Membership Recruitment Book Release

For many years I have cataloged my experiences as I consulted with perhaps a hundred professional and trade associations to understand and capture the successes and challenges these groups have had in growing their membership.

That is why I am happy to share many of these lessons with you in my just-released book,  MembershipRecruitment: How to Grow Recurring Revenue, Reach New Markets, and Advance Your Mission.

This book aims to answer three critical questions: Why is a growing membership so important? How can a thriving membership program be planned and executed? And what is required to achieve long-term membership resiliency?

You can order your copy of the book in print or as an eBook on Amazon. Here are some of the early book reviews.

 “Membership Recruitment is a thoughtfully written guided tour of today’s membership marketing universe, complete with how-to advice for the uninitiated, updates for the experienced, and fresh insights for everyone.”

 Joy Davis, CAE
Managing Director, Member Products
American Association of Pharmaceutical Scientists

 "Tony Rossell is the Master of Membership Marketing. This book is not a theoretical treatise; it reflects Tony’s work over many years, during which he has executed these principles over and over again to the great benefit of many membership associations. As the terrain shifts under the feet of non-profit associations, and for-profit corporations capitalize on the membership model, Tony’s expertise on member acquisition and retention is to be treasured by anybody serious about membership growth.”

 Ron Mattocks
Chief Operating Officer
Council for Advancement and Support of Education

“Tony Rossell is a leading expert on all aspects of membership from recruitment through retention. As it is stated in the book, ‘Members can and should be the driving power for association success.’ This book should be required reading for all who work in a membership association. The book contains practical, research-based advice and guidance that will assist associations in the development of strategies both to increase membership and retention.”

Neil Reichenberg
Former Executive Director
International Public Management Association for Human Resources

“If you are in the membership business, do yourself and your organization a favor by buying and reading this book. Tony Rossell understands the membership business better than anyone. Save yourself years of trial and error by discovering what he has learned during a long and successful career in membership marketing. Tony knows what works today and where the trends are leading us tomorrow.”

Frank Kenny
Founder
Chamber Pros Community

Membership Recruitment: How to Grow Recurring Revenue, Reach New Markets, and Advance Your Mission is available on Amazon. You can also get more information here. 

Budgeting for Membership Marketing in Challenging Times

Right now, every line of an association’s budget is under scrutiny.  So how do you make a case for sustaining and even increasing your membership marketing budget?

Here are the four essential values that members bring to an association that make a fully funded membership marketing budget a priority.

·       Lifetime Value – Membership stands out as producing an outstanding return on investment compared to many of the products that an association offers. At the typical renewal rate of 80%, an average member will stay with an association for five years.  So, a $150 annual dues rate represents an income stream of $750 in lifetime value. On the other hand, customers come and go. Some of our data analysis shows that customers renew year over year at a rate as low as 7%. Having to replace most of your customers each year is a less efficient use of marketing dollars than getting and keeping members. 

·       Customer Value – Besides offering a dues revenue stream, a member also represents a significant value as a customer for an association. Almost any association will find that members pay to attend meetings at a higher rate than non-members and are the top buyers of all of an association’s offerings. Effectively a member is paying you to become a customer. So by producing both a dues revenue stream and non-dues revenue, members represent an economic multiplier for an association.

·       Stability Value – Member dues bring financial stability to an association. Many associations are challenged now with face to face training and conference cancellations.  It has been a shock to many budgets—however, members signup for a year at a time.  So, associations with a strong membership dues base maintain a predictable income stream. Of course, membership counts might decline for some during an economic disturbance, but the decline is typically incremental compared to the loss from a significant event cancellation.

·       Mission Value – Members are the cornerstone for accomplishing the mission of an association through their volunteering, content creation, networking, and support of advocacy. And they typically provide these vital services at no cost to the association. An association without members becomes a publisher or meeting company.

One other important consideration for budgeting is the enormous need in the world now.  People are looking for guidance, community, and solutions. This challenging time offers associations the opportunity to meet needs through the value provided by their membership. You will never know if your association can be the source of that help unless you reach out and invite members to continue with you and to join. Now might be the ideal time to invest in your efforts to get and keep members.

Your Guide to the Most Important Membership Numbers You Need to Know

To find success and be effective in membership marketing there are some essential concepts that you need to master.  These concepts are as simple as determining the response rates of your marketing efforts, to the more complex calculations like how to determine the long term steady state of your organization's membership.  

