Saturday, April 10, 2010

Would you be happy with a 500% return on your member acquisition? Is your membership acquisition program too successful?

I visited a client this week and told him that "I have good news and bad news."

Good news first! I showed him a summary of the eight new member acquisition campaigns that we've run for him during the past 19 months. The results have been great. For every $1.00 he spent with MGI we returned $5.38 in membership dues.

A 1:5 ratio. An impressive metric. This was accomplished with new offers, a new package and using internal lists (expired members, product buyers) and a few external lists.

But its too much good.

Now the Bad News...I told my client that the return prompted me to make two recommendations: 1) we need to be more aggressive in our list and channel testing. While I do believe that my team - shout out to Toya - and MGI do a great job (hopefully many of you feel the same way), every campaign can't be a winner. Let's be realistic. We're ecstatic with a ratio of 1:1. The typical metric for retail is 1:3 or 1:4. I told him that we need to be increasing the size of our campaigns using more outside lists.

He got it right away! Even though we're just now beginning to dig our way out of a recession, he understood that he needs to invest more in exploring new opportunities.

The second recommendation was to review his renewal program. While the lists of product buyers ranks as the #1 response list for these campaigns, the #2 has been non-renewed members. If we take a Systems Approach to membership acquisition as outlined by the Membership Lifecycle, we realize that the success of our reinstate program is inversely dependent upon the success of the renewal and engagement programs. Given that the reinstate is so successful strongly indicates that not enough is being done to renew these expired members and possibly not enough has been done to get them engaged after they joined.

He understood.

We're now working to increase the number of lists and channels that we test and we'll be reviewing the renewal and engagement programs as we move forward.

But what about your reinstate and acquisition programs? Are they too successful? What return should you reasonably expect? These are important questions to answer.

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