Total Quality Marketing: Launch Fast and Learn Fast for Membership Growth

Edwards Deming is recognized as the father of Total Quality Management (TQM) owing to his significant influence on quality manufacturing and management practices. Deming's principles focused on continuous improvement, which he defined as Plan, Do, Study, and Act (PDSA).

The concept of PDSA also has the powerful potential to influence marketing. Many organizations face two challenges when marketing their membership or products and services. The first challenge is getting started. As I have met with associations struggling with their marketing, I have found that, in some cases, they lack a plan or a clear strategy. The second significant impediment is that they spend so much time planning and attempting to build consensus or create a perfect plan that it delays or prevents marketing from happening. I refer to the last issue as the paralysis of analysis.

I remember chatting with a friend at an association event whose organization struggles with perfection. She served as marketing director at a trade association and shared her frustration with getting approval for a membership recruitment program. After several plans were turned down, she proposed buying pizza for her colleagues and having them call prospective members. However, the CEO shut down even this effort because he worried a staff member might not say the right thing to a prospect.

Adopting a PDSA framework for marketing can provide a solution to avoid some of these pitfalls. Much like its application in process improvement, this structured approach to planning, testing, and refining efforts encourages action while lowering risk through incremental phases and learning.

Here is how a PDSA approach can effectively be implemented in an association marketing context.

The Plan Phase

The "Plan" stage involves creating a concise yet well-defined marketing plan to expedite program deployment. Some organizations limit their plan to one or two pages. This format is especially appropriate because it allows the organization to be agile and rapidly adjust based on the results. The plan should answer the following questions.

•            WHO is the target market?

•            WHAT is the membership offer?

•            HOW will membership be promoted?

•            WHAT is the message?

•            WHY does the plan make economic sense?

The Do Phase

After completing the Plan phase, it's time to "Do" – to deploy the marketing effort. The Do stage represents a testing phase that gathers feedback from the marketplace using a limited budget. A/B testing of offers, messages, and channels will enhance the learning outcomes from this step. The promotions are targeted at a subset of potential prospects in the association's database who have an existing or previous relationship with the organization. Because of this relationship, the association can utilize most marketing channels—email, direct mail, digital ads, and telemarketing—for these initial tests.

The Study Phase

With the next step of "Study," each executed action is evaluated to see what worked and what did not perform well. The Study phase allows you to optimize the plan and strategies for the future. At this stage, some critical questions are:

•            WHAT was the Cost Per Acquisition (CPA)?

•            WHICH prospect segments performed best?

•            HOW did messages resonate with the audience?

•            HOW MUCH is the Lifetime Value of respondents?

The Act Phase

Finally, in the "Act" phase, the plan is updated and adapted based on the findings from the Study phase and then redeployed. Since the initial testing mitigated some marketing risks, this step will likely enable a larger budget and a broader audience reach. However, PDSA does not end at the Act stage. Instead, it supports a continuous loop of testing, evaluation, and execution. Marketing is an iterative process, and an embedded PDSA structure forces this orientation.

Why should an association adopt a PDSA model? Utilizing the PDSA methodology enables organizations to achieve maximum learning with minimal effort and expense, reducing time to market while gathering feedback quickly. It helps alleviate the fear of failure and turns the focus to learning. By embedding PDSA into your marketing, you can overcome hesitation, launch more innovative campaigns, and continually refine your approach. 

Tracking and Measuring for Membership Marketing Success

In my book, Membership Recruitment, I share an eye-opening experience with a client. For several years, this association had been doing a sizeable annual mailing to recruit new members. The mailing went to a portfolio of outside lists totaling over 100,000 records. Results were below expectations, so they asked for assistance to improve returns.

The obvious place to start may have been looking at the creative or the offer for the mailing. Instead, we ran an analysis matching the new members that had come in compared to the lists mailed. That is where the eye-opening experience happened. Fully one-third of the lists used year after year produced zero responses. They had wasted thousands of marketing dollars. Other lists were producing good returns and supporting the overall effort. 

Here's the simple lesson for marketing, and in many areas of life, track and measure what you are doing. This critical step will show you where you are wasting funds, time, and energy, and you will also see where you are finding success. Then do more of what works.

How to Simplify Your Membership Marketing

Frequently, I have the opportunity to review the membership marketing programs of various associations.

Sometimes, I find that organizations are doing too little to get and keep members.  They need to increase the frequency and reach of their marketing efforts.

However, of late I have observed another problem; overly complex and tradition bound membership marketing plans. Here are some of the issues that I have seen and some fixes to these challenges.

