Saturday, May 29, 2010

Facebook Turns Two for Me Today

Over time Scott & I both have a somewhat spotty record in terms of posting to our blog, in part because it's so much easier to share things in other environments such as ASAE's listserv and acronym. It's certainly where all our friends and competitors in the association world hang out, so I know I haven't ever written much personal here. I do envy friends such as Shelly Alcorn being able to bring much more personality to their posts than certainly I ever do. 

But for a change of pace, I thought I'd commemorate a small milestone in my own online development. As I was cleaning my email I saw my very first user greeting from Facebook. I guess that maybe made me the 100 millionth user in a community that now has more than 500 million. I know from our research that there are two predominant views of social media: as a business tool and a personal tool. I am never quite certain where I fall as I have been able to use LinkedIn un-self consciously to track 750ish of my business friends, former colleagues and clients and to post the occasional message promoting the next event I'm speaking at.

But Facebook has morphed into something so much more personal that it's hard to think of it in the same league as a "business tool." Sure, I flag myself as a fan of my friends' companies, but as I look through my list of friends I find people I haven't spoken to in person since junior high and I find myself commenting on notes from people I probably sit next to and do not speak to directly at happy hour at Hard Times Chili, just because they also know my favorite waitress. The analyst in me thinks of the classic social networking diagram that shows the web of contacts we form in any workplace--using the number of contacts we make to establish who's in the loop, who's not, who's a connector, who's influential, and who operates in relative isolation.

Sometimes it really is better to not overthink things. I would have no idea how to craft a message that "works" just as well for my cousins who are ministers in Oregon, high school friends from Idaho who kindly shoot and share images from my hometown, including the house I few up in (above, just behind the farm implement store in tiny New Plymouth Idaho), and the association execs and consultants who are my primary contacts in life today in Washington DC. I guess I'll just write what's on my mind and to enjoy a tool that shrinks the scary outside world into a place where a few hundred of the people who have touched my life over the years "live." I can hear all about their lives, their bad jokes, their children's proms and graduations, and even sometimes still play the smart-aleck teenager I used to be even after the wrinkles and bald spots serve as a constant reminder that I am no longer a puppy. As someone without a family and who primarily works alone today, I appreciate even more the luxury of being able to "speak" to people I never see in person. Even our school reunion in two weeks, the first one I've ever attended, is hard to picture without having something like this to link us together when and how we want to be linked.

Thanks, Facebook!   -Kevin (NPHS Class of '82)

Saturday, May 22, 2010

Why It Never Makes Sense to Lower Dues

An association was recently considering lowering their dues in response to member complaints and to demonstrate empathy for members in our current economy. It was interesting, quasi-radical thinking of the kind I generally support, but not something that should actually be implemented. Dues are not like taxes: both represent revenue streams funding what are to some extent "social goods" but the resemblance ends there.

If an association's research identifies pockets of discontent defined by type of individual or organization, it's better to address these groups by developing new/refined services that deliver greater value, communicate more effectively, offering and honoring satisfaction guarantees, or when necessary extending hardship dues forgiveness to a class of members or on a case-by-basis.

The top reasons you shouldn't lower dues include:
1) As an association, we're in a great position because we "compete on non-price." Memberships are not commodities, so our customers don't immediately check out the competition and engage in switching behavior when prices change. If your dues levels haven't changed but you believe willingness to pay has, there are two logical courses of action open:
a) Conduct broad-based research or mine past research to determine if occasional complaints represent a more commonly held perception of inadequate value relative to price paid.
b) Find ways to deliver greater value.
Your association membership consists of a large body of customers (some who complain) who pay the prevailing price for a bundle of benefits that your membership comprises: to me, mass behavior speaks much louder than minority protest. Better to increase value to match the current price, than to lower price to match the lower value perception held by a portion of your membership.

