Over the past few weeks, I have enjoyed participating in the ASAE & The Center for Association Leadership program called Association of the Future.
The process started with evaluating 149 trends and issues that could have a significant impact on the association community. Through a ranking process that we did, these trends were narrowed down to 62. Yesterday, I joined a team of association executives and consultants to explore the potential implications for associations from these trends.
I just asked for and received permission to share a copy of these 62 trends here on the blog. It is an extensive document, but thought provoking and well worth your time.
Let me know what you think are the five biggest trends that will impact associations. I will share the five trends that I think could have the biggest impact on the future for associations in an upcoming post. In the meantime, use this link to access the document.
Some Thoughts on an Excellent Post from Association Inc.
One of the blogs that I link to on Membership Marketing as a “Blog of Value” is Association Inc. The last post entitled “Random Thoughts on New Rules for Association Growth”, is well worth reading. The post speaks to market focus, ownership, dues revenue, data and testing. You’ll find some great ideas to keep the sun from setting on your ship.
Association Inc reminds us to focus on our market not a product. Success comes when we know our marketplace inside out. This intimate knowledge allows us to anticipate needs and create products that meet those needs.
Ownership of whatever product we create for our members is also critical. “Grants, sponsorships, “affinity programs” – these all have a role to play, but in and of themselves will not lead to sustainable, exponential growth because they depend on the whims of others.”[1]
As I have commented on this blog in Exploring Alternative Membership Models, the actual concept of membership has been appropriated by many for profit companies. Many of these companies provide membership for free or at a low dues price, which allows the member to take advantage of discounts and special services.
An example that you may be aware of is Sermo ™ – a free membership site with 60,000 physicians and growing,
Because of this, diversification of income streams is wise. As an ancient proverb reads: “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.”[2]
Using data effectively is another key point. I have used the quote before from the renowned marketing professor Philip Kotler, he says, “Successful companies [or associations] are learning companies. They collect feedback from the marketplace, audit and evaluate results, and take corrections designed to improve their performance. Good marketing works by constantly monitoring its position in relation to its destination.”[3]
Finally, Association Inc. recommends rapid prototyping and testing of new initiatives. This culture of innovation is foundational for success. “Most companies [or non-profits] would be better off if they made fewer billion-dollar bets and a whole lot more $10,000 or $20,000 bets – some of which will, in time, justify more substantial commitments. They should steer clear of grand, imperial strategies and devote themselves instead to launching a swarm of low-risk experiments.”[4]
Are there any other insights that you would add to these?
[1] Association Inc.
[2] Ecclesiastes 11:2
[3] Kotler on Marketing, Free Press, 1999
[4] Gary Hamel and Lisa Valikangas, “The Quest for Resilience”, Harvard Business Review
Association Inc reminds us to focus on our market not a product. Success comes when we know our marketplace inside out. This intimate knowledge allows us to anticipate needs and create products that meet those needs.
Ownership of whatever product we create for our members is also critical. “Grants, sponsorships, “affinity programs” – these all have a role to play, but in and of themselves will not lead to sustainable, exponential growth because they depend on the whims of others.”[1]
As I have commented on this blog in Exploring Alternative Membership Models, the actual concept of membership has been appropriated by many for profit companies. Many of these companies provide membership for free or at a low dues price, which allows the member to take advantage of discounts and special services.
An example that you may be aware of is Sermo ™ – a free membership site with 60,000 physicians and growing,
Because of this, diversification of income streams is wise. As an ancient proverb reads: “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.”[2]
Using data effectively is another key point. I have used the quote before from the renowned marketing professor Philip Kotler, he says, “Successful companies [or associations] are learning companies. They collect feedback from the marketplace, audit and evaluate results, and take corrections designed to improve their performance. Good marketing works by constantly monitoring its position in relation to its destination.”[3]
Finally, Association Inc. recommends rapid prototyping and testing of new initiatives. This culture of innovation is foundational for success. “Most companies [or non-profits] would be better off if they made fewer billion-dollar bets and a whole lot more $10,000 or $20,000 bets – some of which will, in time, justify more substantial commitments. They should steer clear of grand, imperial strategies and devote themselves instead to launching a swarm of low-risk experiments.”[4]
Are there any other insights that you would add to these?
[1] Association Inc.
[2] Ecclesiastes 11:2
[3] Kotler on Marketing, Free Press, 1999
[4] Gary Hamel and Lisa Valikangas, “The Quest for Resilience”, Harvard Business Review
Are Radio and TV in Your Membership Development Future?
In the Five Phases of the Membership Life Cycle, I highlighted how awareness is the first step in the membership relationship. If a prospective member is not aware of whom you are and what value your organization brings, then you are a long way off from closing a sale.
Making a sale involves a series of little steps moving a prospect from A to Z.
That’s why as a membership marketer, I have enjoyed watching the use of radio and television to build awareness and membership by two groups, the American Association of Family Physicians (AAFP) to the Society for Human Resource Management (SHRM).
Here is the publicly available information on these programs that I have come across on the web.
AAFP has launched a major awareness program with sponsorship of my favorite radio program Marketplace on NPR and with 30 to 60 second ads on 71 XM Radio stations. SHRM has also been a sponsor of the regular feature on Marketplace. They sponsor the segment with interviews of top corporate CEO’s in a feature called Conversations from the Corner Office.
In addition, according to Digital News Direct, SHRM has run TV ads during CNN Election Coverage and FOX Business Jumpstart. If you watched the candidate debates you may have seen the ad. Here is a link to the ad.
Both of these groups are well respected organizations and it appears that their awareness advertising has been well thought out and done in a responsible and effective manner.
But as you read this you may ask are radio and TV something that all association marketers should jump on board and do? Will it help your association blossom?