1. Not Keeping a Focus on ROI: Some organizations continue efforts year in and year out without stepping back to really look at the time, effort, and budget required to deploy an initiative compared to the return it produces.  At some point, almost every promotion needs to be retooled or sunset.  Regularly identify and drop the poor performing promotions and reprogram the budget toward innovative new opportunities.
2. Over Testing: Any good marketer is in favor of testing.  However, too much of a good thing may not make sense.  It makes sense to test big elements (offers, lists, channels) because the results will normally come back with a statistically valid outcome.  However, testing little elements like a color, a signature, or a font will very likely produce such a minor difference in response that any variance will be statistically insignificant.  Test big items for big wins and save the time and energy on launching inconsequential tests. 
3. Too Much Segmentation: Every market can be segmented by a host of demographics, behaviors, and list selects.  But at some point providing a unique message and offer to each segment becomes inefficient and ineffective.  More often than not when I have tried to tailor unique “special messages” to each slice of prospective members a generic option has outperformed the highly targeted approach.  Present your most powerful and compelling message to your market instead of diluting it by trying to be all things to all people.
4. Too Many Steps: How many clicks and how much information is required to join or renew your organization’s membership?  It is great to gather a detailed profile of on member and you want to ensure that he is qualified, but over time your application process may have added requests that cause a member to abandon the transaction because it takes too much time or they do not have the information at hand.  In fact, many organizations report exceptionally high shopping cart abandons during the join process on their websites.  When you are asking a prospect or member to complete a transaction, require the minimum time, clicks, and information possible before the dues payment is received.
5. Too Much Research: Research is a foundational discipline for effective marketing.  However, research can become like pealing an onion.  There always seems to be another layer of the unknown.  At some point, gaining understanding has to give way to execution. And indeed the best research can simply be whether or not someone will write a check in response to your offer.  Lean toward a “ready, fire, aim” approach in your marketing by gathering real data from actual promotional efforts.

Here is the bottom line.  When you are developing a plan or a marketing campaign ask the hard questions.  Is this promotion really worth the time and effort required for the expected return?  Do we have the quantity necessary to get a legitimate statistical outcome from this test?  Are these demographic differences really significant enough to warrant a different message or is our core value proposition strong enough for each market segment?  Would I really take the time and effort to go through all of the steps needed to make this transaction or is it too much to ask?   And am I willing to take the risk to gain understanding by acting on what I know instead of waiting for more information? 

Membership Recruitment Dues Discounts: The Do’s and Do Not’s

The other day, I received a membership recruitment mailing offering an end of the year 50% off first year dues discount from a respected professional association.

As a reader of this blog, you may know that I believe in making special offers available to recruit prospective members.  And done wisely, a special offer will produce more than enough new members to pay for the discount or premium and future renewal rates will only be marginally affected.

However, there is a difference between a well-planned, tested, and strategic use of a special offer and -- to use a football term -- an end of the year “Hail Mary Pass” that is designed to prop up final membership numbers. 

With a steep 50% off discount, it is unlikely that the additional response will make up for the lower price.  And even if it does, the members that are obtained will likely continue at a much lower rate when the full price is requested at the time of renewal.

The best approach to membership recruitment continues to be a regular stream of value laden communications that include an incentive to act within a given timeframe.  This approach allows for testing and optimization of the program over the course of the year.

As football seasons draw to a close, we may see some amazing come from behind victories in the last seconds of a game.  But I would rather have the outcome of the game clear in the third quarter because my team executed and effective game plan from the start.  As we go into the next year, be sure organization has a well thought out membership recruitment strategy and schedule in place. 

Three Membership Marketing Resolutions for the New Year: Part One

In this and several upcoming posts, I want to share three resolutions you may want to consider for your membership marketing program in the New Year.  The first resolution is to re-focus your efforts on planning, testing, and tracking.

The basics of membership marketing are to create a plan, try new approaches, and track the results and your important membership data points.  Some groups do this very well, so this may be a simplistic resolution for you.  However, all membership organizations could do this better. 

When it comes to planning some groups simply do not have a documented plan in place to recruit and retain members.  And if you do not know where you are going, it is highly unlikely you will achieve very much. 

Other organizations suffer from the paralysis of analysis.  They over think their plans.  I remember the advice one executive director gave to a new membership staff person.  He said spend your first year getting to know the organization, your second year creating a plan, and your third year implementing the plan.

My preference would be to follow a “ready, fire, aim” strategy.  Put together a plan that makes sense to you and your team: include some new initiatives, read the responses from your promotions and then adapt your plan based on what works best. 

Here is an easy to use marketing template to put together a membership recruitment plan for your organization.   As you can see below, the template helps you to identify the main components that go into a plan including the marketing channels that you will use, the value proposition you will communicate, and your special offers, messages, and the frequency of contact for each market segment that you want to reach.

One of the biggest weaknesses in the practice of membership marketing is the lack of testing.  In the 2013 Membership Marketing Benchmarking Report only 16% of associations reported doing A/B tests in their marketing efforts.  Yet the results from a test can easily double or triple results.  Lack of testing means many programs are sub-optimizing their potential returns.  Marketing tests can be done on the special offers, graphics, messages, and the lists that you use in an effort. 

In the example below of testing lists, the response rates varied between 16 different lists used from 3.46% to 0.33%.  But if some of these higher responding lists had not been tried and the responses were not monitored, the organization might have continued to reach out to the lower responding prospects and never known about the best responding segments. 

Finally, tracking the key statistics related to your membership is essential.  I am sometimes surprised when I meet with an organization and they are not sure about how many new members join each month, or what their renewal rate is for new and longer term members, or even where their total membership count currently stands.  

Ideally, all of these numbers can be maintained on a simple dashboard that helps monitor this data.  Here is a sample of what a dashboard might look like. 

By regularly tracking your vital membership numbers, you will identify problems early on while there is time to make a change.  For example, if you see your “Conversion Rate” (new members’ renewal rate) declining for several months, you can do a quick survey to determine if there is a problem with your content or your product fulfillment.  If you see your overall renewal rate increasing, you can congratulate yourself of the successful changes you made to your renewal process.  Using a dashboard to track your membership allows you to continuously keep your finger on the pulse of your membership.

Laying a foundation for your membership program that includes creating a plan that can be quickly deployed and adapted, testing new opportunities that can offer big jumps in response, and tracking the ongoing health of your membership to allow for interventions is a very good start to the year for any membership organization. 

