Current Practices in Increasing Membership Dues

We have started to work our way through the crosstabs for the 2011 Membership Marketing Benchmarking Report and some great data is showing up from the responses provided by the 650 participating associations.

Analyzing Two Volumes of Great Data
 This week I have had a number of questions asked about dues increases and since we included questions on membership dues this year, I wanted to share some top line responses from the survey data.

In our research, we asked: “How often does your association raise membership dues?”, “When was the last time your association raised membership dues?” and “What was the average percentage of your last membership dues increase across all membership categories?”

Here is how participations responded.

These dues related questions were also included in our 2007 Membership Dues Increase Study. So in addition to cross tabulating responses with membership outcomes, we will also provide some trend data in our benchmarking report.

By the way, participating organizations in this year’s research will receive their copy of the Membership Marketing Benchmarking Report in a few months.

Pricing Your Product, Service or Membership

Sometimes pricing is an afterthought when developing a product or service or changing your membership structure. But this can be a mistake. Pricing is one of the four “P’s” of marketing for a reason. Proper pricing has a huge influence on the viability and profitability of an offering and should be part of the conversation from the very start of product development.

For example, a quick search for a pair of sneakers shows a price range from $6.99 to $2,395. Clearly, there are vastly different strategies between these two ends of the pricing spectrum.

So how does one go about building a pricing strategy? Here are five basic approaches to pricing.

1. Cost-Plus Pricing: A price established to cover costs plus a margin added for profit. This method is not unlike that used in regulated industries like utilities.

2. Market-Oriented Pricing: A price based on the levels charged for similar products in the marketplace. Automobile companies are keenly aware of the price for completive vehicles. Perhaps in part because of this competition, car prices have risen at a much slower rate than inflation over time.

3. Market-Penetration Pricing: A low price to position a product to gain market share. An example of this might be the deals offered by telecommunication and cable companies seeking new customers. The price starts low and then goes up after a year or two.

4. Premium Pricing: A luxury price is designed to convey extreme value and exclusivity. Some people only want to buy the very best and are willing, for example, to pay $47,500 for a Rolex watch.

5. Value-Based Pricing: A price established based on the actual or perceived value a customer places on the product. This method requires a lot more work to set a price, but done properly it can also lead to better profits.

A book that does a good job explaining the value-based pricing strategy is The 1% Windfall: How Successful Companies Use Price to Profit and Grow. The book makes the point that successfully adding just a 1 percent price increase can produce a ten-fold increase in profits.

How does your organization set prices? Do you have a strategy or make it up as you go along? Feel free to share your thoughts.

Sample Marketing Language for Automatic Membership Renewals

One method to improve renewal rates is offering members the option for automatic credit card renewals. I get a lot of questions about this, so I thought it might be of help to provide some sample language you can use to present this option on recruitment and renewal efforts.
“[ ] Yes, I want to join or renew. Charge my credit card and provide my membership benefits with automatic renewal for as long as I wish to continue. See below for details.

As a credit card member, we will continue your membership as long as you wish without interruption, unless you tell us otherwise. At the end of your initial term, and before the start of your new term, we will simply charge your credit card at in the dues rate then in effect. Should terms or rates change, we will notify you in advance. If we cannot charge your credit card we will send you a bill for your dues.”
This language is provided as a sample only. The goal of automatic renewal is to transform the renewal process from being opt-in to an opt-out. This language also allows for a billing option once the credit card has expired.