2) Demand for membership is very price-inelastic, so lowering dues means fewer resources, which can undermine delivering an increasing level of value. This means that the proportionate change in volume is low, relative to the proportion change in price. On the way up, this is good news for us: increase dues by 8%, and the corresponding decrease in membership is unlikely to be more than 1%-2%. On the way down, it's more ominous: a 5% dues decrease might attract 1% growth. In these two cases, gross dues revenue increases 6%-7% or declines 4%. If resources are an issue within the association, staying put and accepting a 0% revenue change may be your best option if current economic conditions and member perceptions truly prevent you from implementing normal, low-threshold increases.

3) Decreasing dues tells a strange 'story' that affects your ongoing communications and relationship to your members and audience at large. In contrast, periodic/CPI-type increases in dues can often pass without any communication, and larger dues increases can be accompanied by statements that it's really a deferred increase because dues haven't changed in 5 years; increase dues are required to fund increasing quality and quantity of programs and/or to reflect increasing costs of doing business, reflecting your circumstances.

Decreasing dues is enough of a 'man bites dog' story that even a small change warrants some communication, but if you're not careful, it's hard to escape the sense among members that you will have to do 'less with less,' or you'll reinforce the sense that the organization had a big cushion before and now you're trimming fat. Either implication isn't terribly productive, and in my mind a small percentage decrease may still beg the question of why not just stay put. As long as our economy isn't in a true deflationary cycle, holding off increases for a few years is the same as implementing a 5% decrease today.   – Kevin

Managing Your Checkoffs … Foundation Contributions via Member Renewals

The degree to which people respond to a renewal form checkoff depends first and foremost on the level of awareness and positioning of your Annual Fund. If it's well understood what the Annual Fund does and it's seen as legitimate and unique, then a check-box by itself can be very successful: a service "that needs no introduction" is the only kind that tends to perform well on an automatic marketing vehicle (such as a renewal form that allows no space to provide a proper introduction). If it's not well-understood, consider testing a buckslip with one renewal effort that helps to explain what the Annual Fund has done, and what it could do with more support. Keep it to just one effort for starters and allow some time before evaluating the results.
Form clutter is the enemy of timely response; since the primary objective of your membership renewal is to renew the member, look at past donation performance and consider the tradeoffs before you decide. In the scenario at right, dues revenue is 600x greater than donor revenue. Even if the inclusion of an additional choice led to only 2% or 3% of members to think about it, delay processing, and thus not pay until the next renewal form is sent, I'd skip the check-off.

If many of your renewing members go online to close the deal, you might include an alternative checkoff there if it can be programmed in what remains a very clean, neat Member Application. But if you have to direct them to a second donor screen to complete the transaction, I wouldn't—it's again a distraction from the membership renewal. As an alternative, choose a logical time to mount a dedicated fundraising effort among renewing members, say 4 months into the new membership year for that individual. A dedicated effort will effectively cultivate and fundraise to the prospective donor.

Our fundraising work has shown quite a few charities who generate 15+% of their total direct response funds through "second asks" (i.e. gifts made in response to a solicitation included with the donor acknowledgement/confirmation form for their first gift). So we know that good donors will give frequently, but asking for a gift within seconds of the online member renewal will get a response that generates a small fraction of what you can generate with subsequent targeted efforts. It makes sense to allow sufficient space and time between efforts to cultivate, perhaps suggest and explain other successful fundraising techniques such as matching gifts, restricted fund solicitation, major/planned giving inquiries, and continuity giving through EFT or credit card.

By far the best performance achieved by associations is with forms that are prepopulated with a suggested gift that the renewing member must consciously omit if they don't want to give. Ideally a personalized gift array featuring their highest previous contribution + a small multiple to upgrade them, or a flat amount slightly higher than the historical average gift made by all donors, if you can't do that. If the vast majority of your members are relatively indifferent toward your Annual Fund as a cause, a large proportion of them who currently don’t take the active step of opting into the forms you used in the past also won't take the active step of opting out of making a reasonable donation. You could easily go from 4% of members donating with a $25 average gift to a 40% rate with a $35 average gift. This would be an impressive increase in the proportion who give, but of course it's still not much money: $50,000 with 5000 members for example.