In subsequent posts, I will look at two other resolutions that you may want to consider in this year.  And if you find this series helpful, you are invited to participate in a webinar on these resolutions that I will be doing for the ASAE Membership Section Council on Wednesday, January 29^th.  Registration for the webinar is free, but a site registration with ASAE is required.  You can sign up for the webinar using this link. 

Winning in Membership Marketing Even if you are Wrong 99.5% of the Time

Here is something that I have been observing in membership organizations of late.  Many organizations too quickly assume rejection.

When I ask why they do not reach out to this or that group of non-members, I might hear statements like, “we asked those people to join when they attended our meeting and they did take our membership offer.”  Or “they didn’t renew their membership awhile back, so we do not contact them anymore.” 

Essentially some organizations have imposed restraints on themselves that might not be supported by marketing data.

The fact is that even if 99.5% of the time you are correct and indeed a prospect will not join your organization, most organizations can still be remarkably successful with a .5% acceptance rate.

The psychological challenge – and the reason we may impose restraints on ourselves -- is that there are very few life situations where a 99.5% failure rate can actually be good.  It does not work in school, engineering, sports, or even Vegas.

Here is some quick math to support how we can be wrong a lot and still be successful. 

Let’s say you have 5,000 prospects that may have declined membership even after a couple of sales attempts.  Most likely you could reach out to them with a direct mail solicitation and a couple of follow-up emails for $1.00 to each person or $5,000 in marketing cost.  If the dues amount for these members is $200 and half a percent of them decide to join, you have generated $5,000 in new dues revenue.  And if your organization maintains an industry average renewal rate of 80%, you will realize $1,000 in lifetime dues revenue from each of these new members (or $25,000 total lifetime dues revenue) plus any non-dues purchases that they might make. 

 

Yes, there will be costs to service these members over their lifetime with your organization, but your overhead and fixed costs will exist whether or not you added these new members.  On an incremental basis, the cost to provide services to these new members should be minimal.

However, these numbers reflect a minimalist view.  Clearly, you always want to do everything possible to achieve the highest success rate you can.

So here is another scenario.  Conceivably, you could be wrong only 99% of the time as to whether or not a prospective member will decide to join your organization.  In this more optimistic case with a 1% success rate, your first year revenue from reaching out to these prospects would jump to $10,000 against a $5,000 marketing cost and your lifetime dues revenue would be $2,000 for each new member and $50,000 in total lifetime dues revenue.

What might we learn from this example?  When we hear from prospective members that they are not interested in joining, it is easy to project that feedback over a larger population.  However, our perceptions can easily trick us.  Instead of drawing premature conclusions, be sure to do the math and remember that even if 199 out of 200 prospective members say, “No” to membership, we may only need one out of the 200 on average to say, “Yes” to maintain a successful program.  Do not give up too soon on reaching out to prospective members.

 

So Why Test in Membership Recruitment?

After my last post, you might say to me, “So what’s wrong with not doing market testing in my membership recruitment program?”

My answer is, "If you don't shoot, you can't score." 

Let me share an example from a recent test that we conducted with one of our clients. For this client, we conducted a price test by splitting prospective members receiving a membership solicitation in half. The control group received a direct mail package with the normal $230 annual membership offer. The test group received the exact same direct mail package, but the with a $31 discount taking the price down to $199.

The final test results were significant. The control group achieved a .35 percent response rate producing $805.00 for each thousand pieces that we mailed. The test group achieved a .67 percent response rate producing $1,333.30 for each thousand pieces that we mailed. The total revenue for the control group came to $24,150 while the total revenue for the test group came to $39,999. So the test group produced both more revenue and more members.

The question often comes up whether the discounted price members will renew at the same rate as those who paid the full price. My experience is that there will be a slightly lower renewal rate from those who took the discounted offer, but not nearly enough to offset the increase in the number of new members.

But whether you choose to discount or not, the more important point is that it pays to conduct statistically valid market tests. The 80 percent of associations that do not do testing in their membership marketing efforts are missing out on better returns.

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.

3 Membership Marketing New Year’s Resolutions

The start of the New Year is a good time to step back and look at the big picture and put in place some initiatives that can really make a difference. So here are three resolutions that you may want to make for a more successful membership year in 2011.

1. Adequately Fund Membership Marketing – Just like putting money into retirement savings, investing in membership pays dividends for years to come. A new member produces a long term income stream. However, as I meet with membership organizations, I am continually surprised at the budgets that have been set aside for marketing. Almost every organization wants to grow their membership, but rarely do I see budgets that are tied to the lifetime value of a potential member. Lack of funding means many organizations are leaving money on the table and missing their potential by not crunching the numbers to determine how much they should be investing in getting more members.

2. Initiate and Cultivate Potential Member Relationships – We find that a promotion sent to a prospective member who provided an opt-in to receive more information from an organization will garner up to four times the response than the next best list. To gather this opt-in, we offer free content from our clients in exchange for contact information (an opt-in). The content offer may be presented through SEM, online ads, or to visitors to the organizations website or social media sites. The key is to initiate the lead and then cultivate the relationship.

3. Test and Track Membership Marketing Efforts – If you want to double or triple your marketing returns over the next year, then setting up marketing tests with a control and test cell is your best opportunity. You can test what marketing list is most responsive, what message is most compelling, and what offer best encourages action. To test you need to code the outbound marketing pieces and track the responses as they are returned. To capture un-coded responses, match back returns to your promotion file.

