am cham worldwide executive director's conference cairo

How to Develop and Manage a Successful Membership Marketing

Program

AmCham Worldwide Executive Director’s ConferenceCairo, Egypt

Presented by Tony Rossell

Senior Vice PresidentMarketing General, Inc.

Developing a Membership Strategy

“There is nothing like a crisis to clarify the mind. In suddenly volatile and different times, you must have a strategy”Richard P. Rumelt, Strategy in a ‘structural break’, Mckinsey Quarterly, December 2008.

What is membership marketing?

• Membership Marketing is a subset in the field of Relationship Marketing

• Membership is a customer model being adopted by many other industries and organizations.

• Membership Marketing is the process of acquiring, engaging, upgrading, and renewing members.

How to be a Strategic Membership Marketer

The four strategic areas for success in membership marketing:– Economics – Why– Market -- Who – Product – What – Promotion – How

Goal: Take away at least one key opportunity for your AmCham from each of these four strategies.

Economics

• Response Rate• Renewal Rate• Average Tenure• Lifetime Value• Maximum Acquisition Cost• Steady State Analysis

What is the basic marketing measure?

Response Rate • Response rate measures the number of prospects

who responded to a marketing effort. – Total number of responses / Total number of

prospects contacted X 100.– Example: (50/ 10,000) x 100 = .50%

How many members do we keep?

Renewal Rate• Renewal Rate measures the number of members

kept over a given period of time -- usually during a fiscal or calendar year.

• Total Number of Members Today (minus 12 months of new members) / Total Number of Members in Previous Year

• Example: (10,500 – 1,500)/10,000 = 90% Renewal Rate

How long do members stay?

Average Tenure• Average Tenure measures how long on average a

member stays with an association. • Reciprocal of Renewal Rate: 1 – Renewal Rate or,

1 - .90 = .10 • Example: Divide Reciprocal into 1, or, 1 /.10 = an

Average Tenure of 10 years

How much are members worth?

Lifetime Value (LTV)• Assume US $1,000 / Year Dues and US $500 / Year in Non-

Dues Revenue· (Dues + Non-Dues Revenue) x Average Tenure = LTV· Example: ($1,000 + $500) x 10 = $15,000 LTV

Maximum Acquisition Cost (MAC)• Assume Incremental Servicing Costs = $200 and Cost of

Goods Sold = $250· (Dues + Non-Dues Revenue) - (Incremental Servicing Costs + Costs of Goods Sold) x Avg. Tenure = MAC· Example: (($1,000 + $500) - ($200 + $250)) x 10 = $10,500 MAC

Where is membership headed?

Membership Steady State• Annual New Member Input / Reciprocal of Renewal Rate (or

Lapse Rate) Shown as a Decimal = Total Membership Steady State.

• For example, 500 New Member Input / .20 Lapse Rate = 2,500

Total Membership.

What’s the best strategy?

• Focus on acquisition by prioritizing the membership-marketing budget to maintain the current 75% renewal rate and add 800 new members each year.

• Focus on renewals by prioritizing the membership-marketing budget to achieve an 85% renewal rate and maintain the current level of 200 new members who join during the year.

• Focus on a balanced approach by prioritizing the membership-marketing budget to achieve an 80% renewal rate and adding 500 new members each year.

Strategy Impacts Outcomes

• The first option with a 75% renewal rate and 800 new members per year will achieve a total membership of ____ members over time.

• The second option with an 85% renewal rate and 200 new members per year will achieve a total membership of ____ members over time.

• The third option with an 80% renewal rate with 500 new members per year will achieve a total membership of _____ members over time.

Case Study

The AmCham ABC last year had 10,000 members. This year 1,500 new members were added to the association. 600 of these new members were attributed to two direct mail campaigns of 40,000 pieces each. Membership acquisition mailings cost $750 per thousand pieces mailed. The membership now stands at 10,500. Membership dues are $500 a year. The average non-dues revenue is $250 a year per member. Incremental servicing costs average $100 per member. On average, the cost of goods sold is 25 percent of the sales price.