From my perspective the answer is before these channels are considered, you need to have your bases covered with more traditional association marketing techniques. True with the increasingly defined market segmentation that HD and satellite radio and cable TV provide, it is now becoming a possibility to at least explore these mediums. But rarely do consumer demographics match up with the qualifiers that would make someone eligible for membership. You may have 50 year old woman as members, but they also need to be in your profession in order to be interested in membership.
Here is another major caution that I have to using broadcast or consumer advertising channels. There is a very big potential to spend a lot of money in a very inefficient manner. You need to ask the question, what proportion of those who see these ads are potential members or people that you want to influence and to compare this to the effectiveness of a tightly targeted promotion.
Some associations and non-profits are not effectively picking the low hanging fruit for new members already, so this should be the first use of resources before investments are made in the consumer realm.
What are your thoughts on the use of broadcast and consumer media to build awareness about your organization and get more members?
Making a sale involves a series of little steps moving a prospect from A to Z.
That’s why as a membership marketer, I have enjoyed watching the use of radio and television to build awareness and membership by two groups, the American Association of Family Physicians (AAFP) to the Society for Human Resource Management (SHRM).
Here is the publicly available information on these programs that I have come across on the web.
AAFP has launched a major awareness program with sponsorship of my favorite radio program Marketplace on NPR and with 30 to 60 second ads on 71 XM Radio stations. SHRM has also been a sponsor of the regular feature on Marketplace. They sponsor the segment with interviews of top corporate CEO’s in a feature called Conversations from the Corner Office.
In addition, according to Digital News Direct, SHRM has run TV ads during CNN Election Coverage and FOX Business Jumpstart. If you watched the candidate debates you may have seen the ad. Here is a link to the ad.
Both of these groups are well respected organizations and it appears that their awareness advertising has been well thought out and done in a responsible and effective manner.
But as you read this you may ask are radio and TV something that all association marketers should jump on board and do? Will it help your association blossom?
From my perspective the answer is before these channels are considered, you need to have your bases covered with more traditional association marketing techniques. True with the increasingly defined market segmentation that HD and satellite radio and cable TV provide, it is now becoming a possibility to at least explore these mediums. But rarely do consumer demographics match up with the qualifiers that would make someone eligible for membership. You may have 50 year old woman as members, but they also need to be in your profession in order to be interested in membership.
Here is another major caution that I have to using broadcast or consumer advertising channels. There is a very big potential to spend a lot of money in a very inefficient manner. You need to ask the question, what proportion of those who see these ads are potential members or people that you want to influence and to compare this to the effectiveness of a tightly targeted promotion.
Some associations and non-profits are not effectively picking the low hanging fruit for new members already, so this should be the first use of resources before investments are made in the consumer realm.
What are your thoughts on the use of broadcast and consumer media to build awareness about your organization and get more members?
Watch the Alligators: Association Marketing Legal Reminders
It is very easy for me to forget that good marketing includes a sound understanding of legal issues in addition to strategy, creative, and analysis.
Here are some of the legal items to keep in mind when developing marketing campaigns.
UBIT: In the April Associations Now piece titled “Lessons from new CAE’s”, Mary Moon Allison, CAE, from the American Nurses Credentialing Center shared that she learned when marketing her affinity programs (like list rentals, credit cards, etc.) that “If we do not actively market it, the income is considered passive and is not subject to UBIT, but if we’re involved in the marketing of it, the IRS considers it unrelated business income (p. 16).” This is why associations that hope to earn substantial revenue from these programs use outside providers to manage the program.
Nonmember Pricing: In the same Associations Now piece, Lakisha Campbell, CAE, National Association of Home Builders noted that “the difference in member to nonmember product or program pricing could not be greater than the price of membership (p.16).”
Invoices or Renewals: Some associations make a common mistake is incorrectly using the term “Invoice” on membership renewal notices. Remember, a member does not have a legal obligation to pay a renewal notice. Therefore, it is not an invoice. Using an invoice is appropriate if a member has requested to be billed through some type of bill-me solicitation.
FAX Solicitations: Fax marketing is also an area where there can be some confusion and liability. The Direct Marketing Association provides a good alert on rules governing the use of faxes in marketing. “The Junk Fax Prevention Act of 2005 allows marketers to send commercial faxes to those with whom they have an established business relationship (EBR), but imposes some new requirements. These requirements include providing an opt-out notice on the first page of faxes and establishing a system to accept opt-outs at any time of the day.” I just met with a group that was unknowingly in violation of these rules. Violations can get very expensive.
Email and SPAM: Fortunately, I do find that most associations are very aware of the laws governing email solicitations and follow the four major provisions of the act including: false or misleading information, deceptive subject lines, opt outs, and physical mailing address.
It is good to keep these in mind because violations can be expensive. The Federal Trade Commission FTC says that “Each violation of the [can spam] provisions is subject to fines of up to $11,000. Deceptive commercial email also is subject to laws banning false or misleading advertising.”
Telemarketing: Another area of legal concern in marketing is telemarketing and the Do Not Call Registry. If you are a non-profit, you are not impacted by the do not call rules. According to the Federal Communications Commission (FCC), The Do Not Call Registry “does not cover the following: calls from organizations with which you have established a business relationship; calls for which you have given prior written permission; calls which are not commercial or do not include unsolicited advertisements; calls by or on behalf of tax-exempt non-profit organizations.”
Direct Mail: Finally, there is also a non-legal, but strongly recommend ethical practice that you should consider with your direct mail marketing. It is to suppress prospective members and customers from your mailings using the DMA Mail Preference Service (Do Not Mail File). This is a file of people who have asked not to receive direct mail solicitations.
Am I missing any other legal issues here that you can think of mentioning? Feel free to let me know.
Here are some of the legal items to keep in mind when developing marketing campaigns.