These membership marketing resolutions are summed up well by a comment from one of my survey respondent who wrote:

“When you actually do a recruitment campaign, they join. When you engage with your members, they stay. When you analyze the data, you find a nugget of information that can change all of your preconceived ideas.”

What are your membership marketing resolutions for 2011?

Membership Marketing Response Rates by State

It is fun to slice and dice data. So the other day, we decided to run response rates by state for one membership organization. Over a million pieces of recruitment mail were analyzed that went out over several campaigns and there were over 10,000 paid responses. No geographical variations were requested in any of the original lists used.

What did we discover?  From the best responding state to the worst responding state, we found a 360% variance in response rate.

I will share, some of the best and worst states, but please be aware the results do not mean that it is good or bad to mail into any of these states. It only reflects how some prospects in these states responded to a particular product offering at a specific point in time. Nevertheless, it might be a worthwhile analysis to do for your marketing efforts.

The top responding states were:

1. Vermont
2. South Dakota
3. Rhode Island
4. Wyoming
5. Utah

The lowest responding states were:

1. West Virginia
2. Alabama
3. California
4. Alaska
5. Washington DC

The efficiency of your marketing efforts can often be improved by doing some fairly simple data analysis. What analysis have you done that has helped to focus your marketing efforts?

The Number One Mistake in Membership Marketing

Perhaps the number one mistake in membership marketing is not conducting marketing tests in each promotion. By not testing, organizations sub-optimize the effectiveness of their marketing.

My colleague, Jeremy Griffin, and one of our clients presented a case for market testing at the just concluded ASAE Great Ideas Conference. The presentation highlights the power of incorporating marketing tests in membership marketing promotions and details high leverage testing opportunities.

Here it is. I hope you find it useful.

Improve Membership Marketing Results One Test at a Time

View more presentations from Marketing General, Inc. .

Testing a Free Trial Membership Acquisition Program

There is a long history of using free trial offers in membership marketing. In essence a free trial offer substitutes providing member services for marketing efforts. It is an attempt to have the product sell itself.

I thought that I would highlight four basic methods that I have used or observed others use to bump up membership returns using trials. By doing some quick calculations, you can determine if one of these methods might be good to try.

1. Opt-in Trial: This method is perhaps the most common in membership marketing. The option features and initial promotion to prospects and asks them to accept a membership trial. Upon acceptance, the respondent receives membership for a specified period of time and additional promotions requesting that he or she join. Depending on the quality of the list, the initial response can be between three and five percent. The final conversion can be about 30 percent. The advantage is that you are only providing free services to a low number of prospective members who request the trial and converting a larger portion of them.

2. Force Free Trial: This method provides a free-trial to a qualified audience that did not specifically ask for the trial. It may be a list that you have compiled or that is supplied to you by some other source like current members. Services are provided to these prospective members for a period of time and then these prospects are asked to convert to a paid status. The final conversion rate from a well qualified list can be about 10 percent. One challenge to this method is that you are providing services to a much larger group with a proportionately lower level of payment because they never directly requested the membership trial.

3. No-Obligation Trial: Like the opt-in trial, this method gives a prospective member the choice to ask for benefits. But there is one key difference. When a prospect agrees to this trial, he or she also agrees to allow the organization to invoice them for the membership. The respondent has the choice to pay an invoice or write “cancel” on the invoice and owe nothing. Getting permission to invoice can dramatically increase the final paid rate especially if the prospective member can submit the invoice for company payment. The initial response to this type of offer can be one to three percent. However, the final payment rate can be as high as 50 percent.

4. Negative Option Free Trial: This is a method that I have not used, but it is becoming increasingly common. Under this method, when a free trial is accepted, the respondent provides their credit card information and has a limited period of time to evaluate the membership. If the trial is cancelled by the respondent, there is not charge. However, if no notice is given then the respondents credit card is charged for the membership.

In the March 2010 edition of ASAE’s Membership Developments newsletter, Karen Krzmarzick, CAE, the Executive Director, of the American Society of Ophthalmic Administrators (ASOA) reported on her success with one free trial method. By my definition, ASOA tried both a force free trial and opt-in trial approach.

For the force free trial, ASOA “sent individual emails out to each physician member of ASCRS [a partnering organization] asking for the name of physician's practice administrator. These individuals where then automatically signed up for the free trial program. “

Also, as an opt-in approach, ASOA said that they “placed ads on our website and promoted the program through business-reply cards in industry magazines.”1

ASOA was encouraged by the outcome. Overall membership is growing. They reported 700 current free trial participants and a conversion rate of 11 percent to membership.

However, what works for one organization may not work for another. If an organization has a large potential market and a low dues rate, for example, the force free trial may be far too expensive to deploy. On the other hand, in a small niche market, getting only 3 percent of the market to try a free trial may not produce the volume of new members needed to grow. 

Here is the bottom line, always run the numbers for your particular situation before launching a new membership marketing initiative.

1. ASAE Membership Developments, March 5, 2010, http://www.asaecenter.org/files/images/sectionnewsletters/md0310.pdf

Unleash the Power of Market Testing in Your Membership Recruitment

Claude C. Hopkins is acknowledged as the great grandfather of direct marketing. In 1923, Hopkins wrote Scientific Advertising in which he declared that: “The time has come when advertising has in some hands reached the status of a science.” 1

His fundamental marketing thesis was: “We learn the principles and prove them by repeated tests. This is done through keyed advertising by traced returns . . . We compare one way with many others, backward and forward, and record the results. When one method invariably proves best, that method becomes a fixed principle.” 2

Today, his premise of testing is as true as ever. In fact, testing may even be more important now because the vast array of options available to marketers. A test can mean the difference between a stunning success for a product or an abject failure.