Exercise - Numbers

Please determine the following for AmCham ABC:– Acquisition Response Rate– Association’s Renewal Rate– Cost to obtain a member– “Lifetime Value” of a Member– “Maximum Acquisition Cost”– “Steady State” Membership of ABC

Association

Exercise -- Strategy

• Based on the member economics, what would you recommend as a strategy going forward for this organization? Some possible recommendations are:– Move monies from acquisition to retention.

– Increase member acquisition.

– Stay the course. Don’t change anything.

Market

• Serve a Market, Not a Product (What do members use and value?)– Awareness

– Usage

– Importance

– Loyalty (not satisfaction)

• Use behavior and characteristics to segment your market

• Spend time, energy, and resources on top prospects.

Product Awareness and Usage

Service

TotalPosition

Board Member Superintendent

Policy Manual CustomizationAware 83.0% 77.8% 90.8%

Used* 68.0% 67.3% 69.0%

Policy Reference Education Subscription Service

(PRESS)

Aware 74.2% 61.4% 93.4%

Used* 81.6% 72.1% 91.0%

Policy Manual UpdateAware 70.5% 64.5% 79.5%

Used* 48.4% 47.3% 49.8%

School Board Policies OnlineAware 55.6% 47.4% 67.8%

Used* 41.9% 38.6% 46.2%

Administrative Procedures Project

Aware 48.4% 39.6% 61.5%

Used* 38.5% 34.0% 42.9%

E-tools for Boards and Districts

Aware 42.4% 38.1% 48.7%

Used* 28.0% 32.1% 22.7%

PRESS PlusAware 37.7% 29.3% 50.2%

Used* 44.4% 38.3% 49.6%

Product Gap Analysis Overall

AcademicOnly

PractitionerOnly

Both Student

Improving my research skills

Importance 3.25 3.74 2.83 3.26 3.53

Meeting needs 2.55 2.72 2.56 2.56 2.56

Enhancing my professional credentials/capabilities

Importance 3.45 3.04 3.41 3.17 3.94

Meeting needs 2.37 2.57 2.30 2.45 2.37

Providing information on graduate training programs

Importance 2.78 2.83 1.99 2.80 3.55

Meeting needs 3.09 3.04 3.14 3.12 2.95

Providing test prep/support for licensing

Importance 2.54 1.89 2.42 2.05 3.19

Meeting needs 1.96 2.26 2.01 1.99 1.84

Enhancing my performance by providing information on best practices

Importance 3.80 3.22 4.02 3.47 3.78

Meeting needs 2.43 2.62 2.31 2.43 2.63

Improving my consulting skills

Importance 3.40 2.44 3.55 2.89 3.75

Meeting needs 2.00 2.34 1.91 2.03 2.16

Red=statistically significant decrease

Blue=statistically significant increase

Potential Acquisition Market

Segments

Former Members

Like Associations

Subscribers

Directories

Market Segmentation Through Data Modeling

80% of responses with 20% of the market

Look for Thriving People, Companies, and Sectors

“Prosperity, success and happiness at work encourage association membership, because associations are where the winners meet in many professions.”

– 79% of association members “very happy in job”

– 49% of association members “very happy in job”

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.

Product

• Value Proposition • Product Line Extension (Increasing

share of wallet)– Product Packaging (Don’t sell a “black” Ford)

• Pricing – Maximizing revenue through the inelastic dues demand of

membership

Product -- Value Proposition

“The message . . . Is that no company can succeed today by trying to be all things to all people. It must instead find the unique value it alone can deliver to a chosen market.”Treacy and Wiersema, The Discipline of Market Leaders, page xiv

Product -- Value Proposition

Vision

RelationshipReward

What separates you from all other organizations?

ASAE’s Decision to Join -- research of 16,944 members and former members from 18 associations -- highlights these components of value that a member is looking to receive.

