Underinvesting in membership recruitment: Your biggest mistake
“What do you think is the biggest mistake that organizations make in the membership marketing?”
The answer is pretty simple: most membership organizations underinvest in getting new members.
Many organizations have very lofty plans on how many new members they want to add. When I ask them what they have budgeted to accomplish this, the answer is shockingly low.
Recently, one group wanted to stem its decades-long membership decline by developing a marketing campaign to recruit an additional 3,000 members over the next year at a dues rate of $65 each. But they only budgeted $30,000 to accomplish this goal, or $10 per new member. Unless it discovers a marketing silver bullet, the group is unlikely to accomplish that goal.
At the same time, members of this organization typically stay for four years. So from the members that they acquire, they will realize an income stream of $260 from each new member who joins, plus any revenue from nondues purchases. Assuming that there is incremental servicing costs of $15 per member, per year, a new member represents a $200 net revenue stream for the organization.
How much should an organization be willing to spend for a new member in order to produce $200 in net revenue? More than $10.
The basic mistake that many membership organizations make is that they underestimate the cost of acquiring a new member and they overlook the lifetime value that a new member can deliver to the organization.
Rossell is SVP at Marketing General Inc., Alexandria, Va. This article originally appeared at Membership Marketing Blog, which he writes. Contact him at tony@marketinggeneral.com.
