Two New Membership Models that are Thriving and One Membership Model that is Struggling

As they look to the future, many membership groups are looking for ways to either increase revenue of cut costs. To achieve this, they are introducing new membership models. Here is what I am seeing with some recent programs that our clients have developed.

1. Premium Membership – There are always highly committed members that want the top individual membership available. So one group I work with added some low cost, but helpful, new benefits to their regular membership and created a plus or premium option. They priced the higher level membership at $97 compared to the regular membership price of $49. With very little promotion members have moved to this new category primarily as they see the option when they renew online. It has increased revenue at almost no additional cost.

2. Institutional Membership – Traditionally membership associations are either an individual membership organization (IMO) or a trade association with company or organizational memberships. However, many IMO’s are creating a hybrid model where they continue to offer an individual membership, but also make available an institutional membership that includes benefits for multiple individuals in the organization. The results are very positive, more revenue and higher retention rates. Essentially these associations have grown their share of wallet beyond the one or two memberships that they normally would have from a single organization to a much higher dues figure.

3. Online Membership – As a cost cutting measure some associations have offered a lower price, paperless membership. All of the services are delivered electronically. Initial signups for this type of membership are good because of the lower dues amount. However, renewal rates for this membership category have been disappointing for many organizations. I have seen renewal rates as low as 15 percent. The challenge with the electronic membership model may be that online members do not receive the “push” of tangible mailed services with their membership. They have to be very proactive to extract value from the membership. And many do not have the time or take the initiative to benefit from services that are not pushed directly to them.

Exploring new membership models is part of the formula to keep a membership strong and thriving. However, not every new membership model works. What new membership models have you tried in your organization?

How to Budget for Membership Recruitment and Renewals

Most membership marketing budgets are built backwards. An organization determines how much it can spend and then asks the membership staff to use it in the best way possible.

But the correct question should not be how much you are allowed to spend, but how much you can generate in revenue for the organization. In other words, base budgets on the harvest, not on the cost of the seeds.

Here is an example.

One group that I work with on renewals has an average dues rate of $95. They run a nine part mail renewal program with supporting emails. The incremental cost to service a member is approximately $24 per member.

Here is how much they spend to renew each member from each renewal effort (cost of the renewal effort divided by the number of members renewing with that effort):

• Effort #1 -- $ 2.31

• Effort #2 -- $ 4.05

• Effort #3 -- $ 8.75

• Effort #4 -- $10.24

• Effort #5 -- $15.96

• Effort #6 -- $10.15

• Effort #7 -- $ 9.36

• Effort #8 -- $ 20.54

• Effort #9 -- $ 37.61

So by the last effort, they are spending over $37 to get a member to renew. Is that too much? I would argue that it is probably makes good economic sense for this organization to push even harder for renewals because they are still making a profit for the organization on effort #9 of $33.84 per member (($37.61 + $24.00) – ($95) = $33.84).

The good news is that this group is basing a renew budget on return on investment that they monitor for each effort instead of on an arbitrary cost budget.

The same evaluation can be done for membership recruitment. As I noted in my August 16th post, a new member will produce a predictable income stream for an organization. This income stream is called lifetime value.

If you know the lifetime value of a member and the cost to service the member each year, you can establish the “margin” that a new member will produce for the organization over time. Knowing the lifetime margin a new member will produce then allows you to build a budget based on ROI instead of on what funds are allocated or might be available for membership recruitment.

So with the organization highlighted above, if the average member stays for 5 years, the dues revenue stream is $475 and the five year servicing cost is $120, producing a lifetime margin of $355.

Knowing these numbers allows the recruitment budgeting discussion to be driven by how much the organization wants to invest to produce $355 income stream from each new member.

The bottom line is that you should not budget backwards for membership marketing. Budget based on the return on investment that each membership marketing dollar will produce for your organization.

Whitepaper with Tips on Membership Association Marketing Released

We have issued a new whitepaper, “100 Super Hints Revealed” focused on tips to help membership associations market more effectively. It is a free download and provides good reminders for experience pros and new marketing professionals as well.

Here is a selection of some of the tips that I like.

3. What’s your “USP” (Unique Selling Proposition)? If you had 15 seconds to convince someone, what would you say? What sets you apart from others?

10. Use what works don’t reinvent the wheel. If it works, use it. If it doesn’t, try something else. Incorporate a “test” into every effort you do.

15. Write the Order Form first since marketing is “only” about sales; your order form is the most important piece in your package.

55. Use a List Broker. They usually work FOR FREE and can help you with research, trade customs, and problems.

73. If your sale has to be approved by others try mailing the influencers as well (e.g., the prospect, their boss, their accountant, etc.).

81. Test, Test, Test. As soon as you find something that works, beat it.

84. Incentives work. Use discounts, premiums, and coupons. Everyone likes to think they’re getting a deal.

Here is the link for the free download. Feel free to add your tips in the comments section below.

Presentation Slides for the Membership Marketing Benchmarking Report Now Available

Over the last couple of months, I have been asked a number of times for content from our Membership Marketing Benchmarking Report to use for staff or board presentations. In order to make the material easier to access, I have loaded my standard PowerPoint presentation onto Slideshare.

You are welcome to use the information; I simply ask that you attribute it back us when you share the findings. I hope that you find it of help.