Membership Marketing Planning for 2008

As the New Year begins, I thought it might be useful to outline the marketing planning methodology that I use to brainstorm and develop strategies for the associations for whom I do consulting. .

I presented this to my good friend, Chris Rogers, President of CDR Communications, at breakfast the other day and he also felt it was a good tool that would serve in his communications work for non-profits. So here it is.

We are all familiar with the four P’s – Product, Price, Place, and Promotion. They are established tools in marketing to help define strategy, but I find that they do not serve non-profits as well.

So I have adapted these for the association world to the following:

• Market – Answers the question, “WHO?”


• Product – Answers the question, “WHAT?”


• Promotion – Answers the question, “HOW?”


• Economics – Answers the question, “WHY?”

Let me make a few quick comments about each of these.

First, any sound marketing strategy needs to look at “Who” we want to reach. I have found it helpful to break most markets down visually using a triangle or pyramid.
At the top of the triangle are the best prospects for the product that we are offering. If properly defined, this is almost always the smallest segment. As we work our way down to less qualified prospects, we have increasing numbers of potential members or customers – hence the wider triangle. The goal of course is to be sure that we flow our scarce marketing funds first to the best prospects and then down the triangle to generate the best ROI.

Taking the time to carefully define who is in each market segment and how many people are in the segment is fundamental to planning.

Next, define “What” you are offering. Should your product be bundled or sold a la carte? What are your best price points? What is your unique selling proposition (USP) to each market segment? What enhancements can be made to the product to make it unique or more valuable? How does your product compare to the competition?

The third element is promotion or “How” we go to market. Unfortunately, many marketers start at this point without doing the earlier leg work. I sometimes, for example, hear that “direct mail doesn’t work for our organization.” It is possible, but it is more likely that the channel is not to blame, but the message went to the wrong person. You cannot sell ice to Eskimos.

Promotional decisions look at how best to connect the product and the market. What marketing channel should you choose (personal sales, telemarketing, direct mail, space ads, broadcast FAX, email, search engine ads, or retail)? Each channel offers unique advantages, cost structures, and response rates.

Finally, marketing planning requires an answer to the question, “Why”. Does the plan make economic sense? This involves looking at realistic projections of revenue and costs and calculating the Life Time Value, Cost of Goods Sold, and Maximum Acquisition Cost for a member or customer. I provided these calculations in a membership marketing context in my post, Know the Numbers on Membership Marketing.

I hope that these thoughts get your strategic marketing juices flowing. I wish you a joyous and peaceful New Year!

I will return to the Five Phases of Membership Marketing in January.

Membership Life Cycle – Part II

Most associations have done a good job at building market awareness. Over the years, members and prospective members learned about the association from doing research, a professor, or a colleague.

After awareness, recruitment is the second part of the membership life cycle. It is the process of getting a member to join your association. Or perhaps better described, it is the process of getting a member to 'try' your association.Membership in professional associations is typically what marketers call a 'push' product rather than a 'pull' product.

A 'pull' product is best defined by the famous statement made in the movie Field of Dreams 'if you build it, they will come.' There are some products that consumers will spend hours seeking out. They do not need a lot of marketing. There are web sites dedicated to tracking down a “pull” product like the Nintendo Wii .

As opposed to the Wii, membership tends to be something that needs to be sold or pushed in order to get returns. Did you ask for a professional membership for Christmas?

A pro-active plan needs to be put in place in order to attract large numbers of new members to an association.

I believe that the single biggest reason that many associations are not growing membership is because of this lack of focus and funding for membership recruitment. I looked at this issue in more detail in an article that I did for ASAE and Center’s Associations Now.

When membership recruitment is done properly, most groups can see their membership blossom and grow.

The National Middle School Association is a good example of the importance of 'push,' or active recruitment.

Jeff Ward, the Deputy Executive Director of NMSA said ‘the association believed that it had a high level of awareness in the school market, but for many years we had experienced a flat membership.'Then the association settled on an aggressive membership recruitment program designed to take membership over a five-year period from 17,000 members to over 31,000. Once the acquisition program was launched, numerous tests were made to optimize both to the NMSA membership product and renewal system. The end result was that over this five-year period, NMSA indeed grew by over 80% and reached the new membership level of 31,000 members.