And because of the larger quantities and costs involved, testing is a particular necessity and an ideal opportunity when it comes to membership recruitment.

It is not uncommon to see a successful test change recruitment response rates by the following percentages:

• List tests – Can impact response by 500 percent.
• Offer tests – Can impact response by 200 percent.
• Creative tests – Can impact response by 100 percent.

These test outcomes highlight that by doing the same old thing over and over again, there is likelihood that a marketing program is substantially sub-optimizing the potential returns that could be achieved.

If testing is so important, then how should it be done?

There are two aspects of testing. Let’s call them the “art” and the “science” of testing.

The art of testing involves thinking outside the box and creating a new way to do things. In a market driven organization, each project should start up with a brainstorming session that asks: “What if?” or “How about?”

Bob Stone, in his landmark book, Successful Direct Marketing Methods, suggests creative helps like the following questions to get the thought process going. He recommends asking:

• Can we combine?
• Can we add?
• Can we eliminate?
• Can we make an association?
• Can we simplify?
• Can we substitute?
• Can we reverse? 3

Once a good set of test options has been developed, it is time to prioritize them. The key here is to test big things. Look for a breakthrough in testing. Too many testing dollars are spent on inconsequential testing – like who signs the letter. The fact is that testing small things will have such a small impact on the results that chances are good it will not have statistical validity.

In addition to brainstorming, there are some specific high leverage areas to consider testing. These high opportunity areas include the following:

• Lists – One of the easiest and most productive tests is trying new lists. For a full discussion on testing lists, take a look at my post, Five Strategies for Picking the Best Marketing Lists.
• Frequency – Try marketing more frequently to top prospects and customers.
• Pricing and offer – Psychological price points are for real. As a rule of thumb, a price ending in a “7” or “9” will generate more orders and dollars. You can test price points by offering a special acquisition dues discount to new members.
• Packaging – Test a bundled membership product instead of selling a one size fits all membership product.
• Media – Many media are available today and need to be tested. Try direct mail followed by an email linked to a microsite compared to a stand alone email or mailing.
• Messaging – Try new messages that emphasize a different value of membership. An easy and fast test of messages can be done with email subject lines. Send out a small portion of the list with a variety of subject lines. The group with the highest open rate wins and that subject line is used for the remainder of the list.

Equally important to the “art’ of testing is the “science” of testing. The science of testing starts with creating proper test structures. The key here is establishing a control package and testing against it. This is done by drawing a portion of names out of the control group of the marketing effort and using them for the test. Then structure the test by holding everything else constant except the variable that is to be tested. For example, if the test is for a special discount offer, then on the test segment use the same format as the control package and mail the test promotion to an equal ratio of the control lists in the mailing.

A test obviously does not always produce better returns than the existing control – that’s why to lower risks tests only go to small segments of a larger promotion. However, statisticians tell us that in each test cell we need a minimum of 40 paid responses to give us a statistically valid test. Therefore the number of anticipated responses will dictate the size of each test segment. If a 0.50 percent response rate is expected then the test cell should include a minimum of 8,000 names (40 / 0.005 = 8,000).

The other challenging yet critical component of the science of testing is tracking. Despite the difficulty in tracking, the bottom line is that the potential returns of testing are so great that one way or another an organization needs to build some kind of mechanism to track returns. Each organization will have to work with its computer staff and order processing staff to find the best way to track returns from a test. However, there are some methods of tracking used by other organizations that have performed well. These include:

• Laser Personalizing, ink jetting, or labeling the reply form with a keycode and requiring the form to be returned to receive a special offer.
• Performing a computer match between the returns from a given period of time and the keycoded mailing lists that were used in a mailing.
• Programming in a “special order code” in order forms on web sites that are required for special pricing or offers.

Once returns come back in, compare the responses in the control group against the test cell. Look to see which cell generated a higher return on investment and make the best performing test your new control.

Testing is an ongoing process. Over time, it becomes part of the culture of an organization. A focus on testing ensures the flow of new ideas and new members that an organization needs to keep growing. And it also provides a methodology for validating each of these new ideas.

To quote Claude Hopkins again, in the past: “Advertising was then a gamble – a speculation of the rashest sort. One man’s guess on the proper course was as likely to be as good as another’s . . . That condition has been corrected . . . Advertising has flourished under these new conditions. The results have increased many fold just because the gamble has become a science.” 4

Testing in membership recruitment allows your organization to market more efficiently. And if Claude Hopkins could do tests back in 1923, I am sure that there is a way to build testing into your membership marketing efforts.


1 Claude C. Hopkins, Scientific Advertising, NTC Business Books, 1991, page 213
2 Ibid, page 215.
3 Bob Stone's landmark book, Successful Direct Marketing Methods, 1997, NTC Business Books
4 Claude C. Hopkins, Scientific Advertising, NTC Business Books, 1991, page 217-218

Improve Response by Testing Email Subject Lines

In my recent post on market testing, I mentioned testing email subject lines. This is perhaps the easiest and fastest test that you can do. In a day, you can determine which subject line get’s the most opens and clicks.

And since you only need 40 opens to give you a pretty good statistical read on what subject line works best, you can test subject lines with a small subset of your email list, read responses, and then deploy the rest of the list using the top performing subject line.

So what are some subject lines that you might want to try testing?