UBIT: In the April Associations Now piece titled “Lessons from new CAE’s”, Mary Moon Allison, CAE, from the American Nurses Credentialing Center shared that she learned when marketing her affinity programs (like list rentals, credit cards, etc.) that “If we do not actively market it, the income is considered passive and is not subject to UBIT, but if we’re involved in the marketing of it, the IRS considers it unrelated business income (p. 16).” This is why associations that hope to earn substantial revenue from these programs use outside providers to manage the program.
Nonmember Pricing: In the same Associations Now piece, Lakisha Campbell, CAE, National Association of Home Builders noted that “the difference in member to nonmember product or program pricing could not be greater than the price of membership (p.16).”
Invoices or Renewals: Some associations make a common mistake is incorrectly using the term “Invoice” on membership renewal notices. Remember, a member does not have a legal obligation to pay a renewal notice. Therefore, it is not an invoice. Using an invoice is appropriate if a member has requested to be billed through some type of bill-me solicitation.
FAX Solicitations: Fax marketing is also an area where there can be some confusion and liability. The Direct Marketing Association provides a good alert on rules governing the use of faxes in marketing. “The Junk Fax Prevention Act of 2005 allows marketers to send commercial faxes to those with whom they have an established business relationship (EBR), but imposes some new requirements. These requirements include providing an opt-out notice on the first page of faxes and establishing a system to accept opt-outs at any time of the day.” I just met with a group that was unknowingly in violation of these rules. Violations can get very expensive.
Email and SPAM: Fortunately, I do find that most associations are very aware of the laws governing email solicitations and follow the four major provisions of the act including: false or misleading information, deceptive subject lines, opt outs, and physical mailing address.
It is good to keep these in mind because violations can be expensive. The Federal Trade Commission FTC says that “Each violation of the [can spam] provisions is subject to fines of up to $11,000. Deceptive commercial email also is subject to laws banning false or misleading advertising.”
Telemarketing: Another area of legal concern in marketing is telemarketing and the Do Not Call Registry. If you are a non-profit, you are not impacted by the do not call rules. According to the Federal Communications Commission (FCC), The Do Not Call Registry “does not cover the following: calls from organizations with which you have established a business relationship; calls for which you have given prior written permission; calls which are not commercial or do not include unsolicited advertisements; calls by or on behalf of tax-exempt non-profit organizations.”
Direct Mail: Finally, there is also a non-legal, but strongly recommend ethical practice that you should consider with your direct mail marketing. It is to suppress prospective members and customers from your mailings using the DMA Mail Preference Service (Do Not Mail File). This is a file of people who have asked not to receive direct mail solicitations.
Am I missing any other legal issues here that you can think of mentioning? Feel free to let me know.
New Blog on Financial Risks and Solutions for Non-Profits
A long time association professional, Ron Mattocks, has just launched a blog to accompany his new book, the Zone Of Insolvency: How Nonprofits Avoid Hidden Liabilities and Build Financial Strength.
The book just came out today, so I have not read it yet. However, here is how Ron describes the issues he is addressing.
“The term ‘Zone of Insolvency’ was first used by the courts in 1992. It describes a period of financial distress where insolvency is at least a foreseeable possibility by reasonable business people. The court said that a board governing a corporation in the Zone of Insolvency has expanded legal responsibilities and liabilities. I chose to focus on nonprofit corporations in the Zone of Insolvency because a greater percentage of nonprofits operate in perpetual financial distress than what we see on the for-profit side. New nonprofits have incorporated at twice the rate of for-profits every year for the past twenty years. But on the back end, fewer nonprofits file for dissolution. As a result, we have this escalating glut of nonprofit organization living perpetually in the Zone of Insolvency.”
The book just came out today, so I have not read it yet. However, here is how Ron describes the issues he is addressing.
“The term ‘Zone of Insolvency’ was first used by the courts in 1992. It describes a period of financial distress where insolvency is at least a foreseeable possibility by reasonable business people. The court said that a board governing a corporation in the Zone of Insolvency has expanded legal responsibilities and liabilities. I chose to focus on nonprofit corporations in the Zone of Insolvency because a greater percentage of nonprofits operate in perpetual financial distress than what we see on the for-profit side. New nonprofits have incorporated at twice the rate of for-profits every year for the past twenty years. But on the back end, fewer nonprofits file for dissolution. As a result, we have this escalating glut of nonprofit organization living perpetually in the Zone of Insolvency.”
His blog covers items ranging from financially stressed organizations to the liabilities of board members to non-profits and theft. As we seem to be facing increased turbulence in the economy, this may be something you want to learn more about related to your organization.
Increasing Member Value through New Product Development
There is much conversation around increasing the value of membership.
Here are some suggestions on increasing membership value through new product development, adding real value to what the association tangibly provides to members. New Product Development also keeps membership exciting and prevents you from being eclipsed by your competition.
When looking at new product development, an association has a choice of two strategies. First, an association can introduce new products in a current product line (e.g., new seminar titles, book titles). This strategy simply involves doing more of what you are now doing successfully. It is a lower financial risk, but also lower profit strategy.
The second strategy involves the creation of new product lines (e.g., starting a compensation survey or a webinar program). Obviously, this strategy involves much higher financial risk, but if done properly can result in significant new revenue for an association.Here are five characteristics that a new product should include to help ensure success.
1. Desirability -- It may seem overly simplistic, but start your evaluation of potential new products by making sure to select items with a high perceived value attached to them by the members or customers. Use focus groups, executive interviews, and surveys to determine your members and customers real and felt needs. And 'stay close to the customer' by spending time talking to your members to confirm the findings you receive from research. Then test market your new product idea to a small sample of your membership to see if your research is accurate and if the price is acceptable. Fundamentally, your best research is whether or not your sample of members opens their checkbooks and buys your new product.
