As the New Year gets started, it is a good time to review membership marketing plans and forecast where membership counts are headed.
Here is a method to help make accurate projections on long-term outcomes and run possible growth scenarios. It is called a Steady State Analysis. The concept of steady state can be illustrated with a bucket of water. If there is a steady input of water and a steady outflow, eventually the bucket will come to a balanced level or equilibrium.
To do a Steady State Analysis with membership, you use a simple calculation based on current new member input and the organization’s lapse rate (non-renewal rate). Using these two numbers, the formula calculates the level where your total membership will reach equilibrium or a steady state.
Here’s the formula. Annual New Member Input / Reciprocal of Renewal Rate (or Lapse Rate) Shown as a Decimal = Total Membership Steady State.
For example, with an input of 5,000 New Member over a .25 Lapse Rate, the steady state of membership will be 20,000.
Steady State Analysis is also a useful tool for studying different membership growth options. Here are three sample scenarios varying the new member input and renewal rate from the example above.
•The first option maintains a 75% renewal and increases the new member input to 7,000 per year and results in a steady state membership of 28,000 members over time.
•The second option increases the renewal rate to 85% and reduces new member input to 2,000 per year and results in a steady state of 13,333 members over time.
•The third option increases the renewal rate to 80% and also increases the new member input to 6,000 per year and results in a steady state of 30,000 members over time.
In order to create the optimal strategy, associations can use a Steady State Analysis to define where the opportunity for growth lies — through enhanced acquisition efforts, renewal efforts, or a combination of both.
When calculating an association’s steady state, the question often arises as to how long it will take to reach the projected membership number. The timeframe will depend on how close or how far away an organization now is from its equilibrium. The further away the longer it will take. However, a simple spreadsheet calculation can be used to establish an accurate time line for reaching equilibrium.
One important message that can come out of a Steady State Analysis is that incremental changes in new member acquisition and renewals can make a big difference over time in membership counts. Take some time to see where your membership is headed and run some scenarios to see what strategy might be most effective to focus on in 2017 to maximize your organization’s long-term membership growth.
A recording of the live webinar that I presented this month on Membership Recruitment and Renewal Strategies is now available online. Here is the link (best viewed in Internet Explorer). The session was adapted from the chapter that I authored for ASAE’s 2016 edition of Membership Essentials: Recruiting, Retention, Roles, Responsibilities, and Resources.
In the area of membership recruitment, the webinar included the following topics:
- Target Markets – Who you want to reach and determining what are your primary markets and acquiring or building lists of these prospects.
- Membership Offers – What a member will receive by identifying special offers you will make in your promotions to attract new members.
- Promotional Tactics – How a member will be reached by selecting the best marketing channels like personal sales, direct mail, email, telemarketing, etc. and the frequency and timing of promotions.
- Marketing Messages – Why a member should join by proving your value proposition and presenting solutions and benefits to members that are compelling.
- Testing and Tracking – Where to take future efforts by trying variations of the four points listed above and recording which lists, offers, messages, and channels produce the best ROI and number of new members.
For membership renewals, the webinar highlighted these topics:
- New Member Conversion – Where to focus efforts to maximize renewals. Typically, first-year members are the least likely to renew.
- Renewal Frequency, Timing and Channels – When and how often various marketing tools should be applied to maximize renewals.
- Budget Considerations and Steady State Membership Counts – Why most organizations under budget on renewal efforts and how adequate spending can make a big difference in total membership counts.
- Payment Options – How offering automatic credit card or EFT renewal turns renewals from an opt-in decision to an opt-out action.
- Renewal Notice Personalization – How personalized messages can be added to renewal efforts like, “because of your membership, you saved $50.00 on your product purchases this year.”
Look for details of our next webinar, Membership Marketing: Beyond the Basics, in February.
For the upcoming year, Aptify just released a report titled, Top Association Management Predictions for 2017. I was asked to provide my perspective on where membership is headed. Here are the three predictions that I shared.
- Continuing Membership Growth – For the eighth consecutive year, according the 2016 Membership Marketing Benchmarking Report, the number of associations reporting an increase in membership counts (49%) has substantially surpassed the number reporting a decline in membership (22%). In 2017, membership will continue to be the glue that enhances networking, information distribution, and sales for associations.
- Evolving Membership Models – Over the last few years, many associations have re-evaluated and changed their membership model by creating tiered membership structures or hybrid memberships. In 2017, many associations will evaluate and adjust their membership product to meet the changing needs in the marketplace.
- Adding Online Inbound Marketing – Because they have so much content to share and very defined audiences, inbound marketing is an ideal channel for associations. In 2017, in order to build worldwide awareness and demonstrate relevance, associations will rapidly adopt this channel as part of their existing marketing mix.
The full report is available as a free download with a site registration. It is a good read.