Last month, we saw that the five-step Membership Lifecycle applies in both domestic and international recruitment and learned why emerging foreign markets need associations.

This month’s MGI Tipster looks at market gaps, transparency, and questions associations should ask when considering entry into an emerging market.

Emerging Market Gaps and How Associations Can Benefit

Emerging markets are often highly fragmented with numerous small, local players. In the absence of reputable major brands, associations are ideally suited to provide a level of quality assurance through membership, credentials, standards, and certification.

By bringing market participants together, associations foster much needed transparency. By identifying market players, measuring the market, and conducting market research, associations can become important to the profession or industry they serve. This applies across all sectors, whether a professional society or a business-to-business trade association.

Associations bring buyers and sellers together at conferences and exhibitions, in membership networks and directories, and through advertising and sponsorship opportunities. Associations are traditionally event organizers for the sectors they serve. Emerging markets often lack this, providing real opportunities for associations to step in.

Transparency, Laws, and Disputes

Emerging markets are often dominated by buyers and sellers who have developed person-to-person relationships over many years. These private networks are neither transparent nor easy to access. Conversely, associations offer open and transparent platforms where buyers and sellers can find one another and, at the same time, make markets more efficient, such as an online job marketplace provided as a member benefit.

The rule of law and, more importantly, the ability to enforce it are key features of mature economies. Emerging markets often have weak, bureaucratic, and sometimes corrupt civil and criminal legal systems. Civil cases can often be settled through alternative dispute resolution, such as arbitration and mediation. The decisions of the American Arbitration Association are enforceable in a large number of countries.

Typically, emerging markets are heavily involved in developing new regulatory structures to comply with free trade agreements or to gain access to Western markets. This regulatory development often offers opportunities for associations to help craft new regulations and develop fairer business policies. Associations can be major influencers and educators for these new policy makers and regulators.

Key Questions for Associations in Emerging Markets

If you are an investor in a developing country, should you replicate your domestic business model or adapt it for the local market? If you adapt, at what point do you lose the advantages of scale and the efficiencies you have built into your current business model? The answers to these questions depend upon how unique local conditions may be.

There are many service and industry gaps in emerging markets. Do you navigate around them, or are these voids opportunities that your association may fill? If there is a lack of information and transparency, can your association exploit this by providing the platform to address this need?

Many markets are simply not ready to support investments in sustainable or profitable ways. Associations should consider whether it is premature to enter these markets. Also, how long do you remain if your strategy is failing? It is far better to recognize when entry is too early and to focus on other opportunities than expend resources where there is little hope of a reasonable return.

When entering new markets, associations often opt to partner with local associations, but does it make greater sense to enter as a more direct competitor? There are usually no right or wrong answers to these questions, but they should be considered nonetheless.

Leading with Membership?

It seems logical that most membership-based organizations would lead with membership as their primary service in a new market. However intuitive or logical this might seem, it is often the wrong approach in new international markets where associations do not yet have a minimum, critical mass of members.

Membership is usually a bundle of services and benefits, but many may be either nonexistent in an international market or seen as irrelevant compared to members’ needs in the home market.

International membership services are almost always more expensive to deliver than they are at home, requiring a higher revenue stream from other sources to offset the added costs. In overseas markets, associations may be wise not to lead with membership, but instead to promote and present a product, service, or event that can be delivered profitably and will establish a positive brand perception with participants and prospects in the international target market.

Have a Strategic Plan

To achieve measurable long-term results, international growth requires a thoughtful international strategy together with intelligent day-to-day marketing programs. Because of the complexity inherent in international markets, associations are wise to obtain expert guidance to avoid common pitfalls and identify the most promising opportunities.

This edition of the MGI Tipster consists of excerpts from the recently released white paper entitled, How to Grow Your Association in Emerging Markets Using Strategy and Tactics, by Erik Schonher of Marketing General and Terrance Barkan, CAE of GLOBALSTRAT. To contact the authors for more information:

Erik Schonher, Vice President, Marketing General Incorporated

703.706.0358 and Erik@MarketingGeneral.com

Terrance Barkan, CAE, Chief Strategist, and CEO, GLOBALSTRAT

202.294.5563 and TBarkan@Globalstrat.org

Erik Schonher, vice president of Marketing General Incorporated, and Terrance Barkan, CAE of GLOBALSTRAT, have collaborated on a recently released white paper that shares important tips about how associations can gain a foothold in the global marketplace. Together, the two authors have more than 50 years experience in international association strategy and membership recruitment, retention, and recovery.