2. Profitability -- After you have discovered what your customer wants, package the new product in a way that makes it economically feasible for your market situation. Take advantage of the leverage found in your particular marketplace. For example, is your membership small but has access to large sums of money? Then package your new product in a format that can command a high price and provide you with high profit margins. With a small market, a new book selling for $19.95 is unlikely to return the margins you might want for the effort required to produce and market it! Is your membership large, but lacks access to corporate funds or discretionary income? Then sell a high volume product at a lower cost like the $19.95 book.
3. Renewability -- Whenever possible make your new product a continuity product. The costs of making one sale are so high that profitability on any but the highest margin product becomes difficult. For associations, membership is the ultimate continuity product. Be creative and duplicate this success by designing new products around a regular renewal. For example, you may want to turn your seminars into a multiple course certification series. Encourage standing orders for your new DVD releases. Try turning your publications program into a book club.
4. Duplicability -- Your staff's time and energy is one of your greatest resources. So avoid creating highly customized products that require constant involvement and servicing by staff (e.g., customized workshops, research libraries). Instead try and let printing presses or web do the work for your staff. Try putting rapidly changing specialized information into an electronic newsletter.
5. Reach-ability -- Make sure your audience is reachable through the channels available to you. For instance, before you decide to hold a conference in Europe, be sure mailing lists exist in your field so you can appeal to potential attendees. Also some products can be sold through the mail or your Web site and others need a personal phone call or sales visit. Evaluate if you have the staff, expertise, and budget to market through these channels.
If you would like more information on growth strategies, you may want to look at some posts from last year. I did a number of posts related to the Five Growth Disciplines -- Introduced of membership marketing. One post related to extending the membership product line (adding new levels of membership).
What Is the Purpose of Easter?
This week I was traveling. So, although I do not usually have a chance to read USA Today, I did this week and came across a reflective article. It seemed to me worth sharing as a thought provoking piece for Easter.
The basic premise of the article is if there is nothing wrong with us, then there is no purpose to Easter. Click her for the link.
By the way, the daffodils are in full bloom in Virginia. Spring has arrived.
I wish you and your family a joyous Easter.
The basic premise of the article is if there is nothing wrong with us, then there is no purpose to Easter. Click her for the link.
By the way, the daffodils are in full bloom in Virginia. Spring has arrived.
I wish you and your family a joyous Easter.
Even Consulting Firms Offer Membership
In my post Exploring Alternative Membership Models, I looked at how many organizations are building their relationship with their customer around a membership model. I just came across another example of using membership to build relationship with prospective customers or clients; this time with a consulting firm.
As you may know, McKinsey & Company is a very large management consulting firm advising leading companies on strategy, organization, technology, and operations. But you may not have know that you to can be a member.
Today, I received an email invitation to from McKinsey & Company to upgrade to a Premium Membership in The McKinsey Quarterly. For a year, I have been enjoying a free email membership with regular copies of the quarterly.
The email said that if I “upgrade by 24 March 2008 [I can] take advantage of our best rates: Two years of Premium online access plus print editions: US $225.00 (15% off standard rate)”
As a Premium member, I would receive:
· Access to the entire Quarterly archive
· A subscription to the collector's edition print journal
· Downloadable PDFs of all articles for offline use
By the way, one thing I particularly like about the McKinsey strategy is how they initially got me involved through a free email subscription. Now they have opt-in approval from me and they can very economically continue to dialogue with me about becoming a paid member. This is a method that more association should try.
As you may know, McKinsey & Company is a very large management consulting firm advising leading companies on strategy, organization, technology, and operations. But you may not have know that you to can be a member.
Today, I received an email invitation to from McKinsey & Company to upgrade to a Premium Membership in The McKinsey Quarterly. For a year, I have been enjoying a free email membership with regular copies of the quarterly.
The email said that if I “upgrade by 24 March 2008 [I can] take advantage of our best rates: Two years of Premium online access plus print editions: US $225.00 (15% off standard rate)”
As a Premium member, I would receive:
· Access to the entire Quarterly archive
· A subscription to the collector's edition print journal
· Downloadable PDFs of all articles for offline use
By the way, one thing I particularly like about the McKinsey strategy is how they initially got me involved through a free email subscription. Now they have opt-in approval from me and they can very economically continue to dialogue with me about becoming a paid member. This is a method that more association should try.
Vindication at Last!
In my post on way back on November 7th, I took ASAE and the book Decision to Join (DTJ) to task for what I thought was a misreading of the DTJ survey data.
Here is what DTJ said: “the decision to join an association reflects an expanded understanding of what constitutes a benefit. It goes beyond the self-oriented assessment of the value received by the individual making the decision to incorporate a more other-oriented assessment of value generated for the community of interest.”
On the other hand, I claimed, “Clearly, we all are influenced in decisions for joining or buying any product in part because what the decision will mean for society. But I believe value, price, and usefulness are influencers that impact our buying decision more than joining for the good of others.”
If you visit the post, you will see it generated a pretty good debate.
However, I have to say that I now feel vindicated as I read the following in the latest membership book from ASAE and the Center, Membership Essentials.
It says: “For most members, it is no longer acceptable for the association to simply advance a cause or defeat forces that negatively affect its constituents. Today’s members expect a quantifiable return on their investment of dues dollars in addition to the association’s delivering on the mission. For every dollar they spend in dues, they demand at least a dollar’s worth of value in return. Membership dues have become a type of investment for today’s consumers, and the investments that yield lower returns are scrutinized or withdrawn entirely.” [1]
Which side do you take in this great debate?
Here is what DTJ said: “the decision to join an association reflects an expanded understanding of what constitutes a benefit. It goes beyond the self-oriented assessment of the value received by the individual making the decision to incorporate a more other-oriented assessment of value generated for the community of interest.”