A solid recruitment plan requires an ongoing learning mindset that uses testing strategies to optimize three key areas:

• The marketing message - To determine what value proposition is most attractive to prospective members.


• The membership offer - To determine what price points, benefit packages, and special incentives will attract members.


• The target market - To determine what market segments or lists of prospective members are most responsive to the message and offer.

Next we will take a look at what you do with the new members once you get them.

Five Phases of the Membership Life Cycle

We have just put out a new white paper titled the Membership Marketing Life Cycle. It highlights the five major phases in the membership lifecycle:

• Awareness
• Recruitment
• Engagement
• Interdependence
• Renewal

Over the next few posts, I would like to highlight each of these phases in the membership lifecycle.

First, let’s take a look at awareness. Membership marketing starts with one very important question. Do prospective members know who you are?Awareness is the measure of how successful your branding efforts have been to gain share of mind in your target audience. Until someone knows you, they are not likely to become a member or a customer. Or put another way, how does the bee find the flower?
Good direct marketing alone is not the best or most effective tool to build awareness. For example, the United Professional Sales Association (UPSA), desired to expand its strong and thriving local organization beyond the Washington, DC area. Members of UPSA attended meetings and established meaningful networking relationships.
However, when UPSA conducted a national membership development campaign, the results were less than they hoped to receive. The promotion was targeted to an audience that tracked with local membership. The challenge appeared to be one of awareness. The market that they sought to reach did not know and recognize their brand.

Fortunately, there are some tools available to membership marketers to help build awareness. These include:

• Search engine optimization
• Search engine ads
• Public Relations
• Word of Mouth Marketing

And when awareness is raised in key constituencies, results will follow. The U.S. Naval Institute (USNI) provides a good example this. USNI just completed a very strong membership growth year, but this growth was supported by a series of videos titled, Americans at War that highlighted the real life stories of their members. These video testimonies were so powerful that they went from You Tube to being picked up on run on PBS stations across the country.

How do you know if awareness is the challenge facing your membership marketing? The best way to find out may be to conduct a small test marketing effort to the prospects that you feel would be interested in joining your organization. If the returns are acceptable, there is enough awareness to move forward. If not, it might be time to cultivate a higher level of awareness before investing funds in selling.

Frequency of Contact in Membership Marketing

In my earlier post this week on Sensible Branding, I emphasized the importance of frequently communicating your brand to your target audience.

I thought that it might be helpful to follow that up with some actual test results.

Earlier this year, we conducted an A/B split membership acquisition test for an organization where we added a follow up email promotion two weeks after our mailing dropped to a portion of the file. The email carried the same graphics and special offer that was included in the mailing.

Here is what we found. The prospects who receive only the mailed membership invitation responded at a .57% response rate. Those who received both the mailing and the follow up email generated a total response rate of .97%.

Adding the email cost very little, but raised overall response rates by 68%. That’s adding 3.9 members for each thousand contacts. Let’s say the dues rate is $200, then the additional email generated $780 more dues revenue for each thousand people contacted. Not bad.

Within reason, good membership marketing requires frequent contact with prospects, ideally using multiple channels.

Sensible Branding

I have to confess something. I have developed negative feelings toward “branding”. Here’s why. With some associations, branding has become an excuse to return to the deadly practice of “if you build it they will come”.

The branding process can stop pro-active marketing in its tracks or can become the end instead of the means to communicating with members and prospects.

After all, who wouldn’t rather spend time focusing on all of their attributes and what members and non-members “really” think about them instead of selling.

It reminds me of the humorous saying: “Enough about me talking about me. What do you think about me?”

But flying back from The Great Ideas Conference and catching up on my reading I was greatly encouraged to read an article that presented a very sensible and smart perspective on branding.

The article appeared in the December issue of Associations Now and was written by one of keynote speakers at Great Ideas Conference, Bruce Turkel.

