Identifying and Solving Systemic Membership Marketing Challenges

With the New Year, it is time to evaluate what worked and what did not in your membership marketing efforts. But this year, why not try a different approach? Instead of compiling a long list of problems and opportunities in your program, why not step back and look at the challenges systematically?

As I have evaluated membership programs over the years, I have witnessed a consistent pattern. In most instances, fixing everything is impossible, but identifying a single systemic impediment empowers membership growth. In other words, don't try to plug every hole in the proverbial leaking dam. Discover what is causing the leaks and work on it.

The good news is that based on real-world experience and 14 years of data collected from thousands of associations through the annual, industry-wide Membership Marketing Benchmarking Report, we have discovered the common obstacles that constrain membership growth. Identifying and fixing one or more of these roadblocks for your organization is a powerful lever for change. Here are five of the common membership marketing impediments.

Undefined Value Proposition

Presenting a clear value proposition is foundational to membership marketing. Sadly, in the most recent benchmarking research, only 10% of associations say they offer a very compelling value proposition. The real issue for many groups may not be that they do not provide attractive benefits but that they lack an understanding of the value they deliver. Members do not write a check to renew if they do not see a return on investment. Yet, in the same report, the median renewal rate for associations is 84%. This apparent contradiction indicates that many associations may not fully recognize the value that they are providing. Taking the time to interact with members and conducting research allows an association to clearly define its value proposition and learn how to message that value to prospects and members.

Inattention to Membership Recruitment

The ongoing responsibilities of serving members and urgent activities can block out the essential job of adding new members to the top of the funnel. However, not consistently asking prospective members to join represents one of the top hindrances to growth. Years of benchmarking data affirm a strong correlation between increased new member input and overall membership growth. Renewing current members is essential, but renewal rates are hard to change and have remained remarkably consistent for years. You cannot renew your way to growth. However, adding more new members by prioritizing staffing and budgets devoted to recruitment will often ignite gains for an association.

Overuses of a Single Channel

Many associations that focus on membership marketing find results diminishing by relying on a single tactic to add and retain members. Pandemic-caused cancellations hurt groups that relied on an annual meeting to attract members. Others dependent on email have seen drops in open and click rates through overuse. The solution to ensuring your message gets through is developing a portfolio of communication channels using an omnichannel strategy. This approach uses many methods like mail, phone, social media, paid digital ads, and sales efforts to meet prospects and members where they are most likely to interact. There is no single stand-alone marketing channel that can fully support membership marketing.

Underfunding Membership Efforts

Acquiring new members is one of an association's most expensive marketing initiatives. But compared to any other associated product or service, membership generates a predictable ongoing revenue stream. An organization with an 80% renewal rate will keep members on average for five years. Plus, members tend to be the best non-dues customers for an association. So, for example, an organization with dues of $150 and non-dues revenue of $50 will see a lifetime value from a new member of $1,000 on average.   This return warrants a substantial investment. Benchmarking data supports the impact of increasing membership marketing budgets. Over the past year, there was a correlation with better results for those groups who boosted their membership marketing spending. Conversely, those reporting declines in membership counts tend to have decreased their budgets.

Lack of Innovation

Focusing on organizational innovation is another vital driver of membership growth. While only 29% of associations consider themselves Extremely or Very innovative, these groups are significantly more likely to see increased membership counts. At the macro level, innovation may require reevaluating your membership package. Is deploying a tiered membership structure or offering a hybrid membership where either an individual or an organization can join an option to review? At the micro level, one of the most significant opportunities to innovate is through market testing, tracking results, and analyzing the returns of your marketing campaigns. Building a testing orientation into marketing efforts allows you to continually adapt as your audiences tell you what they want through their responses. Meaningful elements to test can include who you target in your promotions, what special offers you make, how you present your messages, and what combination of channels works best.

Increasing an association's membership remains an achievable goal. Year after year, benchmarking research highlights that many more associations see their membership counts going up than those experiencing a decline. The opportunity for growth often comes down to focusing on high-leverage strategies with a proven track record of success. Take advantage of these growth drivers to build a thriving membership program.

A version of this article first appeared in the Associations Evolve 2023 & Beyond Journal.