On the other hand, I claimed, “Clearly, we all are influenced in decisions for joining or buying any product in part because what the decision will mean for society. But I believe value, price, and usefulness are influencers that impact our buying decision more than joining for the good of others.”
If you visit the post, you will see it generated a pretty good debate.
However, I have to say that I now feel vindicated as I read the following in the latest membership book from ASAE and the Center, Membership Essentials.
It says: “For most members, it is no longer acceptable for the association to simply advance a cause or defeat forces that negatively affect its constituents. Today’s members expect a quantifiable return on their investment of dues dollars in addition to the association’s delivering on the mission. For every dollar they spend in dues, they demand at least a dollar’s worth of value in return. Membership dues have become a type of investment for today’s consumers, and the investments that yield lower returns are scrutinized or withdrawn entirely.” [1]
Which side do you take in this great debate?
[1] Membership Essentials: Recruitment, Retention, Roles, Responsibilities and Resources, chapter two, Jay L. Karen, CAE, and Ben Martin, page 10.
Help with the Creative Process
I have known people who do great work starting out the creative process with a blank sheet of paper. Scott McBride the founder of Marketing General, Inc. was one of those people. I am not that type of person. I need models and samples to look at in order to come up with new ideas.
That’s why I have appreciated the advice from Bob Stone, in his landmark book, Successful Direct Marketing Methods[1]. He suggests looking at what now exists and asking the following questions to get the creative thought process going:
- Can we combine?
- Can we add?
- Can we eliminate?
- Can we make an association?
- Can we simplify?
- Can we substitute?
- Can we reverse?
The good news is that when it comes to membership marketing, there is a good resource to help you get started in the creative process. It is the ASAE and the Center, Models and Samples section of the web site. There is an entire section on Membership Marketing Brochures and Applications and another section on Membership Letters. Access is free to members of ASAE.
If you need help with a creative new idea, take a look at it.
[1] Stone, Bob. Successful Direct Marketing Methods. (McGraw-Hill; 7 edition (2001) p. 468.
Are Dues a Charitable Deduction?
It’s tax time, so the question comes up for 501 (c) (3) organizations; can I promote deducting dues as a charitable contribution?
Here is what the IRS says, “You may be able to deduct membership fees or dues you pay to a qualified organization. However, you can deduct only the amount that is more than the value of the benefits you receive. . . If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive.”
From my quick scan of the FAQ from a number of associations, not surprisingly, it looks like they believe that the value of their benefits is equal to the dues amount and therefore not deductible. For example, the American Society of Mechanical Engineers is a 501(c) (3) and includes the following on its web site.
“Q: Are my ASME membership dues deductible?
A: ASME dues are not deductible as a charitable contribution for federal income tax purposes, but may be deductible as a business expense. ASME estimates that 0.503% of your dues are not deductible because of ASME's lobbying activities on behalf of its members. ASME recommends that you contact your accountant for tax advice.”
Now deductibility as a business expense would still apply to a professional membership after removing lobbying expenses. However, I along with ASME recommend that you contact your accountant for tax advice.
Are any of your organizations handling this differently?
Here is what the IRS says, “You may be able to deduct membership fees or dues you pay to a qualified organization. However, you can deduct only the amount that is more than the value of the benefits you receive. . . If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive.”
From my quick scan of the FAQ from a number of associations, not surprisingly, it looks like they believe that the value of their benefits is equal to the dues amount and therefore not deductible. For example, the American Society of Mechanical Engineers is a 501(c) (3) and includes the following on its web site.
“Q: Are my ASME membership dues deductible?
A: ASME dues are not deductible as a charitable contribution for federal income tax purposes, but may be deductible as a business expense. ASME estimates that 0.503% of your dues are not deductible because of ASME's lobbying activities on behalf of its members. ASME recommends that you contact your accountant for tax advice.”
Now deductibility as a business expense would still apply to a professional membership after removing lobbying expenses. However, I along with ASME recommend that you contact your accountant for tax advice.
Are any of your organizations handling this differently?
Article in the Association Forum of Chicago Magazine
Several months ago, Gregory Fine, CAE and the Director of Communications & Marketing at the Association Forum of Chicago asked me to put together an article for Forum magazine on the dues research we had conducted. Greg is a commenter on this blog.
The article appeared in the March edition of Forum. The editors were kind enough to allow me to provide a PDF of it to those who might want a copy. You should be able to right click on the images here of the article to download a copy. If you have a problem, let me know and I can email a PDF to you.
Survey Responses Tell Best Media for Acquisition and Retention
In keeping with the theme of looking at best practices from other industries, I thought that the following survey results were helpful.
Target Marketing just reported the results for their 2008 annual Media Usage Forecast. The survey was based on responses from 340 marketing professionals in many industries.
Overall the survey showed, “Going into 2008, direct marketers expect to devote more money to acquisition, after a mostly equal focus on prospecting and retention in 2007. Looking back to last year’s survey results, this represents a more dramatic shift to new customer growth; respondents indicated a heavier dedication to retention activities in 2006 (53 percent).”[1]
I think this underlines the principle that you cannot solely retain your way to growth. Acquisition is needed.
Another interesting set of results from the report show which media had the best ROI for customer acquisition and for customer retention. As the chart below shows, direct mail won for customer acquisition and email for customer retention.
Target Marketing just reported the results for their 2008 annual Media Usage Forecast. The survey was based on responses from 340 marketing professionals in many industries.
Overall the survey showed, “Going into 2008, direct marketers expect to devote more money to acquisition, after a mostly equal focus on prospecting and retention in 2007. Looking back to last year’s survey results, this represents a more dramatic shift to new customer growth; respondents indicated a heavier dedication to retention activities in 2006 (53 percent).”[1]
I think this underlines the principle that you cannot solely retain your way to growth. Acquisition is needed.
