Growing Membership in a Recession

Is it crazy to talk about membership growth in the midst of a recession? Not if you look at the success of the organizations I highlighted in my February, Associations Now article, The Upside of Down. In fact “right now is perhaps the best time in recent memory to acquire new members. And organizations that are taking advantage of this are seeing remarkable returns”. How are they going about achieving these results? View my webinar presentation on this topic below or with this link to discover the four key areas of expertise you and your organization need for membership growth.

Associations Get Mixed Grades for Helping Members in a Recession

ASAE and the Center for Association Leadership just released results from a major survey of members from 97 associations.

The report card says to me that associations could do a better job of communicating the value of the services that they make available, especially during this down economy.

The report, Beliefs, Behaviors and Attitudes in Response to the Economy has some good data. In all over 8,500 members participated in the research between December 11th and January 26th.

The need to better communicate value came through to me especially in the answers to questions about what members say about their associations during difficult economic times.

Members used a scale of 1 to 5 (1 = “strongly disagree,” 5 = “strongly agree”) to express their opinion.

  • In an economic downturn my association (s) will be needed to help me network with others for professional or business help. (Score 3.56)
  • When money is tight the value of my association affiliation(s) are generally GREATER than the cost of dues. (Score 3.50)
  • My employer is LESS likely to pay association dues in a tight economy. (Score 3.35)
  • It is more important to support my association(s) when the economy is down than when the economy is better. (Score 3.23)
  • In an economic downturn my personal participation in association activities is curtailed. (Score 3.19)
  • My association(s)provide me with the resources I need to cope with a down economy. (Score 2.96)

I am curious how you react to the survey.

I Couldn’t Have Said It Better

If you are a marketer, here is a quote that you should put on a plaque on your wall.

“If someone comes to you with a 'great' product that just needs some marketing, the game is probably already over.”

The reality is that “just about every successful product or service is the result of smart marketing thinking first, followed by a great product that makes the marketing story come true.”[1]

[1] Posted by Seth Godin on Seth Godin’s Blog, February 04, 2009

What do Members Really Want?

The best measure of membership engagement is a member’s behavior. A member who attends, buys, volunteers, reads electronic communication, posts, etc. is more likely to stay with your organization than one who does not.

You can see my research on this here.

But in addition to a strong communication strategy, what is the value that you can deliver to encourage this behavior? What do members really want?

I think that there are three basic foundations to build upon in order to provide a member with value and retain them with your organization are:

  1. Vision – When we cast a vision for members that together we can do more than we can do alone, we create a compelling answer to the question, “Why belong to this organization?”

  2. Reward – Members want tangible value to support their continued membership with product that makes a difference in their lives or career. This answers the question, “What’s in it for me?”

  3. Relationship – We are a communal people. We want to be around people that we can help and that can help us. Relationship can be with staff or other members and face to face or electronic. It answers the question, “Who can I connect to here?”

Obviously, the hard work is to come up with strong and reliable answers to these questions.

Sign Up for a Free Membership Marketing Webinar

Over the past few months, you have read a lot in this blog about membership marketing during a recession. Well I have been asked by Socious to put these thoughts together into a webinar that they are sponsoring.

Appropriately, the webinar is titled, “Membership Growth Principles: Best Practices in Membership Marketing.”

The webinar is free and will be given on Thursday, February 26, 2009 12:00 PM - 1:00 PM EST. Please join me. You can Register Now using this link.

Keep the Membership Recruitment and Retention Engine Running

Sometimes the perfect is the enemy of the good.

I have particularly noticed this tension of late in conversions with membership marketing people over building a strong membership product against getting the current product out into the marketplace.

Here is the kind of conversation I have had.

Membership: “I cannot do any membership marketing until I fix the value that I provide to my members.”

Tony: “How do you know that this needs to be fixed?”

Membership:” We see members’ lapsing each month and our research shows that they want more value.”

Tony:” Are members still renewing at a good rate?”

Membership: “Yes, but all we give members is a magazine and newsletter. We need to do more.”

