.e. Hotline Names). This select is usually the best bet to increase your response rate because recent purchases on a list indicate someone is in transition or in a buying mode.
- The 'F' stands for frequency (i.e. multiple transactions). Frequency of purchase can also be described as a multibuyer select.
- Finally, 'M' stands for monetary amount (i.e. larger order size). This select is important if you are trying to sell a higher priced item because it indicates purchasing authority.
Strategy #5—Use direct response lists.
Direct response lists are made up of people who have responded to a promotion and bought a product or service, requested information, or made a donation. In an age when not everyone opens their mail or email, let alone demonstrates that they have the time, interest, and money to respond, these names are a valuable commodity. Direct response lists give you the opportunity to reach a prospect that has demonstrated the exact behavior that you want to have replicated for your product or service.
Because of the demonstrated buying behavior, names on a response list will cost $50 to $100 more per thousand to rent than a compiled file. But direct response lists will also usually respond well above a compiled or directory type file.
Direct response lists are also highly responsive because they include the email or mail address where the buyer prefers to make purchases. Someone who orders a product takes care to give their correct and their preferred address on an order form. In the same way, subscribers and members regularly update names and addresses when they move or change jobs because they have paid for a magazine or membership.
What's the bottom line on finding the best lists for your next promotion?
Since the lists that you select for a marketing effort will have a profound impact on the results you receive, testing and finding new lists is foundational to successful marketing. A new list will open up entirely new market categories for the product and service that you are marketing and will give you access to new customers who are eager to buy from you. Finding new lists takes time and effort, but can be very, very profitable.