Another interesting set of results from the report show which media had the best ROI for customer acquisition and for customer retention. As the chart below shows, direct mail won for customer acquisition and email for customer retention.
From my experience, in the association world, direct mail remains the single best media for acquiring new customers because it is is highly targeted, responses are measurable, and the volume is scalable. Email is advantageous for retention because you have an established opt-in relationship with the member.
Do these results hold true for you. Will you be doing more acquisition in 2008? Are you finding mail as the best ROI media for acquisition and email for retention?
[1] Target Marketing, March 2008, page 44.
How to Lower Churn in a Rapidly Changing Industry
The telecom sector of our economy has had perhaps more turmoil than most. There are new products and wholly new technologies being launched every day that have the potential to draw customers from one provider to another.
Some association prophets say that the future of the association world may also soon experience disruption. So I thought the recent book, Customer Churn Reduction and Retention for Telecoms, might have some application for membership marketing. Are there best practices that we can put in place to reduce churn and retain more members?
Interestingly, it appears that the solutions for preventing churn and keeping customers in telecom focus on many of the same measures discussed in association circles. And intense competition has forced these telecom companies to implement many of these strategies.
Some of the strategies highlighted in the book include Lifetime Value, Product Mix, Predictive Modeling, and Customer Segmentation. Let’s look at these in an association context.
Lifetime Value: One of the reasons I like to follow the game of baseball is that it lends itself to statistical comparisons. Likewise, membership lends itself to statistical analysis. The fundamental analysis is Lifetime Value (LTV). In economic terms, all members are not created equal. Understanding the overall value of a member and then the value of a membership segment or individual is foundational for developing a retention strategy.
Product Mix: In the telecom world they now have the Triple Play (phone, internet, and TV) and some are looking at a Quadruple Play by adding wireless to the product package. We also have this option available in membership. It is called tiered membership. The fact is the higher you can move a member up the membership product line the more likely he or she is to stay with you. Offering the equivalent of a black Ford is not the optimum membership package to enhance retention.
Predictive Modeling: Admittedly this is a marketing tool that increases in usefulness with the size of a membership or customer base. Nevertheless, past behavior is best predictor of future behavior. So modeling should come more into play in getting and keeping members. In a recent acquisition model that we ran, we found that using the best model we could get 80% of the members by mailing 20% of the prospects. In the chart below, the x-axis is the percentile of the prospect database and the y-axis represents the percent of the members gained. The red line would be the results without a model.
Some association prophets say that the future of the association world may also soon experience disruption. So I thought the recent book, Customer Churn Reduction and Retention for Telecoms, might have some application for membership marketing. Are there best practices that we can put in place to reduce churn and retain more members?
Interestingly, it appears that the solutions for preventing churn and keeping customers in telecom focus on many of the same measures discussed in association circles. And intense competition has forced these telecom companies to implement many of these strategies.
Some of the strategies highlighted in the book include Lifetime Value, Product Mix, Predictive Modeling, and Customer Segmentation. Let’s look at these in an association context.
Lifetime Value: One of the reasons I like to follow the game of baseball is that it lends itself to statistical comparisons. Likewise, membership lends itself to statistical analysis. The fundamental analysis is Lifetime Value (LTV). In economic terms, all members are not created equal. Understanding the overall value of a member and then the value of a membership segment or individual is foundational for developing a retention strategy.
Product Mix: In the telecom world they now have the Triple Play (phone, internet, and TV) and some are looking at a Quadruple Play by adding wireless to the product package. We also have this option available in membership. It is called tiered membership. The fact is the higher you can move a member up the membership product line the more likely he or she is to stay with you. Offering the equivalent of a black Ford is not the optimum membership package to enhance retention.
Predictive Modeling: Admittedly this is a marketing tool that increases in usefulness with the size of a membership or customer base. Nevertheless, past behavior is best predictor of future behavior. So modeling should come more into play in getting and keeping members. In a recent acquisition model that we ran, we found that using the best model we could get 80% of the members by mailing 20% of the prospects. In the chart below, the x-axis is the percentile of the prospect database and the y-axis represents the percent of the members gained. The red line would be the results without a model.
Market Segmentation: Because all members do not represent the same economic value and they display different buying behaviors, it makes a lot of sense to segment members and communicate differently to each group. The exciting news for membership marketers seeking to build segmented communication to members is that technology as never before is allowing this. For example, we are looking to move the renewal and retention work that we do now from traditional printers and variable laser black copy to an iGen – a high speed digital color printing press -- which allows for real time variable printing. This means no inventory and the option for a different messages, graphics, and data for each person who receives the retention communication.
Human nature does not vary that much. So it is a great idea to take best practices from other industries and apply them to ours. It is also a good idea to find out what the best and most successful practices are from other membership marketers and apply them in your situation.
Developing a Membership Marketing Maturity Model
In the software world, there is a methodology to assess the level of sophistication an organization has achieved. It is called a Capability Maturity Model.
The thought came to me that it would be helpful to outline the same type of assessment in the area of membership marketing. Is it possible to evaluate an organization's level of sophistication in membership marketing?
I have been thinking about this for the past couple of weeks, so this concept is very developmental. I thought that I would share this proposed model and benefit from your feedback and insight. I am calling the Membership Marketing Maturity Model the 4M’s.
The model has four levels of maturity: (1.) Initial -- everyone has to start someplace, (2.) Basic, (3.) Good, and (4.) Great – a la the Seven Measures of Success.
The thought came to me that it would be helpful to outline the same type of assessment in the area of membership marketing. Is it possible to evaluate an organization's level of sophistication in membership marketing?
