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.
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