It would be key to go any of these option prepared to address the occasional member complaint. As your members are fundraisers themselves, they should understand the techniques and not be terribly resistant to them. So many good marketing programs are killed in response to kneejerk reactions of just a few individuals; if you address those complaints quickly and in-person, you have an opportunity to turn them around (or at worst, agree to disagree but show good business courtesy) while accepting those few contacts as a cost of doing business and a slight deduction from the otherwise positives of higher participation, more revenue & awareness for your Annual Fund. 

Bottom line, effective association foundation fundraising often begins with managing your checkoffs (not your Checkovs!), consciously and effectively.


Member Value is Something You Talk About ... AND Measure

It's becoming far more common to think about our value proposition in associations, yet these discussions often seem to debate qualitative issues. To me member value is primarily an empirical thing—something we can measure.

Certainly, guiding the activities that generate member value requires a strategic mindset, and tactics drive the success of the activities that 'feed' value, but measurement is not tough to do or to interpret. Data analysis is a nice way to disarm some of the ambiguities and unnecessary level of navel-gazing that often seems to accompany these discussions. ('Values' on the other hand are relative, and the basis of one's perceived value varies by person, but this is irrelevant to our ultimate goal.)

Thinking very directly and simply, I summarize and understand value with very simple premises:
- You use things you need and like.
- If you like the experience, you'll like and probably need the thing more.
- If you don't like it, you won't use it.
- If you don't use it, you won't value it very much.
- If you don't like or use it, you probably won't tell people unless they ask (since it's not polite to complain).
- If you don't know what something is, you can't use it.
- If you don't know much about it, you're unlikely to use it.
- To figure out what it is, people talk to each other before they'll ask you. Then they will complain.

This isn't much of a framework, but it gives a very practical and easy to understand way to process your member/customer experience metrics regarding awareness, satisfaction, importance, and usage. So often I see research done to collecting data that collects new findings, compiles data that's been collected previously, then reports them in a 'sports story' format without actually guiding the analysis creatively to help us understand and influence our value chain.

If we do ask our audience these basic questions and really work with the resulting data, we shouldn't have to worry much whether we're serving the profession/industry at large or our members; defining success only by membership and/or revenue, operating more like a non-profit or a business, or if we're measuring success by inputs and outcomes. Either way it's key to collect and work with this data; if we're not, that's just bad management, period.  - Kevin

Advice on Optimal Email Frequency (Part #3 of 3)

It's easy to critique email programs and to philosophize. To end this series, we suggest the following approaches …

  1. Continually test your messages for the best approach, relying on both clickthroughs and open rates as testing criteria. For promotions, often the former; for general interest communications, the latter (even though it is an increasingly flawed measure due to mobile devices, etc.).

  2. Experiment with truly new formats periodically, giving each of them several chances to catch on and outperform the current formats you use. For example when we launched an e-newsletters with our donor base at CRS, we tested the basics (length/tone of subject line, acronym vs. organization name), content (which lead story to feature first, second, third and so on), content format (full article in text, headline only, x lines ending with ellipses leading to the web article). As I recall my staff didn't like it, since this alone entailed perhaps 45 unique combinations, but it was more easily done over several issues, testing the combinations, choosing winners, ties and losers, then testing again to ensure the content didn't drive the findings. (It's interesting as I dug through my own emails to see that the format we tested in has continued to change, so that it looks far more like a personal letter than before ... I hope this also reflects testing more so than personal preferences.)

  3. Pending test results, I'd also seek to maintain a frequency of regular communications focused on industry news and information to be weekly at minimum, then delivered at a regular, consistent time that's convenient for the members.