Turkel defined branding this way, “A brand is not a name, a logo, or a masthead. A brand is the promise of a relationship—the relationship that you build with your customers when they agree to do business with you (page 28).” In many cases, the brand can be described in just a word or two.

He goes on to emphasize that of course you must deliver a top notch product as a baseline for success, but beyond having top products “the most important thing you have to do is to make your customers feel good about the time and money they spend [with you].”

Furthermore, he says, “In order to keep your brand vital to your members, your organization has to be the cauldron where the great new ideas are always bubbling. Like the mama bird catching fat worms to drop into the waiting mouths of her hungry hatchlings, it’s your job to search the world for the best practices and bring them back to your members, often before they even realize they need what you’re offering (page 29).”

Essentially, Turkel is describing great, innovative products and experiential customer service.

But here is the part where some organizations fail and where I think Turkel get’s it right. He emphasizes that once you have a brand, “You must constantly and consistently communicate your brand value. Only a constant message will break through the clutter of all the communicators trying to get your target’s attention. And only a consistent message will present your message reliably enough to stick. Ironically, this doesn’t give you license to be repetitive. Instead you have to regularly refresh your message so it doesn’t bore the very people you’re trying to excite.”

He has it right. A brand does not magically make the world come to your door. Instead, it is the foundation from which to market. Once you have a sense of the promise you can make to your members and prospects in products and experience, you need to aggressively take it onto the street, test it, adjust it, and frequently communicate it.

Ultimately it is not your brand that funds your mission. It is the dues and member purchases that allow you to fulfill your purpose.

What do you think?

More Dues Increase Findings

I wanted to share a few more items related to the dues increase survey research that we conducted this fall.

First let’s take a look at how associations justify raising dues to their members?

• 54% of associations indicate keeping up with inflation is the justification used to support the dues increase.


• 48% report that the addition of new programs or services is the justification used to support the increase.


• Close to one-quarter mention increasing advocacy as justification for an increase in dues.

Directionally, the proportion of associations offering inflation as justification for a dues increase decreases as the percentage of the dues increase grows. However, associations citing the additions of new programs and services are significantly more likely to raise dues 11% to 20% and to have provided a special offer as an incentive to renew.

Next, let’s look at how the dues increase announced to members?

• 44% of associations have announced their most recent dues increase through a letter or e-mail to the association and/or through a letter in the renewal notice.


• 40% of associations announced the increase through an article in the association newsletter or publication.


• If the announcement was made via some form of written communication, associations are significantly more likely to provide a special offer for joining/renewing.

Finally, here is how associations handled the timing of the dues increase and notification of members.

• About one-half of the associations made the dues increase known to the membership within three months of it taking effect.


• 30% of associations announced the change in dues four to six months before it was implemented.


• Only about 10% of associations made members aware of the increase a minimum of six months ahead of time.


• Associations planning to raise dues by 21% to 30% are more likely to announce this increase much further in advance.


• Only about 16% of associations provided some type of special offer to lessen the impact of the dues increase. Those who offered an incentive were significantly more likely to be implementing a dues increase of 11% to 20%.

My goal in conducting this research was to provide associations with a benchmark to consider when raising dues. Clearly, every association is different and needs to consider the environmental and political factors that they face. I hope you find this information helpful if you are considering a dues increase.

Surprises from the Dues Increase Survey

I wanted to share the biggest surprise coming out of our dues increase survey that we completed this fall. The study shows that there is a far greater price inelasticity in dues levels than is commonly believed.

As I mentioned in my last post, these results are from responses of 324 association professionals who completed our dues increase survey.

In the verbatim responses to the survey, the vast majority of responders recommended a dues increase strategy of small regular increases. This is something that I would probably also have recommended to associations.

However, the data from the survey revealed a different outcome on the impact of dues increases when looking at membership counts. As the chart here shows:

• Associations raising dues by 11% to 20% overall were most likely to report membership growing by over 10% than those who had lower or higher dues increases


• Associations raising dues by 11% to 20% overall were the least likely to see a decline in membership of under 10%.

The survey did show that there is a limit to the increase that a membership can sustain.