The Seven Biggest Mistakes in Membership Recruitment

“Why isn’t my membership growing?” I hear this question often in my consulting with associations.  As I investigate the concerns, a consistent theme emerges. In most instances, the root of the problem comes down to issues with their membership recruitment program.

That is why in the book, Membership Recruitment: How to Grow Recurring Revenue, Reach New Markets, and Advance Your Mission, I explore the impediments holding back associations’ membership.  So, here is the list of the most consistent challenges I find in membership recruitment programs.

1.       Abandonment of Membership Recruitment – Perhaps the most significant problem holding back membership for associations is not consistently asking prospective members to join. An association may believe that they can grow their membership by merely increasing retention rates and that recruitment is too expensive or challenging.  In reality, one of the best predictors of overall membership growth is a thriving recruitment effort.  Years of benchmarking data show a correlation between new member input and overall membership growth.

2.       Excessive Planning – A good plan is needed to grow membership.  A plan includes defining your value proposition, identifying target markets, and developing a schedule and goals. However, many associations spend so much time developing a plan to answer every objection and contingency that they delay selling memberships.  They end up with a book-sized document that is out-of-date when and if ever implemented. Instead, consider a “ready, fire, aim” philosophy and do something now.

3.       Inadequate Special Offers – Membership is a push product.  It is sold, not sought.  A prospect can likely join 24/7 on your website.  So, an incentive is needed to get someone to join now.  The fear is a special offer like a new member discount will lead to a less committed member.  But test after test by many associations demonstrates that a strong offer both in the near-term and long-term benefits membership growth.  For example, companies run sales promotions not because they like giving away money but because it grows the number of customers and their revenue.

4.       Overreliance on a Single Channel – Many associations have been damaged by relying on a single tactic to bring in new members. Those groups that depended on an annual meeting to attract members each year were hurt by pandemic caused cancellations.  Others that were reliant on email acquisition efforts have burned out their email lists through overuse.  The solution is to develop a marketing portfolio using an omnichannel strategy that uses a variety of methods like mail, phone, social media, paid digital ads, and sales efforts to get potential members.

5.       Insufficient Frequency of Contact – Once and done is not an effective marketing strategy.  Membership recruitment requires ongoing and consistent outreach.  Growing associations maintain digital ads throughout the year, consistently call members every month when they lapse, send out regular invitations to join, and build their prospect database with new content offers. 

6.       Lack of Testing – When carefully measured, even well-run recruitment efforts show dramatic variance between their best list, offer, and message.  So, structuring statistically valid tests can determine what is working and what is not successful.  Some test outcomes impact results – even with minor changes -- by well over 100 percent. Without a testing strategy, a recruitment program will substantially underperform.

7.       Neglecting a Call to Action – The first questions someone asks when getting a promotion is “what is it?” and “what am I being asked to do?”.  Fortunately, marketers are typically very good at describing the benefits of membership.  But they often fail at telling the prospect what to do with the information.  Defining a Call to Action (CAT) needs to be the starting point in planning a promotion.  Start creating your promotion with the action you want your prospective member to do or the place where you want the prospect to go to join and work backward.

If membership growth is a goal for your association and you can identify with any of these oversights, there is help.  Membership Recruitment: How to GrowRecurring Revenue, Reach New Markets, and Advance Your Mission shares insights on the strategies and tactics that have helped many organizations trigger rapid and sustained growth. Use this link to learn more. 

Calculating the Cost to Serve a Member

One of the questions that I am frequently asked is how to calculate membership servicing costs.  It is an important question to building and sustaining a success membership marketing program.  But how you answer the question can have profound implications on your membership program.

Here is a real life story on how NOT to calculate the cost to serve a member.  One of my clients presented the following analysis to his staff.  He took the entire budget for his organization and divided it by the number of members and determined that the cost to service a member who annually paid $79 in dues was $300 ($3,000,000/10,000 members).

Shocked and with tongue in cheek, I told him that the best solution for the organization was to email all of the members and tell them not to renew – they would save $221 for each member who did not return.  Of course they would have to survive without the $800,000 in dues revenue and some portion of the non-dues, advertising, and exhibitor revenue dependent on members.

But in all seriousness, when an organization assigns too much cost to serving a member, the calculation can kill a membership program.  Why would an organization spend even the smallest amount of money on recruiting or renewing a member when the cost to serve approached the annual dues rate?