Product -- Defining Elements• Vision – When we cast a vision for members that

together we can do more than we can do alone, we create a compelling answer to the question, “Why belong to this organization?”

• Reward – Members want tangible value to support their continued membership with product that makes a difference in their lives or career. This answers the question, “What’s in it for me?”

• Relationship – We are a communal people. We want to be around people that we can help and that can help us. Relationship can be with staff or other members and face to face or electronic. It answers the question, “Who can I connect to here?”

Sample Value Proposition

“SMPS is a community of marketing and business development professionals working to secure profitable business relationships for their A/E/C companies. Through networking, business intelligence, and research, SMPS members gain a competitive advantage in positioning their firms successfully in the marketplace. SMPS offers members professional development, leadership opportunities, and market ing resources to advance their careers. SMPS is the only organization dedicated to creating business opportunities in the A/E/C industry.”

Product -- Exercise

• Discussion of value proposition• Drafting a value proposition for your

organization• Sharing your value proposition

Product Line Extension

“Product line extension -- adding depth to an existing product line by introducing new products in the same product category; product line extensions give customers greater choice and help to protect the firm from a flanking attack by a competitor."

The Marketing Dictionary

Product Line Extension

• Express Membership -- $29: online only services• Basic Membership -- $49: online services plus

subscriptions to the monthly periodical and newsletter

• Comprehensive Membership -- $89: basic benefits plus 5 association books shipped as they are published

• Premium Membership -- $219: all of the above plus an additional newsletter, four additional books and a $100 professional development voucher

• Institutional Membership -- $899: a package that includes one Premium membership and 10 Basic memberships

Product -- Pricing Increases

• Association Dues Increase Research– Association memberships will support an

increase as high as 11% to 20%. – Associations in the study raising dues by 11%

to 20% had the highest percentage of revenue increase, no reported revenue decrease and the lowest percentage of stagnant revenue.

Full Dues Increase Study can be found at http://tinyurl.com/mmduesincrease

Product – Price Points

A New Zealand study found the following:

• 87% of prices were defined as odd prices

• 60% of prices ended in the digit 9• 30% of prices ending in the digit 5

Judith Holdershaw, Philip Gendall and Ron Garland, The Widespread Use of Odd Pricing in the Retail Sector, Marketing Bulletin, 1997.

Promotion

• Flawed Strategies– “If you build it, they will come” – Field of

Dreams– “If someone comes to you with a 'great'

product that just needs some marketing, the game is probably already over.” -- Seth Godin’s Blog

– Stop marketing in a bad economy.

Another View

“It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”

John Quelch, Marketing Your Way Through a Recession, Harvard Business School,

March 3, 2008

Promotion

Three Foundations of Promotion1. Hypothesizing – Start each promotion with

the question, “What cool stuff can we do?”– Can we combine? – Can we add? – Can we eliminate? – Can we make an connection? – Can we simplify? – Can we substitute? – Can we reverse?– Can we copy (adapting best practices)?

Bob Stone, Successful Direct Marketing Methods.

Promotion – How to Validate?

2. Testing – Reveals 1,000% Variance in Response

– Lists

– Channel (mail, email, FAX, phone, face to face)

– Offers (discounts, trials, premiums)

– Messages (gain, fear, pain)

– Payment Options (ACCR and installment billing)

– Format Graphics

3. Tracking – Benchmarking success

Promotion

“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

Membership Promotional Strategy Applied

“Don’t Push Growth; Remove the Factors Limiting Growth.”Peter Senge, The Fifth Discipline

Membership Lifecycle

Awareness

RecruitmentEngagement

Renewal

Reinstatement

Awareness

• Defined: The process of establishing your brand in the minds of prospective members.

• Members do not join an organization they do not know, so “90% of success is just showing up.”

– Search Engine Optimization (SEO)– Free Email Newsletter– Online PR Releases (i.e. PR Web)– Word of Mouth Marketing– Social Media (LinkedIn, Twitter)– Development and Participation in Blogs

• Goal – Build Mind Share (and Prospect Database)

Free Email Newsletter

A key step to building a database of prospective members and making them aware of your organization and activity is to offer a free email newsletter.