To help you master these concepts we have compiled a guide that walks you through how to understand and use these metrics to better manage your membership program. Our guide serves as a reference tool for you to take a strategic look at your membership program.

To get your copy of the Guide to Membership Marketing Metrics please use this link. 

How Understanding Lifetime Value Powers Your Membership Marketing

It is true, without an adequate budget it is a challenge to grow membership.  So how do you make the case for additional marketing dollars?

One effective way is to present the economic argument based on a lifetime value analysis.

Unlike the purchase of a book, webinar, or some other product or service provided by your organization, membership has a predictable, ongoing revenue stream.  Because membership is renewable, there is an economic value provided by a member beyond the initial first year dues payment.

Here is an example using data provided by hundreds of associations in the Membership Marketing Benchmarking Report.

Based on survey responses, the average association will receive $175 in annual dues from an individual member.  And the average renewal rate for a member is 80%, so this translates to a tenure or length of membership of five years.  In addition, members are typically an association’s best customers.  So perhaps and average member will spend an additional $50 per year.

Based on these numbers, the revenue stream or lifetime value of a member is a fairly substantial sum of $1,125 ($225 x 5).

So in order to achieve this revenue stream, how much do you think associations report spending to acquire a new member?

Surprisingly, individual membership associations told us that they spent on average only $24 to acquire a new member.  Of course there are costs to serve the member in addition to the acquisition costs, nevertheless, most organizations when presented with an ROI of spending $1 to produce $47 ($24/$1,125) of long term revenue, will understand that additional investment makes good economic sense.

As one respondent to our research shared, “Measure your results with lifetime value of a member.  It’s the primary metric.”

When understood, lifetime value makes a powerful case for investing more aggressively in membership marketing efforts. Use it to support the level of funding needed to grow your membership.

Everyone is Discovering the Power of Membership

The theme of the recently released book, Marketing 4.0, proposes that “The role of marketers is to guide customers throughout their journey from awareness and ultimately to advocacy.”

Most membership organizations have operated with this philosophy for years.  I have defined this ongoing relationship as the Membership Lifecycle.

But the news is that today the understanding of membership as one of the most powerful relationship builders between any organization and its audience is becoming foundational in minds of most marketers.

For example, the for-profit world is rapidly adopting the membership model.  In her book, The Membership Economy: Find Your Super Users, Master the Forever Transaction, and Build Recurring Revenue, Robbie Baxter spoke to this opportunity.  She wrote, “Membership strengthens loyalty.  Membership strengthens participation.  Membership strengthens referrals.  And organizations that think about membership tend to focus more on providing long-term value, which ultimately leads to better customer lifetime value.  Any CEO who is not thinking about membership is missing a huge opportunity to point his or her organization toward long-term sustainable profitability.”

The economic benefits or establishing long-term, continuity relationships with customer (or members), was also recently documented in a study published in Forbes Magazine titled, “New Subscription Economy Index Shows Subscription Businesses Growing 9X Faster Than S&P 500 Ones.”  The authors study compared the growth rates of companies using a sales platform of recurring subscription revenue (think Netflix) to companies in the S&P 500 and US retail sales.  “The result: Since the start of 2012, the sales of subscription economy businesses are growing nine times faster than sales of companies in the S&P 500 and more than four times the rate of U.S. retail sales.”

What’s more associations themselves are reporting significant strength in membership.  In the soon to be published 2017 Membership Marketing Benchmarking Report, of the 1,056 responding associations, 46 percent reported that their membership has increased over the past year, while only 25 percent reported a decrease in membership counts.  And respondents also reported a median renewal rate of 84 percent meaning associations were benefiting from the revenue of a membership relationship on average for over 6 years.

What can we take away from what we see happening in the marketplace?  For associations the key is to invest and continue to focus on recruiting and retaining members. The tools, methods, and competitive environment of getting and keeping members are changing, but the power and opportunity of this core relationship will continue.

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. 

The Benefits of Membership Continuity

The power of the membership model is twofold.  Most importantly, it conveys the sense of a relationship between an organization and its constituents or customers.  Membership fosters engagement, trust, and loyalty. 

