Tag: Marketing General

Membership Q&A: How Long Should Our Grace Period Be?

Posted on | by Elizabeth Weaver Engel, CAE
Elephant trunk reaching out to take a carrot from a person's hand

Ah, the grace period, the bane of the membership profession’s experience. Should we have a grace period at all? How long should it be?

I will admit to being a hard-ass about grace periods. My preference is none. If your membership lapses on July 31, 2019, then your access is cut off as of 12:01 am August 1.

Remember how I recently wrote about rewarding the behavior you want to encourage? Well, we definitely want to encourage members to renew on time, and not offering a grace period is the “stick” side of the carrot-or-stick equation. “Renew on time or else you’ll lose something of value to you.”

BUT (there’s always a but)

This “no grace period” approach works best in individual membership associations with relatively low dues where the members access online resources frequently and where online payments can be processed in real time.

When I try to log on to get access to a member community, resource library, training webinar archive, or online publication that I use all the time at 9:15 am on August 1 and get the message that I can’t because my membership has lapsed, there’s a good chance I’ll pull out my credit card and pay my $100 or $200 dues right then, particularly if I know that as soon as I pay, my access will be restored.

It’s an entirely different story for trade associations, where decision-making about paying dues is more complicated than “I pull out my credit card and pay,” where dues amounts are higher, where dues processing takes days or even weeks to complete (when you include the member side of the process), and/or where it may take members weeks or even months to notice that they have lost access to member benefits.

Per Marketing General’s most recent (2019) edition of the Membership Marketing Benchmarking Report, offering a grace period of 2-3 months is correlated with higher retention rates:

Table correlating grace period lengths with average retention rate

 

 

 

 

(Chart from page 38 of MGI’s 2019 Membership Marketing Benchmarking Report)

It’s important to remember that correlation is not causation. The grace period is not necessarily what’s causing the associations that responded to the survey to be more likely to have retention rates above 80%. Some third factor could be causing them both (perhaps efficient and effective internal processes?), or they could be completely unrelated.

If experience demonstrates that your members are likely to renew (you *are* tracking your renewal rate over time, right?), but that some of them just tend to renew a little late (you *are* tracking who those regular scofflaws are, right?), there’s no good reason to create extra – and artificial – churn, particularly if restoring access to benefits isn’t an instantaneous flip of a switch.

But pay attention to your data.

If you have a LOT of members who renew late – or a set of members who ALWAYS renew late – it’s worth asking why that’s happening.

Are you creating the problem yourself? For instance, your members are HVAC contractors and you renew on an April or October calendar year, aka during their busiest times of the year, when people are first turning on their cooling or heating systems and discovering they aren’t working. Maybe shift to a December calendar renewal deadline.

Are you creating incentives for bad behavior? For instance, you regularly offer a discount or special deal to members to come back after they’ve lapsed and they’ve learned that you do that, so they wait for it. Maybe offer that discount or special deal ONLY to members who renew on the first notice.

As always, one size fits, well, one, so test different options, pay attention to what happens, and choose the option that the data points to.

Photo by Waldemar Brandt on Unsplash

 

Don’t Get Lazy!!

Posted on | by Elizabeth Weaver Engel, CAE

Putting it all together, maybe the most important thing Sohini and I learned from fundraisers as we were researching Steal This Idea! (and as Sohini has worked with them over the past two decades) is: don’t get lazy.

And it’s really easy to do that, particularly if you’re organization is not in crisis. And many associations are NOT in crisis. According to the 2017 edition of the Marketing General Membership Marketing Benchmarking Report, nearly three-quarters of associations who responded are either holding steady or increasing membership. Renewal rates are generally solid. Participation in programs, products, and services – particularly white-label social networks, virtual and in-person event attendance, and credentialing programs – remains robust.

“If it ain’t broke, don’t fix it,” right?