So what is the best way to determine the cost to serve a member?  I believe that the optimal method is to base the analysis on incremental servicing cost.

The incremental cost is simply made up of the variable costs that the association would incur to serve an estimated number of additional members.  These variable costs might be as simple as printing and mailing additional magazines and renewal notices.  You can determine these incremental costs by working with suppliers to get an estimate of what the additional cost would be if, for example, you printed and mailed and additional 1,000 magazines and sent out additional renewal notices to 1,000 more members and then divided these costs by that number of members.  A typical association might find these costs are less than $20 per member and not the $300 per member noted earlier.

Clearly over time for a rapidly growing association the incremental cost method poses some problems.  At some point, additional staff will be required to serve members and office space might need to be expanded.  But I have witnessed clients growing membership by 50 percent and not adding staff or additional space.

The other approach to calculating servicing costs is to try to define the “real” costs to serve a member.  The challenge is that what those real costs are is highly subjective.  Should the servicing costs include some portion of the CEO’s salary?  What about the editorial staff that works on publishing the magazine for members?  Should only the office space occupied by the membership department be assigned to the cost or the space used by others?  Are marketing communications sent to members a cost and if so does the membership revenue budget get credited with the non-dues purchases made by members?  How does the cost of insurance, software, and staff travel get assigned?

All these costs in theory can be assessed and monitored over time.  However, does this really provide a clearer picture or simply reflect someone’s arbitrary judgment call?

The bottom line is that for most associations, serving members is the reason that the organization exists.  And in addition to dues revenue, most product purchases, registrations, exhibit and advertising revenue are driven by the existence of members.  So understanding that there are costs to provide services to members needs to factor into any economic calculation, but following a simple incremental cost calculation will provide the fundamental information needed at a considerable savings of time and debate.

Determining Your Association’s Missionary Product

The most expensive task in marketing is new customer, member, or donor acquisition.  But many associations are trying to fight the marketing wars on multiple fronts because they have not identified their introductory or missionary product.  Instead they reach out to the marketplace with many products like membership, certification, conference, or publications.

An association that defines the product with the best level of response and return on investment and focuses its marketing resources on it to bring prospects into relationship with the association will achieve the most success.  The strategy is then to upgrade or cross-sell additional products and services to buyers of the introductory product.  However, when acquisition marketing efforts are spread over many products lines the marketing impact is diluted and the costs increase.

For associations, the most successful missionary product is membership.  This makes sense when you think about it.  As a member, a prospect is signing on to stay in touch with you for the next twelve months allowing for regular upgrade and cross-selling opportunities for secondary products and services.  Additionally, the average member stays with an association for five years, so there is a long-term income stream tied to a new member that supports the initial marketing investment.

On the other hand, a book buyer may only be interested in a specific topic and perhaps make their next purchase through an online bookstore.  And a conference registrant or certification candidate has to make a much bigger financial and time investment compared to the price of purchasing a membership.

But whatever product or service an association chooses to use for new customer acquisition, it makes sense to support it with adequate budgets and push.  Growth comes through focused efforts targeted at a specific market segment. 

Four Questions to Answer before Setting a Membership Growth Goal

The late, great Yogi Berra once said, “If you don’t know where you are going, you might end up someplace else.”

His thoughts certainly hold true in membership marketing.  Everyone likes a catchy phrase.  A leader may have stated a goal like, “20,000 members by the year 2020.” However, the frustration and challenge for many membership marketers is the goal may have been set without understanding the context of what it will take to achieve the goal.

Setting a membership development goal is a great idea, but to make it realistic, it requires the answer to four foundational questions.

·        Who are the prospective members that you want to recruit and are there enough of them to achieve the goal?

·        What is the value proposition that will appeal to these prospects and are there products and services to support the value proposition?

·        How will these prospects be reached (marketing channels), how often (frequency), how will they be incentive to act (offer), and how will the results be measured?

·        What is the economic model to reach the goal including the necessary budget availability, the required ROI, and the projected life time value of a member?

These are not easy questions to work through for an organization.  And there may be some resistance to the process because everyone is looking for a “silver bullet” answer or they may feel they already have the answer, “if we only do this, we will solve our membership problem.” 

But if these important planning questions are not addressed, the likelihood of ending up “someplace else” other than where you hoped is very likely.