You will find that simple and direct work best. Typically you want to make and offer or give a promise. It also works to present a knowledge gap. Highlight something the recipient should know, but may not know.

The VR Marketing Blog offers “29 Great B2B Subject Lines”. Some of them include the following:

• “Save Money and Look Like a Star to Your Boss
• How to make it onto your buyer's short list
• Complimentary Webinar: [insert webinar name]
• Breakfast & Secrets for How to [insert problem you solve or product you sell]
• Success Tip: 5 Ways to a Better [xxxx]
• Register Today: [inert name of event] Nov. 5 2009
• Entry deadline fast approaching
• New White Paper: Best Practices for [Insert problem and solution here]
• Success Tip #1: [Insert Tip Headline Here]
• Extended for a Day: Get Free Shipping Through Friday
• Your Weekly Alert: [insert topic here]
• Hear Exclusive Research Presented on [insert what your event is about] - Register Now!
• Inside: [hot topic in your newsletter you think will get the most opens]
• Save $200: [insert event here] Early Bird Registration Ends [insert date here]”

What are your best performing subject lines? Please feel free to share them here.

Integrating Channels and Content to Recruit Members

Testing is such a powerful tool in direct marketing. I would like to share today the outcomes of two tests that produced a substantial pop in results.

The first has to do with channel integration – connecting with a prospective member through multiple media.

We tested this recently using mail and email simultaneously to prospective members. We split our audience into two groups. One group only received a direct mail membership solicitation. The second group received the same direct mail package, but also received a follow up email. The mail only group produced a 1.23% response rate. The combined mail and email group produced a 2.08% response rate. This represents a 69% lift in overall response by adding the email.

I have seen a number of tests combining mail and email in membership acquisition over the past year and in each case the combination has improved response over either channel used in isolation. In adding email to the marketing mix, it is important to remember that email is not free. Often email lists needed to be rented for the promotion and the creation, deployment, and building a companion microsite also involves costs.

A second test included channel integration, but added to the mix exclusive and useful content. I call this content integration.

Here is how this test was structured. The prospect list was split evenly and the relevant touches were sent out at the same time.

The control group received a direct mail solicitation and a follow up membership recruitment email. The email provided a link to a customized microsite with an in-depth presentation of the organization’s membership benefits.

The test group received the same direct mail solicitation, but a series of emails where used to follow up the mailing. The first follow up email offered access to a microsite full of information on how an organization could take advantage of the American Recovery & Reinvestment Act (ARRA). The second email provided a link to another microsite that included a staff presentation again focused on how to access funding from the ARRA.

The third and final email replicated the control email from above and provided a link to the microsite outlining the membership benefits.

So the test really focused on the use of free, exclusive and relevant content to engage the prospective member.

The test group was the decisive winner. Allowing for a statistical margin of error, the test group outperformed the control group by over 300%. It did over three times better in both the number of members and in dues revenue.

What can we learn from these tests? One lesson is that intensity is important in marketing. More touches with valuable content in a short period of time gets a prospects attention. In addition, all of the communications pushed toward a sale.

Feel free to post your questions or observations about these tests here.

Impact of Frequency of Contact in Membership Recruitment

You often hear the advertising wisdom that it takes seven impressions to produce a buying decision. You also may have read in our Membership Marketing Benchmarking Report the power of continuing contact with renewing and lapsed members.

But how do these concepts apply to the frequency of contact when looking at membership recruitment or acquisition? Is there a correlation between the number of new member solicitations and the likelihood of a prospective member joining?

We asked this question recently and set up a test to help find the answer. Here is what we did.

With one membership marketing client that uses fairly static prospecting lists that we have compiled, we went back in our data to identify the number of times we had sent a mailing to the prospective member over the past three years. We then tagged prospective members by the number of contacts.

Then in a subsequent campaign, we defined our lists by the number of mailings that the potential member had previously received and tracked back our responses to these “lists”. Here is how responses broke out.

Clearly our analysis highlights that for this group there is an erosion of response from people who have been mailed multiple times. So with this organization, to maximize net revenue and work with tighter budgets, we dropped the prospects who had been contacted more than seven times from some upcoming campaigns. By eliminating these prospects, we saw response rates jump up. However, after resting these records for several campaigns, we will re-introduce them in future promotions.

In the coming months, I will be doing more analysis with mailers who have a longer history and higher frequency of contacts.

Five Strategies for Picking the Best Marketing Lists

Smart direct marketers will agree that whom you target with your promotion is the single biggest factor in the success or failure of your efforts.

In direct marketing, the 'who' is defined by the mailing and email lists—and the selects within those lists—that you choose to reach.

Since the person who gets your promotion is so key to your results, it pays to follow time-tested strategies to find and use the best marketing lists to maximize your success. Here are five strategies you may want to consider the next time you are ready to order lists for a promotion.

Strategy #1—Test lists regularly in all your promotional activities and track the results.

It is remarkable how many marketers ignore this basic strategy. If list selection is the single biggest factor in the effectiveness of a promotion, it makes no sense to test offers, formats, copy, and graphics until you know that you are reaching the prospects who are the most likely to respond. Even if you are 'happy' with the response you are getting now, testing is essential because any list that you are promoting to will fatigue over time.

Even in marketing efforts sent to current customers, it makes good sense to include tests to identify key response characteristics for various segments of your file.

Strategy #2—Research lists effectively by using available published data, professionals in the field, and your professional network.