Well, no. To quote the whitepaper:

It’s easy to get lazy. We urge you and your team not to, though..The association industry’s operating landscape is shifting rapidly and in unpredictable ways…That’s why it’s important, at least at times, to turn outside the industry to see what other organizations are doing to attract audiences, particularly younger audiences; to build relationships with those audiences on their terms, not the organization’s terms; and to recognize their contributions equitably and make people feel known, heard, special, and appreciated.

To learn more, download your free copy of Steal This Idea! Innovations in Cause-Oriented Fundraising for Associations at https://bit.ly/3eu6ntm. Also, mark your calendar for Wednesday, March 21, 2-3 pm ET. Sohini and I will be delivering a webinar on the whitepaper, graciously hosted (so free for attendees) by the nice folks at Wild Apricot.

 

Membership 101: Life Time Value

Posted on | by Elizabeth Weaver Engel, CAE | 2 Comments on Membership 101: Life Time Value

One of the questions I get asked a lot is: “How much should I be willing to invest to recruit a
member?”

The answer is not obvious.

For example, let’s say you invest $1000 on a recruitment campaign and bring in five new members. That means you spent $200 each to acquire those members.

(Don’t get distracted by: “But I contacted 100 people, so I only spent $10 per person.” No, you didn’t. 95 of those people didn’t join.)

What if your annual dues are only $100?

Was that campaign a waste of money?

It looks like it might be, but it’s not necessarily, because of something called the Life Time Value (LTV) of membership.

Hopefully, at least a few of those five people you recruited will renew for years two, three, four, and beyond.

Even if they don’t renew, they may do things in that membership year like register to attend your conference, or buy a book or a webinar, or contribute actively to discussions in your white label social network, or boost your social media signals to their own friends, fans, and followers.

All that other stuff? That’s LTV. The total value the association receives from a member encompasses far more than just one year’s dues payment.

That means it’s probably OK to invest more than the value of one year’s dues to get a new member. But how much more?

That’s where things get tricky.

Marketing General has some helpful base formulas you can use as a starting point.

The simplest way to think about LTV is to add average dues plus average non-dues revenue and multiply that by average membership tenure (which MGI also helpfully explains how to calculate).

That provides a good baseline calculation, but there are two potentially significant issues that would skew that calculation.

  1. Not all members behave the same.
  2. It ignores the value of non-financial contributions.

You almost definitely have different segments of members who behave in very different ways. Large companies versus small companies. Domestic members versus international members. Students versus established professionals. Young professionals versus retired and retiring members. Members in regions with active chapters versus those in regions with dormant chapters. They may pay different dues amounts, have different average membership tenure, and have very different purchasing patterns. Those would lead to very different answers about the level of appropriate investment to bring them in.

A large company that pays a large sum for dues, and is likely to be with you for many years, send teams of people to your meeting every year, and require their managers to earn your certification merits a much larger investment than a mom-and-pop business that’s likely to be acquired by a larger competitor within the next three years.

You should to create LTV member segments just as you would for the other types of member engagement we’ve discussed throughout the Membership 101 series. And you need to document those segments and the assumptions you’re making about their behaviors so that your LTV calculations can be consistent over time.

Also, as I hope is now apparent to you after reading some of these Membership 101 posts, “value” is not just dollars. Members contribute to the good of your association and the profession or industry you serve in all kinds of ways that have no price tag attached to them. How do you “value” things like service on your board of directors or committees, speaking at your conference, writing an article for your magazine, presenting a webinar, mentoring young professionals, and encouraging colleagues to join your association for purposes of LTV calculation?

I can’t tell you. The answer to that question is unique to every association, and you can only decide what it looks like for yours by sitting down and talking it through with your team members.

What I can tell you, though, is that you do need to think about it. I hope it strikes you as absurd to ignore something like board service in calculating LTV. It’s equally foolish to ignore those “smaller” contributions.

You need to document which non-financial contributions you’re including (and which you’re not, and why), how you value them, and how they match up with your membership segments, just as you did with direct financial contributions, so you know the assumptions that underlie your LTV calculations.

Then you test those LTV calculations against reality, and, with all your segments and assumptions documented, if you discover a mismatch, you know what levers to push to improve.