But the second benefit of membership for many organizations is that it encourages financial continuity.  Whether someone is a member of an association, a church, or a charity there typically is a projectable retention rate and income stream from members. 

The renewal income stream of this concept is more and more being built into almost every aspect of our economy today.   Whether it is cell phone contracts, music streaming, or your cable bill, this annual or monthly agreement is now part of many of our transactions. 

The Harvard Business Review reports that this continuity or subscription approach is now becoming a more regular practice even in the retail industry.  It meets two important customer needs – convenience and simplifying the many choices that a customer has walking into a store.  HBR says that retailers who move in this direction “forge deeper relationships with customers, gain access to valuable consumer demographic data, tap a recurring revenue stream, and meet a growing consumer demand for both convenience and curation.”

One example of this retail subscription is the Dollar Shave Club which allows you to choose your blade and have regular delivery at a frequency you select.  The subscription continues non-stop until you take the pro-active step to cancel.

There are opportunities for membership organizations to increase this continuity with members.  Our research shows that many associations are moving from an opt-in renewal process to and opt-out method through automatic credit card renewals and regular installment payments.  The Membership Marketing Benchmarking Report highlights that 37% of individual membership associations offer some type of installment renewal options and 32% offer automatic annual credit card renewal options. 

With these automated renewal methods, a member must cancel an active credit card in order to discontinue membership instead of having to make a specific renewal decision.

More than just convenience of delivery, membership organizations enjoy the power of a relationship with a member.  Building a solid relationship with members is the primary goal for an association.  But adding continuity into as many products and services in this relationship is proving to make great economic sense in almost every sector of the economy.

Membership Growth Helps Increase All Association Products and Services

The famous quote from John F. Kennedy, “a rising tide lifts all boats,” certainly applies to membership.

In our soon to be released Membership Marketing Benchmarking Report, we cross-tabulated organizations that reported an increase in membership numbers to the outcomes that they were experiencing in other areas of the association. 

When we compare associations who saw a decrease or no change in membership over the past year to associations reporting growth in membership, we see associations with increasing membership reporting better performance in many categories.  

Here are the associations reporting increases in a category -- like meeting attendance or volunteerism -- broken out by the percentage who had memberships that Increased/Unchanged/ Decreased). 

·        Attendance at annual conference/trade show (55% vs. 45% and 34% respectively)

·        Attendance at professional development meetings (52% vs. 38% and 33%)

·        Attendance of webinars (70% vs. 45% and 54%)

·        Volunteerism (37% vs. 30% and 17%)

·        Number of members who acquire or maintain certification (59% vs. 42% and 36%)

·        Purchase of non-dues products (45% vs. 24% and 25%)

·        Purchase of non-dues services (46% vs. 28% and 17%)

·        Number of visits to members-only section of website (61% vs. 48% and 36%)

Fundamentally, for most associations, members are the driving force behind attendance, volunteerism, and purchases.  Members pay the association to be customer.  A growing and thriving member base contributes revenue and time to all areas of an association.

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.

Under Investing in Membership Recruitment: The Biggest Mistake made by many Membership Organizations

This afternoon, I was interviewed for an upcoming article on association membership. The writer asked me, “What do you think is biggest mistake that organizations make in the membership marketing?”

I shared with him that for me the answer is pretty simple. Most membership organizations under invest in getting new members.

Frequently, I speak with organizations that have very lofty plans on how many new members they want to add. When I ask them what they have budgeted to accomplish this, the answer is shockingly low.

One recent group I spoke with, for example, wanted to stem their decade’s long membership decline by developing a marketing campaign to recruit an additional 3,000 members over the next year at a dues rate of $65 each. However, they only budgeted $30,000 to accomplish this goal or $10 per new member. Unless they discover a marketing silver bullet, it is unlikely that they will accomplish their membership goal.

At the same time, members in this organization typically stay for four years. So from the members that they acquire, they will realize an income stream from each new member who joins of $260 plus any revenue from non-dues purchases. Assuming that they have incremental servicing costs of $15 per member, per year, a new member represents a $200 net revenue stream for the organization.

How much should an organization be willing to spend for a new member in order to produce $200 in net revenue? They should be willing to spend more than $10.

The basic mistake that many membership organizations make is that they under estimate the cost of acquiring a new member and they overlook the lifetime value that a new member can deliver to the organization.