To begin your search for new marketing lists, there are some outstanding on-line databases that are excellent tools to help you identify specific files. The two most recognized on-line sources are Nextmark and SRDS DirectNet. SRDS also publishes a print directory called the Direct Marketing List Source that includes most commercially available lists.

You will also want to take a look at where organizations like yours advertise and exhibit. Chances are that the subscribers or members of these organizations will also be good prospects for you. Likewise, if an organization is renting your list, it is a good bet that their customer list will also have good prospects for you.

Help from list professionals is also very valuable. A good mailing list broker will help you find the lists that have worked successfully for other organizations with a similar product or offer. They also have subscriptions to the major list databases and experience in using them. List brokerage services are provided at no cost to the list user. They are compensated for their time by the list owner, so it is appropriate to have the broker who did the research for you place the order. Your list costs are the same whether you buy direct or through a broker.

When you select an outside list from a third party provider, your order of the list for direct mail usage will be provided to you in the format you prefer, labels, excel, tape, etc. The rental price allows you to use the list one time. If you order an email list, the manager or owner of the list will send out the email to the list on your behalf. You will supply the text or the HTML content for the email.

Strategy #3—Test marketing lists strategically by testing list categories.

Breakthrough growth for an organization comes from finding a new market segment or category of prospects. When you find this new group of prospects it is not unusual to see the number of responses double or triple compared to what you would ordinarily expect.

For association marketers, some major categories worth testing are:

• Membership lists of compatible organizations
• Subscribers to other industry periodicals
• Seminar or convention attendees
• Supplementary book and audio-visual buyers
• Compiled lists selected by job title

And of course, do not forget to test your own in house lists:

• Former customers/donors/members by year lapsed, and
• Referrals and inquiries by year received.

Although it is wise to try a variety of list categories, a good place to start is to select a category of lists where the behavior of those who make up that list matches the action you want your prospective customer to take. For instance, if you are trying to sell an information product, try information seekers who have joined an association or subscribed to a magazine. To do fundraising, market to donor files. To generate attendees for an event, try seminar lists.

Strategy #4—Test lists efficiently by trying only the best segments of a new list first.

Begin your list testing by using the best segment or select from a list first. If this select does not work, then you can assume that the remaining portions of the file are unlikely to generate an acceptable response.

But how do you know what the best segments of a list are?

Even if you know very little about a list, you can be fairly certain that you are receiving the best portion of the list by remembering three letters, 'RFM,' and incorporating them into your list selections.

• The 'R' stands for recency (i.e. Hotline Names). This select is usually the best bet to increase your response rate because recent purchases on a list indicate someone is in transition or in a buying mode.
• The 'F' stands for frequency (i.e. multiple transactions). Frequency of purchase can also be described as a multibuyer select.
• Finally, 'M' stands for monetary amount (i.e. larger order size). This select is important if you are trying to sell a higher priced item because it indicates purchasing authority.

It is not unusual for 'RFM' to increase response rates by up to a third. RFM—especially ordering recently added names to a list—can also be a technique to reinvigorate a regularly used list that is experiencing fatigue or a decline in response rates.

Strategy #5—Use direct response lists.

Direct response lists are made up of people who have responded to a promotion and bought a product or service, requested information, or made a donation. In an age when not everyone opens their mail or email, let alone demonstrates that they have the time, interest, and money to respond, these names are a valuable commodity. Direct response lists give you the opportunity to reach a prospect that has demonstrated the exact behavior that you want to have replicated for your product or service.

Because of the demonstrated buying behavior, names on a response list will cost $50 to $100 more per thousand to rent than a compiled file. But direct response lists will also usually respond well above a compiled or directory type file.

Direct response lists are also highly responsive because they include the email or mail address where the buyer prefers to make purchases. Someone who orders a product takes care to give their correct and their preferred address on an order form. In the same way, subscribers and members regularly update names and addresses when they move or change jobs because they have paid for a magazine or membership.

What's the bottom line on finding the best lists for your next promotion?

Since the lists that you select for a marketing effort will have a profound impact on the results you receive, testing and finding new lists is foundational to successful marketing. A new list will open up entirely new market categories for the product and service that you are marketing and will give you access to new customers who are eager to buy from you. Finding new lists takes time and effort, but can be very, very profitable.

Creativity Meets Time Tested Techniques

Is there such a thing as too much creativity?

A good marketer starts out a new project by asking the question, “What if?” What if we reach out to a new market? What if we make a special offer? What if we try a new marketing media channel?

However, when it comes down to implementing a program, the “what if” possibilities have to be balanced against “what if it does not work”. We are after all responsible for producing results and often our jobs, clients, or companies are depending on our sales.

Here are a few ideas on how to keep creative ideas flowing, but minimize the risk associated with launching them.

1. It is unlikely that any of us will reinvent the wheel. Lot’s of great marketing ideas have been tried over the years. See if your new idea matches a successful program in some other industry. If someone else is doing the same type of promotion with success, then it may be a good indicator it is worth a try in your market. For example, associations can learn some creative membership renewal techniques from magazine publishers (and visa versa).


2. Do an economics reality check to see if your creative idea is viable. If you normally get a 1% response rate, but need to get a 10% response rate to pay for your creative idea then think twice. As exciting as it might be, there is a reason why a 30 second Super Bowl commercial may not make sense economically for most professional or trade associations.


