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. 

Pricing Your Product, Service or Membership

Sometimes pricing is an afterthought when developing a product or service or changing your membership structure. But this can be a mistake. Pricing is one of the four “P’s” of marketing for a reason. Proper pricing has a huge influence on the viability and profitability of an offering and should be part of the conversation from the very start of product development.

For example, a quick search for a pair of sneakers shows a price range from $6.99 to $2,395. Clearly, there are vastly different strategies between these two ends of the pricing spectrum.

So how does one go about building a pricing strategy? Here are five basic approaches to pricing.

1. Cost-Plus Pricing: A price established to cover costs plus a margin added for profit. This method is not unlike that used in regulated industries like utilities.

2. Market-Oriented Pricing: A price based on the levels charged for similar products in the marketplace. Automobile companies are keenly aware of the price for completive vehicles. Perhaps in part because of this competition, car prices have risen at a much slower rate than inflation over time.

3. Market-Penetration Pricing: A low price to position a product to gain market share. An example of this might be the deals offered by telecommunication and cable companies seeking new customers. The price starts low and then goes up after a year or two.

4. Premium Pricing: A luxury price is designed to convey extreme value and exclusivity. Some people only want to buy the very best and are willing, for example, to pay $47,500 for a Rolex watch.

5. Value-Based Pricing: A price established based on the actual or perceived value a customer places on the product. This method requires a lot more work to set a price, but done properly it can also lead to better profits.

A book that does a good job explaining the value-based pricing strategy is The 1% Windfall: How Successful Companies Use Price to Profit and Grow. The book makes the point that successfully adding just a 1 percent price increase can produce a ten-fold increase in profits.

How does your organization set prices? Do you have a strategy or make it up as you go along? Feel free to share your thoughts.

Membership Dues Pricing and Value

The last few months, I have received a number of questions related to dues increases and pricing issues for membership.

If this is a topic of interest for you, please feel free to join me and my colleague Erik Schonher for an ASAE and the Center Membership Idea Swap titled, The Fundamentals of Pricing and Value.

The session will take place this Wednesday, May 5, from 9:30 to 11:30. Here is the link to register.

We will explore some of the following topics:

• Pricing Theory
• Price and Offer Testing
• Price Points
• Dues Discounts
• Dues Increases

But if you cannot make it, feel free to look at some of my previous posts related to these topics.

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

The Results from the Association Dues Increase Survey

To help build an understanding of the best practices related to raising membership dues, we did a primary research project this fall of association executives. The results are in and over the next week or two; I wanted to highlight some of the findings from our research and provide some commentary on what we found.

The first portion of the survey that I wanted to take a look at is how often associations raise dues. Here are some of the findings:

• Two-thirds of association respondents indicate dues are raised as needed.


• 18% of respondent organizations raise dues annually.


• 34% of organizations have raised dues this year.


• Almost 20% last raised dues in 2006 and about 15% last raised dues in 2005.


• Associations primarily offering organizational memberships are significantly more likely to have raised dues in 2007.

Since the most common answer to when associations raise dues is “as needed”, there does not appear to me to be a pricing strategy employed by most associations. Instead, it looks like dues or price increases are driven by accountants not marketers. If dues are simply raised as needed, then the dues increase serves to back fill program funding needs.

Dues are the “price” that an association charges for membership. And price is one of the 4 p’s of marketing. It is the only one of the 4 p’s that actually generates revenue.

So ideally, dues rates should be part of the marketing equation for an association. They should not be raised simply to fund increase expenses or shortfalls from other programs. Dues should be strategically set to maximize either the number of members (lower prices) or the net revenue to the association (higher prices). This is known as price elasticity. There is an optimum price or dues rate for each association.

Let me know your thoughts on this. Should associations price membership to maximize their strategic goals?

By the way, for those of you who like the statistical backing for the survey, here is the methodology. The survey went to 10,347 association executives and we had 324 responses. The response rate for this project was 3.1%. This sample size of 324 carries with it a margin of error of +/- 5.4 percentage points. That means that if all the recipients were surveyed, we could expect that the results of that survey would not vary more than +/- 5.4 percentage points at a 95 percent confidence level.

Gathering Data through Market Testing

In addition to data analytics and market research, successful associations also let members and prospects vote with their wallets by maintaining a sound promotional test strategy. They let the market drive strategy and tactics.

Marketing tests provide real data that can substantially impact results and strategies. A test can help an association define the most effective messages, promotional schedules, pricing, marketing media, and product packaging.

One association, for example, recently concluded a test on the impact of a new-member dues discount. The association evenly split prospects in a membership acquisition mailing. Half were offered membership at full price and the second half received a $10 dues discount. The group receiving the discounted membership dues offer had a 40 percent higher response rate than the group offered the full dues rate. This added response more than paid for the discounted dues.

But the association examined the data beyond the front-end response rate. They tracked the members in both the full price and discount group over two full renewal cycles. After two years, they found that the discount group still out numbered those originally joining at full price by 35 percent.

By capturing, analyzing, and using data the association was able to effectively boost its membership acquisition program by more than 35 percent.

My question to you is, why don't more associations incorporate tests into their membership marketing plans?