The bottom line: before setting or agreeing to a membership growth goal, do the homework to make sure that it is reasonable, sustainable, measurable, and economically feasible.

A “Good” Response Rate in Membership Marketing

Many times I am asked what a good response rate in direct mail is. So I found it interesting when a client shared some data from the DMA Response Rate Trend Report. The report found that “Response rates for Direct Mail have held steady over the past four years. Letter-sized envelopes, for instance, had a response rate this year of 3.42 percent for a house list and 1.38 percent for a prospect list.”

Benchmarking data from other organizations is a good starting point for any analysis. However, real data collected from actual market tests is always the best. That’s because response rates are a comparative measuring tool, not an actual definition of value.

For example, is 72 degrees Fahrenheit a good temperature? It is great if you want to go for a walk, but bad if you are cooking a steak.

Before you determine if a response rate is good or bad, you need to understand the costs and the revenue associated with your membership (what cooking temperature is required). Then you can employ the response rate to define which list, offer, or package meets you minimum response requirements.

In the example below, the response rate varied on 16 different lists from 3.46% to 0.33%. If the revenue associated with the response is very high, then even the lowest responding list might be economically productive. But if the allowable marketing cost is $30, then responses below a 1.79% response rate on list “D” would be unacceptable.

What’s the bottom line on response rates? Do the economic analysis first to understand the costs and revenue associated with your marketing effort. This will tell you what the minimum response rate you need to achieve your outcomes. Then use your response rate as a decision tool to define what is good and what is bad from your marketing efforts.

Structuring Your Organization around the Value You Deliver

For many organizations the end of the year is a time to look and see if your strategies, tactics, and structure line up with your vision.

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.”[1]

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.

[1] The Discipline of Market Leaders: Choose Your Customers Narrow Your Focus, Dominate Your Market by Michael Treacy and Fred Wiersema, page xiv

A Wake-Up Call for Associations

Most associations that I interact with view competition as coming from the association next door. Going forward, I think that it will most likely be coming from a for-profit company. And in my mind, the best way to protect and grow your association before this happens is to build relationships and connections through membership with your market.

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.

Nurses
LPNs
Imaging & Radiation Oncology
Directors in Rehabilitation
Physical Therapists & PT Assistants
Occupational Therapy Practitioners
Speech-Language Pathologists & Audiologists
Audiologists
Long-Term Care Management
Respiratory Care & Sleep Medicine
Administrators of the Laboratory
Medical Laboratory Professionals
Health Information Executives
Health Information Professionals
Nurse Practitioners
Physician Assistants
Healthy Aging

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.

Does Common Marketing Wisdom still Apply?

Common marketing wisdom in a recession says the following.

“It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”[1]

This obviously assumes that the spending is done in a thoughtful and well targeted manner.

Does this still apply with our current conditions or do we need a new recession marketing philosophy? What do you think?

[1] John Quelch, Marketing Your Way Through a Recession, Harvard Business School, March 3, 2008

The Word on the Street

I have enjoyed emailing and talking with a number of marketers over the last few weeks. The constant question that I am asked is, “what are you seeing out there with other associations?”

It is a smart question, because according to McKinsey and Company,” the broader forces at work in the global economy mean that the underlying economics of strategies could continue shifting with unprecedented speed and scale. Such extreme uncertainty demands constant attention.”[1]

So here is what I am hearing from you and your colleagues. Exhibits, sponsorship, and advertising are being hit hard with sales declines and cancellations. Interestingly, I have yet to speak to anyone who is having a downturn in their membership results or budgets from the last few months of turbulence. In fact, most groups are on or above budget for membership.

I have heard one thing that concerns me. It appears some organizations are stealing from Peter to pay Paul. In other words, they are cutting membership marketing budgets to compensate for losses in other areas. I understand the reality of budgets, but I continue to maintain that winning and keeping members during the tough times is a solid strategy.

Again from McKinsey and Company, “To weather the storm, it will be necessary to identify anew who and where the profitable customers are and to prioritize the most effective marketing and sales vehicles for reaching them.” Or in other words, do not take money from what is working.

Please feel free to share what you are experiencing.

[1] David Court, The downturn’s new rules for marketers: The old recession playbook won’t work this time around, The McKinsey Quarterly, DECEMBER 2008.