This month and next, the MGI Tipster will reproduce excerpts from their white paper entitled, How to Grow Your Association in Emerging Markets Using Strategy and Tactics. We hope any association executive interested in exploring the potential of the international marketplace will find this useful.

Grow or Perish

Growth is essential if membership organizations are to remain competitive and relevant. But many organizations have discovered it is increasingly difficult to find new growth opportunities in mature and well-served markets, such as North America.

Despite the global recession, there are countries and regions that have continued to grow, some quite rapidly. Whether in Boston or Bangalore, associations can thrive in today’s highly globalized world when they tap into opportunities in emerging markets.

These market openings, however, can carry significant obstacles and challenges. Emerging markets lack the structures, transparency, information, and access to prospective members that are common in more mature economies. However, for associations that have education, certification, training, networking, and related services, these same obstacles can be turned into market opportunities.

The Basics: Adapting the Membership Lifecycle

The dynamics of the association Membership Lifecycle apply just as much in the international marketplace as in the domestic. To thrive in a highly globalized world, association leaders should understand how the five steps of the lifecycle fit within the context of an international strategy coupled with local tactical growth plans.

Awareness…when prospects first discover you. Especially in emerging markets, new channels such as social media are making once-unprofitable markets economically attractive. Combined with acceptance of a common language, English, associations are finding greater access to new markets than ever before.

Recruitment…when prospects choose to try you. Emerging markets are filled with aspiring individuals who want to better themselves and their professional prospects. Associations that offer attractive services and valuable benefits that allow members and customers to address their local needs usually find receptive audiences.

Engagement…when new members feel they belong with you. Engagement is fundamental to high retention rates and sustained membership growth no matter where the organization may be located. Engagement programs that drive local and regional allegiance are a crucial lead-in to Renewal.

Renewal…when lapsing members decide whether to keep you. As the needs of international members evolve, so, too, must associations keep pace and provide compelling reasons for them to remain with an organization.

Reinstatement…when former members agree to return to you. Reinstatements are a regular component of membership growth programs that every organization should have in place regardless of location.

Why Emerging Markets?

Emerging markets are countries experiencing rapid growth, industrialization, and modernization. Examples include Brazil, Russia, India, China, South Africa, Indonesia, Malaysia, Thailand, and Nigeria that together represent hundreds of millions of people.

The Conference Board, a global business association, has projected that emerging economies grew 6.6 percent in 2011, much higher than most industrialized nations. The Board projected that emerging economies will grow on average 6.3 percent per year through 2020. Further, they report that in 2011 emerging economies collectively added three times as much to the global GDP as advanced economies.

Not all emerging countries are similar, of course, nor do they offer the same levels of opportunity for associations. Differences in language, culture, political stability, trade agreements, and historical trade patterns all influence the pace of growth of individual countries.

Why Emerging Markets Need Associations

Especially in emerging markets, where local businesses and business people often struggle to differentiate themselves from one another, affiliation with a prestigious association can be a genuine competitive advantage. Associations can become invaluable assets to the professions or industries they serve by identifying market players, measuring the scope of the market, and conducting market research.

Just the last 20 years have seen the emergence of global associations that have experienced truly explosive growth. Organizations like the Project Management Institute (PMI), the Society of Human Resource Management (SHRM), the Institute of Electrical and Electronics Engineers (IEEE), the Society of Petroleum Engineers (SPE), and the Chartered Financial Analyst (CFA) Institute are examples of organizations that now have significant international operations. In some cases, the majority of new members and revenues are generated outside of the United States.

The building blocks of domestic membership marketing readily apply to the international arena as well, with important opportunities in emerging markets that may have stronger economies but fewer sophisticated business laws and regulations.

In next month’s MGI Tipster, we will look at how associations can help foreign markets fill gaps in services, and we will list the key questions that associations should ask before entering the competition.