As you might imagine, I have some concerns with this thinking. First of all, I will never argue against adding more value to a membership package. But be aware that sometimes we are our own worst critics. We hear negative comments from a few members, but forget that the vast majority of members vote with their pocket books and renew year after year.

In fact, the research that drove the book, Decision to Join, says that most members leave for reasons other than value. “Approximately half of them [lapsing members] indicate their reasons had more to do with career and other life changes than with the performance of the association. This means that those who worry about their retention rates get a 50 percent discount on their current distress levels.” (Page 3)

This level of leaving an organization is akin to what the economist call the natural rate of unemployment. People will come and go at some level each year.

The good news is that even in a changing market where membership value continues to be enhanced and recast, many members and prospective members will vote for membership through properly executed acquisition and retention strategies.

Here is one example, Association BisNow reports, “Membership in the American Occupational Therapy Ass'n grew from 32,000 to 39,000 the past four years. Fred Somers has been CEO for five and implemented new recruitment and retention methods that helped win back members who suddenly viewed membership as discretionary spending.”[1]

In keeping with full disclosure, AOTA has been a client of my firm, Marketing General, Inc. for the past four years. Membership came to be viewed as more “discretionary” when certification and membership were separated.

So what is the take away from not letting the good become the enemy of the perfect? Don’t believe that the product you offer is inferior until the market clearly tells you. Keep recruiting new members. Keep renewing members. But never stop listening and improving your membership product. Marketing and product development is not an either/or. Both are needed, now.

[1] Association BisNow, An IOTA from AOTA, February 4, 2009.

Important Membership Marketing Formulas

This past week, I had the privilege of leading a board retreat on growth strategies. We went over the following membership formulas and I promised to post them on this blog for the board members to review. I hope that they are helpful to all of my readers.

Renewal Rate
  • Renewal Rate measures the number of members kept over a given period of time -- usually during a fiscal or calendar year.
  • Total Number of Members Today (minus 12 months of new members) / Total Number of Members in Previous Year
  • Example: (10,500 - 1,500)/10,000 = 90% Renewal Rate
Average Tenure
  • Average Tenure measures how long on average a member stays with an association.
  • Reciprocal of Renewal Rate: 1 – Renewal Rate or, 1 - .90 = .10
  • Example: Divide Reciprocal into 1, or, 1 /.10 = an Average Tenure of 10 years
Lifetime Value (LTV)
  • Life Time Value measures the revenue stream that a member will produce.
  • Assume $100 / Year Dues and $50 / Year in Non-Dues Revenue
    Dues + Non-Dues Revenue) x Average Tenure = LTV
  • Example: ($100 + $50) x 10 = $1,500 LTV
Maximum Acquisition Cost (MAC)
  • Maximum Acquisition Cost measures the long term net incremental value (or margin) of a member.
  • Assume Incremental Servicing Costs = $20 and Cost of Goods Sold = $25
  • (Dues + Non-Dues Revenue) - (Incremental Servicing Costs + Costs of Goods Sold) x Avg. Tenure = MAC
  • Example: (($100 + $50) - ($20 + $25)) x 10 = $1,050 MAC
Steady State Analysis (or Potential Analysis)
  • Steady State projects the long term equilibrium of a membership based on current new member input and lapse rates.
  • Annual New Member Input / Reciprocal of Renewal Rate (or Lapse Rate) Shown as a Decimal = Total Membership Steady State.
  • Example: 20,000 New Member Input / .25 Lapse Rate = 80,000 Total Membership.

The Upside of Down

A story I wrote on the economy’s impact on membership marketing was included in one of ASAE's Associations Now feature articles. The story is titled, The Upside of Down. Here is a link if you are interested in reading it.

As I noted in the article, I am continuing to see very good response to membership acquisition efforts. Prospective members need the services, networks, and training made available by associations more than ever.

That's why for many organizations, now may be the best time to actively market and grow membership.

Please share what you and your organization are experiencing with your membership.