3. Test your new idea. Good marketing is built on setting up statistically reliable tests to validate what method is superior by running a “test” (new creative idea) against the old reliable “control”. The single biggest mistake made by most marketers is too little testing of new ideas and concepts. Way back in 1923, Claude C. Hopkins, the father of direct marketing, wrote, “We learn the principles and prove them by repeated tests. This is done through keyed advertising by traced returns…We compare one way with many others, backward and forward, and record the results. When one method invariably proves best, that method becomes a fixed principle.”[1] Testing allows your members or customers to vote with their dollars on whether they like your new idea or not.

You will notice that I did not list standard research techniques as methods to validate your creative ideas. They can be used successfully. But remember, in marketing majority does NOT rule. If 90 percent of your prospective customers dislike your concept, but 10 percent love it and buy, you are a hero. So any research has to be careful of shooting down an idea that some economically viable segment of a market will support and buy.

What do you think? Feel free to add your comments.

[1] Claude C. Hopkins, Scientific Advertising (NTC Business Books, 1991).

It is the Best of Times!

Eighty percent of marketing is very logical. However, twenty percent of it is counter intuitive. Understanding the counter intuitive aspects of marketing is what often determines success.

Here is an example of a non-logical truth. The best time to acquire new members can be during an economic downturn.

Yes, you read that correctly.

As I scan reports for membership acquisition efforts, I am seeing some very strong returns. One organization that I spoke with today is seeing a turn around this year after many years of declining membership. Another long term client is experiencing their best new member year ever.

Why is this?

First of all, any change prompts people to look at new opportunities and solutions. We are clearly in the midst of great change as a society.

Secondly, during times of economic uncertainly, people look for an anchor. Professionally associations can be that anchor. Think for a second, if you knew your job was in jeopardy, isn’t one of the first places you would go for help your professional association or network. That is the place to make contacts, go to job boards, attend meetings, and interact on a list serv.

Here is the bottom line. Don’t base your marketing on what you hear in the news or what seems logical. Stay in the membership acquisition market – emphasizing the unique services you alone can provide -- and read the marketing results. You might be surprised by the number of loyal members you will add when you become their knight in shining armor.

Ten Top Membership Acquisition Offers

Many of us are enjoying watching the Olympics with the “thrill of victory and the agony of defeat”. But at least one marketer is frustrated with the amount spent on the TV ads without ROI.

Denny Hatch writes in Target Marketing, “Nothing—nothing!—bugs me more than advertising writers who call TV ads “winners” because they’re the “best-remembered” and/or “most-liked.”Did the ad sell anything? What was the ROI? . . . If you want a response from a prospect, it’s imperative that you make an offer. No offer, no response.”[1]

Hatch makes a good point. It is easy to get lost in creating memorable and entertaining marketing communications without being sure to focus on effectiveness. Just like the Olympic competition, your marketing can be set up to measure performance and show a clear winner and loser.

That’s why good membership marketing promotions include a compelling offer and ask for a response.

Here are 10 of the top membership marketing offers that have worked for my clients.

1. A discount almost always is the top offer in membership marketing. The amount of the discount must be appropriate to the product/situation. Generally a discount should be 15%-35% and move the rate below a price point. In membership acquisition, a properly developed discount will produce both more new members and more total revenue.

2. A "no-risk" or “no-obligation” offer will almost always out pull a "hard" (pay now) offer. It usually works best with organizations that have a lot of "mail box" benefits and higher priced dues. Accepting the no-risk offer includes the right for an invoice to be sent out and either paid or cancelled by the responder.

3. A product voucher offering new members $75 to $100 in savings on any purchase from the association can make a lot of sense. It has a high perceived value and helps the new members engage the organization with a second purchase right after joining. Typically, these vouchers will see a 20% redemption rate. So in theory the voucher can be 5 times higher than a discount.

4. Sweepstakes increase front-end response by 35% or more, but may decrease total paid response. Sweepstakes work best for impulse items, e.g., magazine based membership, contribution to a charity.

5. Premiums (free gifts) rarely beat discounts, but off-the-shelf items can be used at such little added expense that they make economic sense. The best premiums appeal to the self-interest of the reader (e.g., special reports or a salary surveys).

6. Offering more of the product can increase response (e.g., 15 months of membership for the price of 12). But generally this works best in markets where the product is already well known to the reader (e.g., qualified prospects, and former members).

7. A free trial offer will usually out pull a hard offer by at least 3 to 1 on the front end and 1.5 to 1 on the back end. But the key to making it work is developing a back-end conversion series to move the trial members to paid members.

8. A shorter term offer (e.g., 6 months membership) will pull up gross response, but beware; it may not increase response enough to cover the added costs of the extra renewal and loss of some buyers after the initial term sale.

9. Guarantees (i.e., money back if not satisfied) has become a basic “have to have” offer that is added to increase the confidence of the buyer. There is usually very little redemption on a money-back guarantee. If members do not like the product, they simply do not renew.

10. Installment billing with EFT or automatic credit card charges. This option turns a $239 membership into an easy monthly payment of $19.91. You do not pay for your cell phone or electricity up front, why should you have to pay your dues in one lump sum?

Okay, here is a bonus item.

11. Every offer should include an "upgrade option." An appropriate upgrade can attract 10% to 30% of the respondents to it. Offer a member an additional newsletter or an association book club option. We discussed some options in Growing Revenue through Membership Packaging.

Any special offer takes some time to make sure that back end operations support what is being offered up front.

Would you add any additional special offers here? What has worked best for you?

[1] Denny Hatch, “The Madness of Advertising on TV Blowing $750,000 in 30 seconds”, Target Marketing, August 19, 2008: Vol. 4, Issue No. 46