This edition of the MGI Tipster consists of excerpts from the recently released white paper entitled, How to Grow Your Association in Emerging Markets Using Strategy and Tactics by Erik Schonher of Marketing General and Terrance Barkan, CAE, of GLOBALSTRAT. To contact the authors for more information:

Erik Schonher, Vice President, Marketing General Incorporated

703.706.0358 and Erik@MarketingGeneral.com

Our new address will be:

625 North Washington Street, Suite 450

Alexandria, VA 22314

Putting together a membership marketing plan is the first step to successfully recruiting new members. And understanding the appropriate elements to include in the plan and the investment associated with them are fundamental to developing a successful plan.

This edition of the MGI Tipster reviews six critical elements to include in your master member recruitment plan for 2012 and beyond.

Element #1: Economics

The plan starts with an analysis of the scope of the member acquisition program and how much can be spent on acquiring new members. How much is a member worth? This is a calculation made from several sources.

First, figure the income from membership dues and non-dues revenue and multiply it by the number of years the average member stays with the organization. That calculation is based on the inverse of the renewal rate. An 80% renewal rate is equal to 100% divided by 20% or 5 years. Then subtract the annual incremental cost of servicing the member to derive the net income from each constituent over their lifetimes.

With that in hand, the number of new recruits expected to be brought aboard multiplied by their net income results in the anticipated revenue stream that a new member will generate. That tells marketers a lot about what a member is worth and how much the association can afford to spend on the recruitment campaign.

Element #2: Target Market

Next, it is important to decide just whom you want to reach as a prospective member. This includes where potential members can be found and what lists of prospects are available in your targeted market. Examining the target market for its size, composition, and competitors enables the membership marketer to gauge how available and how easy or difficult attracting each new member will be.

A SWOT review (strengths, weaknesses, opportunities, and threats) will also help to understand the recruitment potential. It pays to be realistic in determining the target market because the reality of the market potential will play out in real life month by month.

Element #3: Membership Offer

The offer is the second most important element in the success of membership recruitment (the first is the list). What will a member receive? The membership benefits bundle is the starting point because it defines the value that membership will provide to the prospective member.

Special incentives to sweeten the membership offer are also effective in encouraging the member to join now. Effective membership recruitment incentives might include free months of membership, dues discounts, premiums such as coffee mugs, or special drawings.

Element #4: Marketing Message

The message conveys the offer and convinces prospects of the reasons for joining. The message should be built around the value proposition and employ the USP or Unique Selling Proposition. The USP is the benefit that sets your membership organization apart from all others.

The message should be thorough, succinct, and persuasive to describe why a prospect should join. Successful messaging is a combination of words, layout and design, and brand building that work together to create a compelling argument that answers the prospect’s basic question about investing in a membership—What’s in it for me?

Element #5: Promotional Tactics

Once the organization has learned where to find qualified prospects and what to offer them, the decision must be made about how to recruit them. Tactics are the day-to-day decisions that best carry out the overall plan comprising the six elements. Tactics describe how a member will be reached, and there are a number of choices and combinations of choices that come from basic marketing principles and experience over time.

This includes selecting the optimum marketing channel or channels to best convey the message to the audience, such as direct mail, telemarketing, email, web promotions, and even one-on-one personal sales, or all of them if appropriate.

Element #6: Testing and Tracking

Membership marketers should never stop testing their overall marketing plan by examining the results of each recruitment effort and comparing them with what has gone before. Test messages against one another. Test offers. Test channels. Test lists. But be sure to test just one item at a time or run the risk of having no idea which tested element caused the new results.

Testing requires patience, a willingness to risk some of the marketing budget to discover the optimum elements, and a rigid methodology that makes certain that the tests are meaningful, measurable, and accurate.

Final Words

Marketing plans that are kept simple are more likely to be implemented. So, once the organization’s membership marketers have considered the six elements outlined above, it makes good sense to act on only the areas that are relevant to an organization’s situation.

Finally, membership organizations should not fall into the trap of spending more time planning than actually doing. That is unproductive in and of itself. Just as important is to consider the marketing plan a living document that can be altered to adjust for the unexpected and what actually happens as the plan is carried out in the marketplace.

If you need help developing your membership recruitment plans to enroll more members, please feel free to contact Tony Rossell, MGI’s Senior Vice President, at 703.706.0360 or by email at Tony@MarketingGeneral.com.