Case Study: A Thriving Membership Organization

One of the membership organizations that I like to follow is Costco. It is a good example to show to people who argue that membership is no longer a viable go to market strategy.

Costco has enjoyed exceptional membership growth over the years. The chart below from their 2010 annual report shows membership at the end of their fiscal year in August 2010. They reported 22.5 million Gold Star Members and 5.7 million Business Members.

As of the end of August 2011, Costco reported 25.0 million Gold Star Members and 6.3 million Business Members. That means Gold Star Membership has seen a five year growth rate of 44 percent and Business Members have grown by almost 21 percent.

A piece by Forbes about Costco that came out yesterday reports, “The renewal rates are approximately at the 89-plus percent range in the U.S. and Canada and 86% worldwide. Costco is also experiencing increasing penetration in the executive membership.” Forbes added that “in Q4 2011, the new member sign-ups witnessed an increase of 22% as compared to a year ago.”

Interestingly, Costco is upping membership fees by 10 percent on November 1. Prices will go from $50 to $55 for Gold Star members and $100 to $110 for Executive Members.  We will have to see if this impacts their membership numbers going forward. 

Obviously, every membership organization cannot be like Costco. However, it is a good reminder that when you deliver good value and market effectively, there are many millions of individuals who are ready and willing to sign up as members to participate in an organization.

The Impact of a Membership Dues Increase on Renewal Rates

It has been my observation that the demand for membership renewals is fairly inelastic of price. In other words, a percentage increase in dues rates generally does not translate into an equal or greater percentage drop in renewals rates. The demand for the membership holds. At least up to a point.

Some data from our recent Membership Marketing Benchmarking Report supports this premise. For example, 82% of organizations that raised dues by between 1% and 10% reported renewal rates of 70% or better after the increase. Similarly, 83% of organizations that raised dues by between 11% and 20% also report renewal rates of 70% or better after the increase.

However, this pattern falls apart with dues increases over 21%. In this case, only 68% of organizations that raised dues by more than 21% reported renewal rates of 70% or better.

The chart below provides the data on percent of dues increase and renewal rates.

The bottom line -- based on the the aggregate data -- it appears if an organization can keep a dues increase to under 20% there will not be a drop in overall renewal rates. But going over a 20% dues increase may errode renewal numbers.

The 25 Most Important Lessons in Membership Marketing

One of the sections that I find most interesting in our benchmarking research is the responses to our open ended question about lessons learned. We asked:

In your own words, what are the most important lessons you have learned in the area of membership marketing?

This year, we had over three hundred and eighty participants take the time to share their thoughts on lessons learned. I went through them and pulled out a representative sample of 25 responses.

Here are the insights that your fellow membership marketing professionals shared.

1. Recruitment and retention efforts require more "touches" than ever, and certainly more than, say, ten years ago. Associations must work to break through their members' "clutter."

2. Focus on the numbers. Construct and regularly monitor membership metrics to guide decision making and expenditures.

3. You can't grow without an acquisition program. A retention program simply maintains the membership or perhaps has a decline as people leave the profession or die.

4. The profession we support is going through a period of redefinition. The membership structure that has served us well for many years is now obsolete. What I have learned is the biggest barrier is that in volunteer run association, business decisions take too long and there we are not nimble as an organization in our ability to respond to the changes in our market with changes to our own business model.

5. You have to keep in there pitching every day. There is no "silver bullet" - direct mail, email, social media, events, member get a member. They all have their place.

6. The current economy has made everyone take a serious look at value for member dues. The abstract notion of "affiliation" is no longer enough. The surge of technology has caused a social media explosion that is difficult to keep up with and challenging to imitate. The bar has been raised in the areas of networking and providing up-to-date and exclusive information. We can no longer be a vague "something for everyone"; we need to develop a well-defined value proposition that resonates in today’s environment.

7. Surveying the membership base on a regular basis and always requesting and listening to feedback is extremely important to the association. Never assume the membership base wants or needs the benefits you feel they need/want.

8. In a down economy, it's more important than ever to stay in the marketplace and keep brand awareness strong. Do whatever it takes to maintain budget levels and continue solicitation efforts. That's key in ensuring you'll be well positioned once the economy begins to turn...and always continue to test - new efforts, offers, ideas, messaging, lists, etc.

9. That there is an actual discipline to it that needs to be followed, studied, and consistently applied.

10. Integrated marketing is key - no one channel is guaranteed for recruitment or renewal. I need to use direct mail, email, telemarketing and social media for each campaign.

11. Keep testing, even after you think you have found the magic bullet. Know your market and your competition. Understand your organization's business objectives and tie them to your membership marketing programs.

12. Reaching out to new members about 3 months after they've joined has won us good will. We talk about free member services and make sure they know how to take advantage of them and ask if they have any questions about their membership. They really seem to appreciate the check in.

13. Old programs such as branch/chapter, member get a member worked in the 80's and 90's. Need to sunset those, and fulfill needs of younger generation: quick turnaround, fewer hierarchies, ease of renewals, instant information, and willingness to engage.

14. Value is key to membership retention. Marketing is key to membership growth.

15. Having a clear message from leadership regarding the vision and purpose of the organization. It is key that all members understand and be able to share with others the purpose and value of the organization

16. Successful membership means instituting and implementing consistent processes and procedures for renewals, testing new membership techniques and messages, and always pursuing lapsed members.

17. You need to continue to try new things and track what works and what doesn't.

18. Clearly define goals, test the offer and meticulously record the results.

19. Investments in marketing pay off.

20. Multiple contacts are very important.

21. Membership should work with marketing to actually create a campaign.

22. Success depends on building relationships with our member companies, "drilling down" and developing relationships with multiple contacts at the member company and regularly communicating the value that the association provides to each member in multiple ways

23. Be persistent, circumstances can change regarding interest in membership. Every prospect has a "sweet" spot; you just have to find it.

24. We are not competing with other associations; we are competing for member dollars with for profit service providers and personal expenditures.

25. Times have changed - Members are looking at Association memberships much more carefully than they used to. The VALUE has to be there for the member to renew.

Feel free to add your own thoughts on lessons learned in the comments section below.  Which insights listed here do you agree with and with which do you disagree? 

ASAE’s Associations Now Interactive Extra Focuses on Membership Matters

The October edition is now available from ASAE of the Interactive Extra for Associations Now. The focus is “Membership Matters”. Some of the article titles include:

1. What Membership Means Around the World

2. Retaining Members, From Year One to Retirement

3. 7 Tips for Dealing with Angry Members

4. Recruitment, Retention, and Engagement Trends

5. Build a Better Member Survey

It is a very well done supplement. Here is the link if you would like to take a look at it.