Recruitment

• Definition: The process of inviting new members to join your organization.

• Push vs. Pull Products -- Membership is a “PUSH” product

7 Top Recruitment Tips1. Begin each and every campaign by thinking

creatively and asking “WHO MIGHT BE INTERESTED IN JOINING?” Then search out lists that contain these potential members.

2. Develop a special offer to answer your prospect’s question: “WHY JOIN NOW?” • Dues Discount• No-Obligation• Guarantees• Installment Billing

3. Carefully develop a strong Unique Selling Proposition (USP). The USP answers the prospect’s question of “WHY THIS MEMBERSHIP?”

Why People BuyPain

In trouble and want to get out of it.

A

Present

Future

Present

Future

B C

FearSee trouble coming and want to avoid it.

GainCan visualize something great and want to experience it.

As employment and consumer spending slows, manufacturing professionals are concerned. So how can you prepare for change, build your skills and position yourself for career success? See details inside...

Your USP for Membership

7 Top Recruitment Tips4. Build your promotion around a metaphor --

something a prospect will recognize and know what to do with. Try using an invitation, survey, certificate, or temporary membership card format.

5. Write your promotion in terms of a conversation between a salesperson and a prospective member. Ask and answer the questions any prospective member would ask (e.g., “IT SEEMS TOO EXPENSIVE”, or "I’M NOT SURE IT WILL BE USEFUL TO ME.")

6. If you are using direct mail, make the investment in a computer-personalized format (i.e., lasering the name and address on the letter and reply).

7. Before you send out your promotion, be sure to set up a system to accurately track responses.

Engagement

• Definition: The process of moving members from observers into users of the resources made available by your organization.

• The first year of membership is the “Conversion Year”

• Members Who Interact Convert

Impact of Interaction

• Data Analytics for one association on engagement.– Members who attended an association meeting in

the past year were 19% more likely to renew than those who did not attend a meeting.

– Members who attended four or more meetings were 30% 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.

Renewal

• Definition: The process of confirming the value that has been delivered to the member over the past year and requesting the continuance of the relationship. – Renewals are the members chance to “vote” on the

value of what you have provided to them.

• The number one reason members give for not renewing is: “I FORGOT”– Renewal keys: Frequency, Intensity, Duration

Renewal Frequency and Timing

Month Activity

1 Renewal Acknowledgment e-mail

2 New Member “Special Offer”

3

4 New Member Survey

5 NCOA/fax/email/phone append

6

7

8 Pre-renewal “Early Bird” Email

9 Mail notice # 1 & Email



12 Expire email or fax renewal

13 Telemarketing


Reinstatement

• Definition: The process of re-introducing yourself to your former member.

• Reinstatement programs test the effectiveness of your renewal program.

– "Look not where you fell, look where you slipped." - African Proverb

• Many organizations are sitting on hundreds of members just waiting to return.

What Lapsed Members Say

Very Likely25%

Somewhat Likely34%

Neither Likely nor Unlikely

16%

Very/Somewhat Unlikely

25%

Likelihood to Renew Membership in the FutureAmong lapsed members

Growth Strategy

“Growth endures not because of fortuitous demand, a hot product, or any single tactic. Growth endures when management follows a portfolio of disciplines to ensure that a broad set of growth opportunities are identified and captured as routinely as costs are controlled and processes are improved.” Michael Treacy, Double-Digit Growth

Tony Rossell

Tony serves as the senior vice president of Marketing General, Inc., an Alexandria, Virginia-based firm that specializes in membership marketing solutions for associations. A frequent write and speaker on marketing topics, Tony is a contributing author to two books, Membership Marketing (ASAE 2000) and Membership Essentials (ASAE 2008). He writes the Membership Marketing Blog. Contact Tony at 703-706-0360 or [email protected].