## Tuesday, November 30, 2010

### Membership Basics - It's in the Numbers

In the world of membership marketing we use basic metrics to measure our progress. These metrics are:

1. Renewal Rate
2. Average Tenure
4. Maximum Acquisition Cost (MAC)

I've spoken on these many times and I'm sure you all have read something on them at one time or another. But as my high-school coach would always work us on the "fundimentals," I think a review of these metrics and how we calculate them is never really ever wasted time.

Renewal Rate

• Measures the number of members that you keep over a specific period of time, usually 12 months.
• Formula:  (Total Number of Members Now - New Members gained over the last 12 months) / Total Number of Members Last Year
• Example:  (10,000 - 2,000)/9,500 = .8421 or 84.21%

Average Tenure

• Measures how long a member stays.
• Formula:  1 / (1 - Renewal Rate)
• Example:  1 / (1 - .8421) = 1 / .1579 = 6.333 years

• Measures the average anticipated revenue from a member.
• Formula:  Assume Dues of \$125/yr and Non-Dues Revenue of \$100/yr, (Dues = Non-Dues Renvenue) x Average Tenure = LTV
• Example:  (\$125 + \$100) x 6.333 = \$1,424.92 LTV

Maximum Acquisition Cost (MAC)

• Measures the Net Lifefime Value of a member by deducting incremental costs associated with member services, cost-of-goods sold, etc.
• Formula: Assume Incremental Costs = \$50, ((Dues + Non-Dues Revenue) - Incremental Costs) x Average Tenure = MAC
• Example:  ((\$125 + \$100) - \$50) x 6.333 = \$1,108.275

• By considering the number of new members acquired in relation to the expire rate, this metric projects ultimate membership size where the number of members coming in will be equal to the number of members leaving.
• Formula:  Annual New Members Acquired / (1 - Renewal Rate) = Steady State
• Example:  2,000 / .1579 = 12,666 Total Membership
• Please note that this does not give you the 'when,' just the 'how much.'

## Thursday, November 11, 2010

### Reasons for Online Marketing

Here are a few reasons why, if you're not online marketing or you are questionning the value of online marketing, you NEED to be online, marketing.

a. Search marketing is about seizing opportunities. Every organization should maximize opportunities to engage potential members/ customers online that are actively searching for relevant services an organization provides by instituting a comprehensive search engine marketing strategy including paid search marketing and search engine optimization (SEO).

b. Marketing speed and agility are important competitive advantages, especially with today’s focus on costs. Online and search marketing allows for on-the-fly changes that save time and money.

c. Unlike magazines and publications that publish ads on their own schedule say once per month, search is on your customer’s schedule, real-time, engaged in the “now.”

d. Online marketing allows you to connect and engage with potential members when they’re receptive, when they’re ready to receive your orgs message.

e. With search engine marketing your org will have the ability to target an audience on a country level all the way to a 10 mile radius within a specific metro area.

f. Instantly generate and track leads for membership, products and services. Know precisely the path of how and when they found you.

g. Real-time reporting keeps your org on top of marketing results providing measures for accurate decision making and optimization.

h. Online marketing allows you to stay on top of costs because reporting and analysis are constant. You will always be in up-to-date on cost-per-new member, cost-per-customer, cost-per-lead, etc.

i. Unlike traditional push marketing channels, search marketing lets you pay only for consumer responses like click-throughs – keeping marketing expectations and budgets on track.

j. Major happenings in your field/industry occur all the time. Is your organization prepared online to capture these surges of awareness? Be prepared online and your org will surge with these happenings.

k. Search engine marketing does not get thrown in the trash, lost in a stack on a desk, filtered out by someone else. With search marketing your orgs message is only delivered when your target audience is ready to receive it.

## Tuesday, November 2, 2010

### FREE Preview of MGI Tipster - Engagement is the key to Renewals!

Every month MGI puts out an email newsletter entitled MGI TIPSTER which provides, as the name implies, tips on membership marketing based upon research or our experience over 30 years of working with hundreds of associations. However, some of you may have never had the opportunity to read it. So, I thought I'd give you a chance to take a 'FREE TEST DRIVE' of the MGI Tipster by simply posting the November issue. Here goes...

As soon as a prospect joins an association, she or he becomes the most likely person not to renew. Most organizations have the same experience—first-year members are the lowest renewing cohort. New members take the organization for a test drive, so to speak, to decide whether membership value justifies the dues they paid. Therefore, the more frequent and more positive the interactions the association has with the first-year member, the higher the renewal rate is likely to be.

Engagement has become an absolutely necessary component of membership retention and growth. Organizations have discovered they must pay special attention to new, at-risk members and be certain that they interact with the association beyond being just a mailbox members.

Better engagement means better renewals

Research shows that in the past year members who...

•...upgraded their membership to a higher level of service were 12% more likely to renew
•...ordered a product in the past year were 28% more likely to renew
•...were also chapter members were 17% more likely to renew
•...attended an association meeting in the past year were 19% more likely to renew
•...attended an association meeting at any time were 7% more likely to renew, and
•...attended four or more meetings were 30% more likely to renew

Engagement does not need to be difficult; it can be as simple as a telephone welcome call.

Any communication with members is good; more is better

Effective engagement programs usually involve a series of communications that invite members to interact with the organization. A compelling engagement program orients members and steers them to make the most of the benefits, products, and services an organization has to offer.

This might be as easy as asking members to complete a simple satisfaction survey. If the first interaction succeeds, follow-up contacts reinforce the relationship, which in turn makes first-year conversions far more likely.

Engaging new members

The opportunities are almost endless:

• A welcome letter or phone call from a member service representative
• An offer to assist with registering for the password-protected sections of the website
• A mailing with a dollars-off voucher for a first purchase
• An email survey verifying the use of member benefits
• A courtesy call to answer member questions

A second purchase or interaction is important. Customer-retention expert Jim Novo says, "If a customer (or member) has not made a second purchase within 30 days, he or she is telling you something is wrong."

What research tells us about engagement

The 2010 Membership Marketing Benchmarking research study included a question that asked participants to list all the communication methods in use to engage or onboard new members. Here are the top ten, as reported by survey respondents, starting with the most used:

1. Email Welcome – 72%
2. Mailed Welcome Kit – 68%
3. Membership Card or Certificate – 59%
4. Volunteer or Staff Welcome Phone Call – 32%
5. New Member Introductory Email Series – 27%
6. Invite to a Chapter Meeting – 25%
7. Special Discounts on Services – 23%
8. In-person New Member Reception – 20%
9. New Member Newsletter – 20%
10. New Member Survey – 18%

The communications that correlated with higher renewal rates are high-touch contacts that can include mailed welcome kits, volunteer or staff welcome calls, new member surveys, and new member receptions. Associations with larger membership counts were more likely to report they used volunteer or staff calls to new members compared to other-sized groups.

Engagement is essential to growth strategy

The best measure of membership engagement is member behavior. A member who attends or buys, volunteers, or reads electronic communication posts is more likely to stay a member than one who does not.

The bottom line is this: lots of information sent to a member does not build engagement. However, finding ways to get a member to interact, use, and take advantage of the value the organization offers builds a more successful and longer lasting member relationship.

I hope you enjoyed this 'special preview.' If you'd like to sign up for the MGI Tipster, please go to http://www.marketinggeneral.com/ and simply follow the links. Or, call your MGI contact (yes, me) and I'll be happy to get you signed up.

Have a great week!