I have been thinking about this for the past couple of weeks, so this concept is very developmental. I thought that I would share this proposed model and benefit from your feedback and insight. I am calling the Membership Marketing Maturity Model the 4M’s.
The model has four levels of maturity: (1.) Initial -- everyone has to start someplace, (2.) Basic, (3.) Good, and (4.) Great – a la the Seven Measures of Success.
The first driver for evaluating maturity that I have is management. So today, let’s take a look at the maturity model as it relates to the organizational management of membership marketing.
- Initial: When organizations start out with membership marketing it is typically a board driven initiative. This is good. One of the roles of leadership is to initiate. A board member might say, “Let’s all call our friends and ask them to join or renew.” However, this model is dependent on volunteerism, so it is not often sustainable or scalable. An organization will not thrive for long by staying in this early stage of maturity.
- Basic: At the basic level, the organization realizes that membership marketing takes a level of professionalism. Membership marketers are experienced with the principles, tools, and techniques that are needed. They competently manage the membership marketing process, but goals are handed down from the board or senior management based on the imperative de jour. They may have responsibility, but not authority.
- Good: Management drives membership marketing through research, testing, and analysis. Goals, strategies and budgets are based on data. However, the organization’s operational constrictions, bylaws, or departmental silos impose a drag on the achievement of the membership marketing opportunities.
- Great: A great membership marketing organization has a unified vision for growth. It brings together the people with expertise and talent; market data based decision-making; and the necessary “structures, processes, and interactions”[1] to achieve this vision.
As always, your feedback is appreciated. With input from others, my hope is that the 4M’s will be a tool that organizations can use in measuring and benchmarking their membership development program.
[1] Seven Measures of Success, page 24.
Associations are “Where the Winners Meet”
From my membership marketing tests over the years, it is clear that the best predictors of someone responding to a membership acquisition effort are typically that they are a subscriber, book buyer, or joiner already in the association’s field. Those who have not demonstrated a tendency to purchase and learn are less likely to join.
That’s why I enjoyed the interesting analysis on the attitudes and income of association members by The William E. Smith Institute for Association Research. It was just published in January.
The report shows that, “On average, association members earn significantly more money and are more satisfied with their jobs than non-members. This is true even after holding constant differences in job categories, disparities in education, and all other relevant personal characteristics. However, the benefits of association membership are not as straightforward as we often hear: Membership by itself does not stimulate higher earnings and job satisfaction. On the contrary, the most plausible explanation based on the data is reverse causation: Prosperity, success and happiness at work encourage association membership, because associations are where the winners meet in many professions[1]”
The data for this analysis was drawn from 2004 General Social Survey (GSS), a random survey of 1,200 American adults.
So who do we look for when we seek new members? This research and the marketing data that I have seen suggest that we seek the “winners” as new members. What do you think?
[1] Arthur C. Brooks, PhD., Where the Winners Meet: Why Happier, More Successful People Gravitate toward Associations, The William E. Smith Institute for Association Research, January 2008, page 13.
That’s why I enjoyed the interesting analysis on the attitudes and income of association members by The William E. Smith Institute for Association Research. It was just published in January.
The report shows that, “On average, association members earn significantly more money and are more satisfied with their jobs than non-members. This is true even after holding constant differences in job categories, disparities in education, and all other relevant personal characteristics. However, the benefits of association membership are not as straightforward as we often hear: Membership by itself does not stimulate higher earnings and job satisfaction. On the contrary, the most plausible explanation based on the data is reverse causation: Prosperity, success and happiness at work encourage association membership, because associations are where the winners meet in many professions[1]”
The data for this analysis was drawn from 2004 General Social Survey (GSS), a random survey of 1,200 American adults.
So who do we look for when we seek new members? This research and the marketing data that I have seen suggest that we seek the “winners” as new members. What do you think?
[1] Arthur C. Brooks, PhD., Where the Winners Meet: Why Happier, More Successful People Gravitate toward Associations, The William E. Smith Institute for Association Research, January 2008, page 13.
How is the economy impacting your association?
Almost every association that I have met with over the past few weeks is asking me the same question, “What are other groups experiencing with the current economic situation?”
They want to know if conference attendance is down or if membership acquisition or renewals have been impacted.
If you have some feedback, please go ahead and post a comment with what you are seeing with your organization. Is the bottle half empty or half full?
From a marketing perspective, whether the economy ends up in recession or we move back to a growth pattern, I think the key to success still depends on generating innovation as a means to maintain resilience. Time after time I have found that we have been able to innovate ourselves out of very challenging business situations.
This was articulated for me a number of years ago when I read an excellent article in the Harvard Business Review. The basic premise of the piece was that no matter what business you are in, keeping relevant and “resilient” was the key to success. The authors said:
“Most companies [or non-profits] would be better off if they made fewer billion-dollar bets and a whole lot more $10,000 or $20,000 bets – some of which will, in time, justify more substantial commitments. They should steer clear of grand, imperial strategies and devote themselves instead to launching a swarm of low-risk experiments.”[1]
I think that it is pretty good advice. Here is a link to an abstract of the article.
Please also do share your insights on any early signs that your organization is seeing from the current economic conditions.
[1] Gary Hamel and Lisa Valikangas, “The Quest for Resilience” Harvard Business Review, September 2003, Page 6.
They want to know if conference attendance is down or if membership acquisition or renewals have been impacted.
If you have some feedback, please go ahead and post a comment with what you are seeing with your organization. Is the bottle half empty or half full?
From a marketing perspective, whether the economy ends up in recession or we move back to a growth pattern, I think the key to success still depends on generating innovation as a means to maintain resilience. Time after time I have found that we have been able to innovate ourselves out of very challenging business situations.