The Importance of Membership Marketing Expertise

Marketing smart is more important than ever during these challenging times. And it does take time and practice to become a smart marketing or to become accomplished in any profession.

Malcolm Gladwell makes this point in his new book, Outliers: The Story of Success (Little Brown).

He noted in a recent interview, “The 10,000-hours rule says that if you look at any kind of cognitively complex field, from playing chess to being a neurosurgeon, we see this incredibly consistent pattern that you cannot be good at that unless you practice for 10,000 hours, which is roughly ten years, if you think about four hours a day.”[1]

What are the lessons for us in Gladwell’s premise? First, it may be ask for help from those with experience. Be careful not to conclude that sufficient knowledge and insight reside exclusively in your organization. Secondly, pick what you want to be good at and keep learning. Put in the time and effort to become “good” at what you do.

[1] FORTUNE MAGAZINE Leadership 2008

Making Your Marketing Memorable

Psychologists tell us that three of the parameters to help people retain information are Frequency, Intensity, and Duration.

So how can you apply these rules to make your marketing more memorable? Let’s take a look at each of them in turn.

Frequency: Marketing is remembered when multiple impressions are received. No we do not want to overwhelm members and prospects with repeated communications. However, in some key membership areas, I find that frequency is often lacking. For example, most organizations do not send out sufficient membership renewal notices. Surveys still show that many members have not renewed because they “forgot”. Here is another area. In an effort to limit email some organizations have moved to a single “combined” promotional email communication each month. But if email was achieving a 5% click through rate with a frequency of twice a week, it is unlikely that a 40% click through on a once a month communication will be achieved.

Intensity: In marketing, intensity relates to how effectively the promotion taps into a prospect’s emotions. A remarkably high number of buying decisions are made based on emotions and justified with reason. I wrote about using emotional drivers in a recent post. To enhance the intensity of your marketing first understand the wants and needs of your audience, then use stories and appeals to emotions -- like avoiding discomfort or embarrassment or gaining personal prestige or influence – to lock your message into the memory of your prospects.

Duration: In challenging economic times, one of the first budgets to be cut may be marketing. But research shows that organizations who keep marketing going over the long haul – taking advantage of duration -- build recognition and market share.

Here is one piece of research that I came across. An article from the journal Strategy and Leadership reported on a study of over 4,000 companies “the research showed that cutting marketing during a recession leads to reduced profitability in recovery, while increasing it leads to a 300% faster market share gain during better times.”[1] Keep this in mind as you look at your budgets.

How is your marketing doing in the areas of frequency, intensity, and duration? Feel free to share your insights.

[1] http://www.walesonline.co.uk/business-in-wales/business-columnists/2008/09/06/don-t-use-the-downturn-as-an-excuse-to-cut-marketing-91466-21684915/

The Cost of the Wrong Membershp Marketing Strategy

In my two previous posts, I tried to outline the profound long term opportunities of choosing the best membership marketing strategy for an association. Picking the one that looked good to some of you would have resulted in a long term membership nearly 60 percent lower than the full membership potential in our case study.

That’s why it is so important for every association – however well intentioned it may be -- to conduct this type of analysis before launching a membership marketing strategy.

Now let’s take a look of the financial opportunities of selecting the proper membership marketing strategy. Selecting the best strategy also has profound implications for the financial future of the association.

In the case outlined above, assuming an average dues rate of $95 and average member product purchases each year of $80, the financial outcomes of choosing the correct strategy are significant.

• Option one – focusing on membership acquisition -- generates an annual dues and member product sales revenue stream of $5,600,000.
• Option two – focusing on membership renewals -- generates an annual dues and member product sales revenue stream of $2,332,275.
• Option three – focusing on a balanced strategy of acquisition and renewals -- generates an annual dues and member product sales revenue stream of $4,375,000.

Choosing the membership acquisition strategy #1 over strategy #2 more than doubled the association’s potential annual revenue.

Potential Analysis is a shorthand methodology to focus the membership development direction of an association. The key to its success is using realistic estimates of how many members could be added to the association and what the renewal rate could be. Therefore, market research and benchmarking with other organizations can be used to hone these estimates and generate a more accurate future picture. But without doing this analysis of where an association is and where it can be, many groups significantly sub-optimize their potential.