• Associations raising dues by dues by 21% to 30% were most likely to report a membership growing by over 10%.


• Associations raising dues by 21% to 30% were most likely to see a decline in membership.

Not surprisingly, the best revenue outcomes were also associated with dues increases of 11% to 20%. These findings show that association membership will support a dues increase as high as 11% to 20% and not negatively impact membership counts or revenue. However, anything over 20% shows a diminishing rate of return, with larger decreases in membership and acquisition rates, and declining renewal rates.

The lesson is to rely on the data, not just our intuition, when establishing pricing or any other marketing initiative. It also shows that associations that raise dues at lower percentages may be sub-optimizing their revenue.

By the way, if you would like a copy of the dues increase report, please send me an email and I will be happy to forward it to you.

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.

Thanksgiving Message

I find it very easy to shift from an attitude of gratitude to one of entitlement. That’s one reason why celebrating Thanksgiving is so important.

This weekend our Thanksgiving church message highlighted this for me. It came from the text:

“What do you have that you did not receive? If then you received it, why do you boast as if you did not receive it?” [1]

What does this mean? I think it points out that life is a gift that we receive. We do not control when we come into the world or the nation where we are born or the basic skills and intelligence we possess. We receive all of them.

When I lived in Honduras, CA, I daily walked past a woman who was blind. She did not speak, but she had her hand out requesting money. Each day that I passed her, I pressed a coin into her hand. I have often thought, “Why did I have the gift of sight and the benefit of being born in this country?” I do not know. But I do know that the blessings I enjoy are things that I “received” and did not earn or deserve. I should be grateful.

[1] 1 Corinthians 4: 7

A Big Membership Decision – College

The past year has been a lot of fun. I have been able to watch my son – who is a high school senior -- be marketed to by hundreds of colleges who want him to “join” them as a student.

Joseph and I talked this weekend about what has worked best to attract him to particular colleges. Here are the three elements that were most effective in encouraging him to actually apply to certain colleges.

• Consistency – One contact did not work for us. Over the year we have collected a large laundry basket of mailings from colleges. Those who sent one letter got a quick look, but those that had a steady stream of communication were more successful in making us aware of what they had to offer and at least helping us reach a point of considering them for a visit.


• Personal Contact – Before the process began, there was one in-state school that we wrote off from consideration, but they actually turned us around and my son is applying there for admission. How did they do it? Through personal contact. They consistently had students from the school calling my son urging him to take the next step by requesting an application, scheduling a visit, sending them SAT scores, etc. They won us over by making him feel that they were interested in him as an individual.


• Enthusiasm – Once the school got us to the campus for a tour or interview, hearing from an enthusiastic speaker or guide and talking with enthusiastic students had a big impact. The presenter at my Alma Mater, Dickinson College, took the prize for the most inspiring presentation. But casual conversations with students who were passionate about what they were studying were also memorable.

As I always argue on this blog, taking the experience of one person and projecting it on everyone is NOT a good idea. However, can any of these sales or marketing elements be applied to get people to join or continue membership with your association?

By the way, thanks to Matt Baehr for the inspiration for this post. On his blog, he challenges several of us to look at things from a different angle. So I took a look at being marketed to as a consumer instead of marketing for an organization. Good idea Matt.

Wisdom for Human Resource Decisions

We deal with human resource and human relationship issues every day. Here is a good quote from a classic by Peter Drucker.

“Fast personnel decisions are likely to be wrong decisions. . . People-decisions are time-consuming, for the simple reason that the Lord did not create people as ‘resources’ for organization. They do not come in the proper size and shape for the tasks that have to be done in organization – and they cannot be machined down or recast for these tasks. People are always ‘almost fits’ at best. To get the work done with people (and no other resource is available) therefore requires lots of time, thought, and judgment.”

Peter F. Drucker, The Effective Executive, p. 32 & 33

No Good or Bad Renewal Rates

Because of the impact of differing business rules among associations and environmental factors, you cannot compare one association's renewal rate to others. There really is not a good or bad renewal rate. Instead, the purpose of calculating renewal rates is for an association to establish a standard to monitor the improvement or decline of membership retention.