This was articulated for me a number of years ago when I read an excellent article in the Harvard Business Review. The basic premise of the piece was that no matter what business you are in, keeping relevant and “resilient” was the key to success. The authors said:
“Most companies [or non-profits] would be better off if they made fewer billion-dollar bets and a whole lot more $10,000 or $20,000 bets – some of which will, in time, justify more substantial commitments. They should steer clear of grand, imperial strategies and devote themselves instead to launching a swarm of low-risk experiments.”[1]
I think that it is pretty good advice. Here is a link to an abstract of the article.
Please also do share your insights on any early signs that your organization is seeing from the current economic conditions.
[1] Gary Hamel and Lisa Valikangas, “The Quest for Resilience” Harvard Business Review, September 2003, Page 6.
Are You Indispensable to Your Members?
When I go to association conferences, read the ASAE listserv, and visit association blogs, I continually hear people talk about delivering “value” to members and keeping members by providing value. Dictionary.com provides a lot of definitions of value. One for example is:
Value -- Relative worth, merit, or importance: the value of a college education; the value of a queen in chess.
One of my colleagues -- who by the way helped inspire my recent post on “Membership Interdependence” through vision, reward and recognition -- uses a much better word to highlight what associations are seeking to achieve with membership. He uses the word “indispensable”.
Indispensable -- Absolutely necessary, essential, or requisite: an indispensable member of the staff.
In a brainstorming session today when we asked a client to define the value they provide members, we did not get too far beyond information and networking. But when we asked what members found indispensable, the ideas began to flow. Surveys show that members with the association’s designation make more money (reward), there is real industry honor accorded to those who carry the membership designation (recognition), and the association is effectively improving the image of the industry through forceful enforcement of ethical standards (vision).
What do you think about becoming indispensible instead of providing value?
Value -- Relative worth, merit, or importance: the value of a college education; the value of a queen in chess.
One of my colleagues -- who by the way helped inspire my recent post on “Membership Interdependence” through vision, reward and recognition -- uses a much better word to highlight what associations are seeking to achieve with membership. He uses the word “indispensable”.
Indispensable -- Absolutely necessary, essential, or requisite: an indispensable member of the staff.
In a brainstorming session today when we asked a client to define the value they provide members, we did not get too far beyond information and networking. But when we asked what members found indispensable, the ideas began to flow. Surveys show that members with the association’s designation make more money (reward), there is real industry honor accorded to those who carry the membership designation (recognition), and the association is effectively improving the image of the industry through forceful enforcement of ethical standards (vision).
What do you think about becoming indispensible instead of providing value?
Life Cycle V – Renewal
Renewal is the quantitative measurement of how successful you have been with the earlier components of your membership system. An aware, engaged, and interdependent member is much more likely to renew than one who is not.
But at the same time, there is a unique challenge to renewing members. Any renewal program needs to take into account that people are very busy and overwhelmed with communications.
Over the years, my analysis of why members’ lapse shows that the number one reason that people leave an organization is not that they are unhappy with the services or angry about customer service. No, the key reason most people do not renew their membership is because they “forgot”.
In some cases, the member moved and did not provide the association with a forwarding address. In other cases, the brand of the association did not stand out enough in the renewal notice, and it was overlooked. Whatever the reason, more members leave an organization by omission than commission.
In order to break through this omission challenge, renewal programs need to break through the clutter of competing communications.
Perhaps one of the simplest and often one of the most effective ways to improve renewals is simply to increase the frequency of notices. Increasing the number of notices sent to a member should be considered if tracking reveals that the final notices of the renewal program are generating a strong response or if subsequent reinstatement efforts produce good returns. I have met with organizations that do telemarketing to former members and have response rates in excess of 10 percent. This says to me that their renewal system is leaking members who communicated with properly are ready and willing to stay with the organization.
As a rule of thumb, the frequency of renewal notices should be increased until the cost of generating a renewing member through the system equals or exceeds the cost of acquiring a new member. In the rare event that tracking reveals the cost of renewing a member is higher than acquiring a new member, then decreasing the number of renewal notices would be appropriate.
A second tool to break through the challenge of members forgetting to renew is the use of multiple marketing media. In addition to mailed renewal notices, other channels like phone, FAX, and email can be employed.
A high frequency, multi-channel renewal program might look like the following.
Finally, an opportunity to positively impact renewals is to look at offering different options to actually eliminate the member’s renewal decision. This is accomplished by offering payment options like:
- Automatic credit card renewal
- Automatic electronic funds transfer renewal (EFT)
- Multiple year memberships
- Life memberships
- Automatic monthly/quarterly credit card installment billing
These payment options change the renewal dynamic from asking the member to act pro-actively to continue a membership to requiring the member to act proactively to end a membership. Associations that have members who accept some type of automatic debit or credit card charge can see renewal rates 10 points higher for these members than for typical members.
What techniques have you used to increase membership renewals? Please feel free to share them here.
By the way, you can read my first four posts on the Membership Life Cycle through the following links: Awareness, Recruitment, Engagement, and Interdependence.
Membership Marketing Projections, Not Promises
Last month I was meeting with a prospective client and they were very surprised that I could project results, but not promise them a certain level of return.That’s why I have always enjoyed the following quote.
“Successful companies are learning companies. They collect feedback from the marketplace, audit and evaluate results, and take corrections designed to improve their performance. Good marketing works by constantly monitoring its position in relation to its destination.” (Philip Kotler, Kotler on Marketing, page 34)
Marketing really is a process. Knowledge is built over time through experimentation and analysis. The challenge is that unlike a chemistry experiment, for example, when the variables are all controlled, marketing works in a dynamic environment. Variables include elements that you do not control like the economy, competition, and the post office and those you have more control of like timing, offers, market segments, and messaging.
So like a ship blown by the waves and wind, you need to monitor where you are and make adjustments to get to your destination.
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