| The View Beyond This Year – Long-Range Membership Program Planning
by Harold Maurer, CDM and CeM
Based on experience, I think it is fair to say that many membership organizations – not all, mind you – maintain a relatively vague idea of their overall numeric membership and financial growth. Although most groups can name profit and loss; tell how well a campaign, convention, or funding drive performs; and balance their budgets at the end of the fiscal year, many still face the future by setting objectives and tactics without weighing the full impact of each of their programs on long-range return of their investment (ROI).
A Membership Marketing Dashboard
When speaking for Marketing General Incorporated at association events and other workshops, I often give a presentation on the economics of membership, and how each metric I present is vital to the overall success and ROI of a membership program. “Members are your currency,” I tell the audience. “And most of us don’t keep a very accurate checkbook.”
To assure a membership program is successful, every association should know these vital measurements to keep their checkbook balanced: total membership to date, renewal rate, average member dues, average member tenure, average cost to obtain a member, average lifetime value of a member, the maximum amount to spend on acquiring a member, and finally, given the current rates of renewal and new member acquisition, what is the point at which we will neither grow nor shrink – also known as our steady state.
Additionally, when any sort of membership campaign is launched, whether single effort like a mailing, or integrated effort like a mailing-email-web-landing page program, an association should also be very aware of how many total contacts have been made and what the rate of response (or joins) is for the campaign.
Without this knowledge at the core, it is almost impossible to really tell how successful your program will be, or whether you will shrink, grow, or stay the same in the future. As an example, let me offer this dashboard illustration to demonstrate the significance of a single variable on long-range success: renewal rate.
This is an association that knows its metrics. ABC has 10,000 members and their dues per member are $150 per year. They have a 75% renewal rate which is offset by their bringing in an additional 2,500 members a year. Their financial analysis is built on the figures in the bottom right column, but what is singularly important to note here is that they are neither growing nor shrinking.
ABC Association Dashboard
Now, by changing a single variable, ABC’s renewal rate, let’s look at the impact to growth of a 3% reduction in renewals:
A simple 3% slide in renewal rates reduces total membership by 1500 in 5 years and overall revenues by close to $1.4 million in that same time period. Another change to note is the change in estimated Steady State of the association. Given the impact of a 72% renewal rate, the organization cannot grow to more than 8929 members unless something is done to improve how members join and are retained.
Stay Focused on Your Group’s Long-Range ROI
The message of this Tipster is straightforward: it is vital that you remain focused on the long-range impact of your programs today, because even the slightest change can affect your overall success. How you allocate budget and resources can have an amazing effect on your bottom line. As an example, when reallocating renewal expenses in favor of another revenue-producing program, if you focus on long-range impact, you will have a better knowledge base upon which to make the decision whether to reallocate or not. As a final example, here’s the impact of an increase in renewal rate of 3%:
Upcoming Webinar: Setting and Measuring Long-Term Membership Goals, May 6, 2014
This has been a simple example demonstrating one measurement variable. In the Marketing General Webinar on May 6, I will demonstrate this and the rest of the above-mentioned metrics using this dashboard interactively to show how each major measurement of a successful membership marketing program interacts with overall five-year goals. Please join me on May 6, 2014, at 2 p.m. for the Marketing General Incorporated Webinar, Setting and Measuring Long-Term Membership Goals.
For more information about setting and measuring long-term membership goals, contact Harold Maurer at Harold@MarketingGeneral.com or call him at 703.706.0391.
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