Variables that limit the ability to benchmark renewal rates across associations and determine a "good" or "bad" renewal rate include the following:

• Individual membership organization versus trade association membership. Associations that offer an individual membership as opposed to associations with institutional or company memberships typically will see lower renewal rates. ASAE reports that the mean renewal rate for is 83% for an individual membership association and 91% for a trade association.[1]


• Member-paid dues versus company-reimbursed dues. Associations that serve a market where dues are reimbursed or paid for by an employer will see better renewal rates than dues paid out of pocket by individuals. Decision to Join reported that “two thirds of those who are now members of any association and have dropped an association membership in the past say that their employers stopped paying dues.”[2]


• Growing versus declining memberships. Associations with a rapidly growing membership tend to have lower renewal rates than groups with a steady or declining membership. This occurs because growing associations have a larger proportion of first year of members and first year members typically renew at a much lower rate than longer term members.


• Incentive-generated members versus full-price members. The stronger the incentive used get members to join an association, the lower the renewal rate will be when compared to members who joined with no incentive. Members who receive a complimentary membership when they attend the annual meeting, for example, will not renew as well as members who join at full price.


• Transient industry versus stable industry. Associations that serve highly transient markets, where job turnover is high or members are moving out of the industry, will see lower renewal rates than a steady marketplace. A job change for an individual association member or a merger for a trade association member raises the likelihood of not renewing membership.


• Short membership grace period versus longer grace period. Business rules on when a member is considered lapsed varies between associations. Some associations count members as renewing if they receive payment within 90 days of expiration. Other associations lapse a member on expiration and consider a payment 90 days after expiration to be a membership reinstatement.

Therefore, if an organization has an individual membership where dues are not reimbursed by an employer, is rapidly growing through the use of substantial new member incentives, is focused on an industry that members move in and out of, and has business rules that require ending an unpaid membership on the expiration date, then the association will probably have a what someone might characterize as a very low renewal rate.

But that does not mean the membership marketing staff is doing a bad job of serving and renewing the members. And comparing this organization to others that do not have the same factors is not helpful. Instead the organization should use the current rate as a benchmark and work to put new tests and programs in place to move the rate higher.

[1] 2006 American Society of Association Executives (ASAE) Policies and Procedures in Association Management: A Benchmarking Guide, Volume 1 Membership, p. 36.
[2] DTJ, ASAE and the Center, p.63.

One Thing I Do Not Like about DTJ

As I mentioned in my last post, there is some great insights in ASAE and the Center’s Decision to Join (DTJ).

As you may recall, DTJ is book taken from a survey that included 18 individual membership associations and 16,944 survey respondents. The survey went to the associations’ current members, lapsed members, and prospective members.

However, one finding that I do not agree with is DTJ’s contention that prospects “more important” reason for joining an association is to support the “community of interest”. I think that this conclusion can lead membership marketers in the wrong direction when it comes to asking new members to make a decision to join.

Here is what DTJ says: “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.” Based on a comparison of two separate questions where personal benefits of joining received a mean score of 3.4 and benefits to the field received a mean score of 3.6, the study concludes “that the benefits for the good of the order are more important than personal benefits” (page 6).

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.

I’ve come to this conclusion based on what the decision to join research actually reported and on the results of membership marketing efforts for many associations over the years.

Here are statistics from DTJ that would support this value based joining contention.

• Of those who responded to the survey and had dropped a membership, the primary reason reported by 56.1 percent of the responders said that they dropped membership because they “did not receive the expected value to justify the cost of the dues” (page 81). If members do not join for value, they sure leave for lack of value.


• When asked how important various personal benefits to joining were, “access to the most up to date information” received a 4.22 rating and “professional development” received a 3.91 rating. This compares to a 3.85 rating for “”promoting standards” as the highest rated item for joining for the benefit of the profession (page 82 and 83). So information and professional development were the top rated reasons for why members joined.


• One could argue that the highest rated “benefits to the field” as defined by DTJ are really personal benefits. To do their job, members need someone to provide “standards and guidelines” and the “gathering analyzing, and publishing data on trends in the field”.

