By Tony Rossell, MGI Senior Vice President
Do New Member Discounts Really Work?
Many associations struggle with the question of whether or not to offer new members an introductory discount to improve recruitment efforts. Within limits, the data that we have seen over the years support offering a discount to incentivize new members to join your association.
Here are some findings from two longitudinal tests that we have done.
In the first example for an individual membership association, we conducted a new member test on 400,000 prospects where the list was evenly split. Half of the prospective members were offered membership at full price, and the second half received a $10 dues discount. The group receiving the discounted membership dues offer had a 40 percent higher response rate than the group offered the full dues rate. This added response more than paid for the discounted dues.
But of even greater importance, we examined the data beyond the front-end response rate. We tracked the members from both the full price and discount group over two full renewal cycles. After two years, we found that the group receiving the new member discount still outnumbered those originally joining at full price by 35 percent. So there was a slightly higher lapse rate from the discount group, but overall the association ended up with far more members.
We did a similar test with a trade association offering a substantial dues discount for new members. Using the deep discount doubled the response rate compared to the typical response. And again when we looked at the continuance of members several years later, the discount group indeed had retained members at a lower rate, but the association still had far more members overall from the discounted group than from the higher priced promotions.
Making a data driven decision, both of these associations embraced the new member discount incentive.
Some will make the case that the value of the membership alone should encourage a prospective member to join. Certainly the value provided will determine whether or not a member continues with the organization. However, the purpose of a new member incentive is to encourage the prospect to give membership a try. Without taking the step to join, the prospect cannot really understand the value the association offers.
More broadly when you look at marketing efforts, whether the promotions are selling magazine subscriptions, cars, or wireless plans, incentives are used not because organizations enjoy giving away money, but because they work to maximize profits both in the short term and the long term. People are motivated by a special offer to act now in making a buying decision.
There is an important qualification to using new member discounts. The level of a discount or incentive should be tested. Again, in tests we have run, a 15% discount has often performed pretty much the same as a 30% discount. Providing very deep discounts is not always required in order to have a successful new member promotion.
If you would like assistance in testing a new member discount or analyzing the results of an incentive you have used in the past, please feel free to contact Tony Rossell, MGI’s Senior Vice President, at 703.706.0360, or by email at Tony@MarketingGeneral.com.