In addition to what DTJ reported, my experience in testing messages in new member solicitations also supports the value based membership appeal. Regularly – typically at a board’s direction – we create messaging around joining an association for the good of the profession. And regularly this message loses in head to head tests to a benefits oriented theme focused on “here is how membership can benefit you in your career.”

Let me conclude with a couple of caveats to my point. First, I always include an altruistic message in membership solicitations. Joining for the good of the field is an extra benefit that warrants mention and can serve as an additional motivator to joining. Secondly, I believe that the longer a member remains with the association and the more involved the member becomes, the more likely he or she becomes to staying with the association for the good of the community. However, in DTJ, we are not asking why an involved member stays, but what the basis of the decision to join is.

I believe the bottom line is that we sell membership on value. Do you agree with me?

Six Things I Like about DTJ!

Over the past couple of months, I have had the opportunity to look at ASAE and the Center’s Decision to Join with colleagues and clients.

There are a number of continuing questions that come up in discussions about association membership that this book helps to clarify. Here is my list of the issues where DTJ provides some help and confirmation to what I have also seen in the marketplace.

1. DTJ says that those who are involved as volunteers in an association are much more enthusiastic about the value provided than are those who are not involved. “Those who are not involved lie perilously close to former members in their overarching assessments of the value they derive from associations. If former members are thought of as being dead, the uninvolved are close to comatose.” (Page 4) As you will note in my post yesterday (Growth through Membership Retention), this finding rings true with other data that I have seen and is an encouragement to get members involved as volunteers and customers with an association.
2. DTJ says the “approximately half of them [lapsing members] indicate their reasons had more to do with career and other life changes than with the performance of the association. This means that those who worry about their retention rates get a 50 percent discount on their current distress levels.” (Page 3) In other words, no one will ever renew everyone and a plan is needed to add new members -- The Cost of the Wrong Membership Marketing Strategy.
3. DTJ says not to worry about younger members. “A considerable body of evidence indicates that entry-level people have always been slow to appreciate the value that associations off until their career pursuits settle in as they reach their late 20s.” (Page 4) See my post and the debate related to this titled: The Ageless Question.
4. DTJ says that in rank order the magazine or journal, conference or meetings, e-newsletter, or association web site is where current, former, or never members “prefer to receive information about your profession or field.” (Page 23) Members still want paper.
5. DTJ says that the single biggest reason for dropping membership is that the member “did not receive the expected value to justify the cost of dues.” (Page 24) This finding emphasizes the need to provide excellent member benefits in order to keep members with the association -- Tangible Benefits Matter.
6. DTJ says that the three most important personal benefits in your decision to join are: “a. Access to the most up to date information available in your field, b. Professional development or education program offerings, c. Opportunities for you to network with other professionals in your field.” (Page 82). This sounds like the classic information, professional development, and networking that we all include in our membership solicitations.
   
   What did you find helpful in DTJ?

Growth through Membership Retention

Over the course of this month, I have been looking at five growth strategies. The first post on this was, October 12th, Five Growth Disciplines -- Introduced.

Today, I wanted to look at the growth strategy of keeping the growth that you have already earned or membership retention.

The retention rate obtained by an association in large part determines the ultimate level of membership for an association. For example, an association that adds 5,000 new members a year and maintains a 75% renewal rate will grow to 20,000 members. While an association that adds the same 5,000 new members but maintains an 85% renewal rate will grow to 33,000 members.

Better membership retention helps an association grow by lowering the number of new members that go toward making up for lost members and letting those new members contribute to membership growth.

So how do you increase renewal rate? I believe the key is through engaging or establishing interaction between your association and your members.

This interaction can be as simple as a phone call. In a presentation for ASAE and the Center that I did with Karen Gebhardt of the Aircraft Owners and Pilots Association (AOPA), we reported that their research showed members who called the association’s '800' number compared to those who did not had an improved retention rate.

Interaction can also be in the form of member transactions. In a data analytics study we did for an association, we found:

• Members who also maintained membership in an optional local chapter along with their national membership were 17 percent more likely to renew than those who were not a member of a chapter.
• Members who attended an association meeting in the past year were 19 percent more likely to renew than those who did not attend a meeting.
• Members who attended an association meeting at any time in the past were 7% more likely to renew than those who never attended a meeting.
• Members who attended four or more meetings were 30 percent more likely to renew than members who never attended a meeting.
• Members who placed a product order in the past year were 28% more likely to renew than those who had not placed an order.
• Members who upgraded their membership in the past year to a higher level of service were 12% more likely to renew.

The effectiveness of member engagement was further highlighted in ASAE and the Center’s Decision to Join (DTJ) study. DTJ found that “Those [members] who are not involved lie perilously close to former members in their overarching assessments of the value they derive from associations. If former members are thought of as being dead, the uninvolved are close to comatose.” (page 4)

In an upcoming post, I will look at techniques to engaging members in order to increase retention. Does this growth strategy sound like a good one for your association to use?

The AARP Growth Strategy

Yesterday’s post, My Favorite Growth Strategy – Market Expansion, outlined the theory of growing membership through market expansion. I thought that it might be interesting to take a look at the classic example of using this strategy today – AARP

In 1947, Dr. Ethel Percy Andrus, a retired high school principal, founded the National Retired Teachers Association (NRTA). But after ten years of operation, in 1958, NRTA evolved into AARP when Andrus opened the organization to all senior Americans.

“Apart from a bumpy period in the late '70s, AARP's rolls have risen rapidly each year since its founding in 1958: 1958 50,000 1968 1.6 million 1978 11.8 million 1988 30 million“(Money Magazine).

Membership was boosted in 1984 when AARP further expanded its markets by lowering the age of membership eligibility from 55 to 50.

Today AARP reports 38 million members.

Clearly, the AARP growth included favorable demographics, market need for insurance and other products, and a good membership value proposition. However, if AARP did not look beyond its original narrow teacher market, some other organization would be serving seniors today instead.

That’s why market expansion is so important.

Thinking broadly about who might benefit from the products and services provided by an association can lead to substantial growth.

My Favorite Growth Strategy – Market Expansion

In my post on Growing Revenue through Membership Packaging,
Wednesday, October 5th, we looked at product line extenuation as a strategy for growth.

Today, I want to discuss one of my favorite growth strategies, Market Expansion.
I was reminded of this strategy in the last issue of Associations Now in the article Picking Markets That Matter by Noel Capon.

Capon warned that there are two mistakes organizations can make. One is overstretching to new markets and the other is remaining static and not moving fast enough.

He gave two corporate examples of organizations that successfully looked beyond their existing markets to grow. One is “GOJO’s launch of Purell as a first-in-its-category consumer product for keeping hands clean.” This launch moved it outside its traditional healthcare and food-service markets and “put it on unfamiliar ground.” But today, Purell is a very successful consume brand.

The second example is Progressive Insurance which launched a discount pricing strategy tied to an analysis of customer’s credit ratings. This allowed it to “acquire and retain a new population of medium- and low-risk customers.”

This market expansion strategy “drove Progressive’s growth from the 13th-largest to the third-largest player in the U.S. car insurance market.”

I have also seen the strategy of reaching out to new markets used with great success in the association marketplace. Sometimes, a market expansion strategy will require some modifications to member benefits and services.

Here are some examples of market expansion:

• Professional engineering associations reaching out to operators
• US associations expanding internationally with electronic membership
• High visibility cause driven-associations reaching out to consumers as donors
• College based associations reaching out to AP high school teachers

Here are some tips to help you get started with a market expansion strategy to adjacent or hot new markets.

• Use secondary research to begin scanning new markets to see if who would benefit from your association’s insights;
• Initiate primary research with executive interviews, focus groups, and surveys to identify unmet needs;
• Match your existing members and customers against commercial databases with data analytics to identify individuals from new markets who are already joining and using your services;
• Add live test quantities of commercially available mailing lists and databases in new markets to your ongoing marketing activities to measure potential response in these segments.

What new markets should you explore to expand the growth of your organization?

New Member Discounts and Incentives

I often hear people say that a dues discount cheapens membership and attracts members who the association really does not want. I appreciate their good motives of wanting to attract true believers to the association, but based on real life marketing experience, I disagree.

That’s why I enjoyed reading Maddie Grant’s post on her blog, Diary of a Reluctant Blogger, picking up on an ASAE marketing listserv discussion related to new members dues discounts.

Maddie and I both came to the same conclusion that discounts are okay. In fact, she reports her association gives new members a $500 first year dues discount.

I won’t repeat the quantitative test results that I used to support trying a new member dues discount, except to say that with in one long-term test, we found that an initial dues discount helped one association end up with many more members and much more dues revenue after a full three years of tracking. You can read the details in a past post that I did on the Membership Marketing Blog on the topic of Gathering Data through Market Testing.

But I would like to comment on why I think a discount or any appropriate incentive can be effective.

Through running membership programs for over 20 years, I have come to the conclusion that membership is what marketers call a “push” product. Prospective members may wake up in the morning and say, “I’ve got to find a Starbucks”. But they do not wake up saying, “Gee, I have to find an association to join today.”

In fact, only a small number of members will “find” an association on their own. We learned from The Decision to Join (DTJ page 83) that a mere 2.6% of the survey respondents found out about the association from “browsing the Internet”. Most were introduced to the association by colleagues, conferences, ads, or some type of marketing.

In other words, membership is sold not bought.

This is no different from sharing samples as you stroll through the aisles of Costco or offering trial subscriptions to magazines. It is said of churches that new members often belong before they believe.

Because membership is a push product, growing associations are typically those that have aggressive programs to ask people to become members and incentive them to give the association a try. They say to prospects, “Try it, you’ll like it.”

Sure some members will try the association and not renew. DTJ reports that the number one reason members leave an association is that they, “Did not receive the expected value to justify the cost of dues” (page 81). But because many associations offer a sold product that can truly help a member; the goal needs to be getting that prospect into the fold so that they can become the true believer that we all desire for our association.

Five Growth Disciplines -- Introduced

Okay, if growth is what we want for our membership, what do we do to get it?

Several years ago a book came out that I enjoyed. I liked it because it clearly outlined strategies that I had long believed in as foundational to generate growth.

The book is, Double-Digit Growth: How Great Companies Achieve It--No Matter What, by Michael Treacy

Treacy articulated five disciplines that led to double digit growth for organizations. They are:

1. Keep the growth you already have earned.
2. Take business from your competitors
3. Show up where growth is going to happen
4. Invade adjacent markets
5. Invest in new lines of business

I don’t think that the book caught hold in the non-profit market. We don’t like to talk about “taking” business from other associations or “invading” markets. Nevertheless, there is wisdom in his recommendations.

So in the association membership context, I might translate his disciplines to:

1. Retain your current members
2. Present your value proposition in your marketplace
3. Stay on the cutting edge of your industry or field
4. Expand to new markets
5. Expand your product lines

I hope to take a look at some of these growth strategy disciplines over the next few posts. But first let me know if I am missing something in this list?

Characteristics of Growing and Declining Associations

When we talk about membership, most would agree that growing the number of members is a good thing. But why do we agree with this? What are the implications of a growing membership compared to a declining membership?

Here are some of the impacts that I have observed in associations with increasing and declining memberships.

Characteristics of Growing Associations

• Economic
  Efficiency is increased as fixed costs spread over more members
  More net revenue is available for investment in new initiatives


• Members
  Boosts confidence of current and potential members
  High demand associations can set the agenda on pricing


• Staff
  Attract brightest and best staff (also volunteers and thinkers)
  More opportunities to enhance personal skills and expertise

Characteristics of Declining Associations

• Economic
  Budgets are too tight to try new initiatives
  Efficiency is lower as fixed costs are spread over fewer members


• Members
  Less momentum and excitement with members
  Members demand lower pricing


• Staff
  Financial rewards lower
  Less personal growth opportunity

In my upcoming posts, I would like to look at some of the key strategic drivers of membership growth. Does your experience allign with what I have outlined above?