  4. Rely as much as possible on using your newsletter formats to carry promotional messages for events and products with navigation bars, banner ads, and advertorial copy—i.e. use frequent contact, but put the promotions in their place, a little less important than the content that members tend to value and not see as self-serving to the organization. As with print media, most of us notice ads better when we're reading editorial content than when we're given a purely promotional insert. Standalone promotional emails will seem to perform better, but to use a traditional mailbox analogy, if you're presented with a magazine and a pile of flyers, chances are you will discard the latter and at least glance at the former.
Of course, one might object that, as associations, you have a different relationship with your constituency than traditional advertisers. This is true as long as you avoid engaging in a long term practice of carpet bombing them with email.  -Kevin

Optimal Email Frequency Also Depends on What You're Saying (Part 2)

Through client work, and "show of hands" exercises at several recent presentations, I know many associations apply very conservative limits to their regular all-member communications. Monthly appears to be a common, acceptable frequency. Unfortunately, math is not in our favor. This means for someone receiving 100 emails per weekday, they have a 0.05% chance of seeing your carefully-constructed e-newsletter, all other things being equal.

In this context, it was interesting to contrast this under-communication scenario with listserv feedback from vendors/experts regarding "How many emails do you send for each event?" To quote two: "sending reminders one week, one day and one hour in advance .." and "for Associations with engaged members: 10 'marketing' messages per event Associations with wider, less engaged audience: up to 20 'marketing' messages per event."

This is great to maximize participation in a single event, but it might mean sending more emails for that event than you do all year for the association at large! And if you have multiple events, your 'regular' communications might dwindle to only 5% or 10% of the total messages you send. On the bright side, your odds of being read by the typical member/customer might rise as high to 1 in 100. On the down side, the content map for your e-communications might show a mix that's 5-10% substantive industry news, 5-10% housekeeping/transactional stuff, and 80-90% promotional content ... probably not the mix you had in mind. Depending on how you monitor member communications, you may not even be aware of it and the signal it sends to your audience.

The core messages you want to convey and the value you need to impart through your e-newsletter may be swamped by other, simpler messages that may collectively convey the impression that the organization 'exists primarily to sell you stuff' (to quote Scott) rather than provide pertinent information, educate, and support them and their industry/profession.  -Kevin

Optimal Email Frequency: How Much is Too Much, and When Don't You Do Enough?

Recently there have been questions on the ASAE listservs regarding optimal email frequency. It's hard to determine, overall and by specific goal: product, event or activity. Frequently the specific and overall objectives are in direct conflict with each other.

Many of us prefer empirical evidence over anecdotal, but we also have to ensure that our metrics show the big picture—impact on overall association performance—rather than metrics for a single campaign or a product (event, publication, etc.). It's very common in our associations to have motivated managers or outsourced service providers who can inadvertently abuse the email list and undermine member satisfaction, leading to unsubscribes, lower open rates, even lower renewals and overall participation.

Thinking back to presentations I've heard and/or given over the past couple months at Great Ideas and DigitalNow! regarding e-communications management, there are a few instructive points to consider:
* Ian Ayres (author of Supercrunchers) made a compelling case for associations that, if you're not conducting randomized tests/trials at least part of the time, you're not really doing your job of maximizing member value and satisfaction.
* In a GI session, none of my panelists and very few attendees had EVER done a randomized, A/B split test of their emails to determine what email approaches (frequency or format) work best for them.
* Another popular GI session featured speakers who were proudly explaining how well they boosted attendance for a single event through a systematic process of carpet-bombing with emails. (Judging from audience reaction/note-taking, they really liked the idea!)

These points embody "the fallacy of composition" reasoning that often applies in managing email:
* Ian is right: the best and perhaps only way to determine what works for your audience is to test alternative options head-to-head, pick statistically valid winners. Then test again, repeatedly against other options to ensure that your overall communications and programs are optimal.
* Without this process, our formats are determined by personal taste, past habits and convenience rather than what leads the audience to read & act. In the short term at least, this may mean being less efficient, but the long-term payoff comes from being more effective with the right format, frequency, messages, and segmentation.
* We also need to manage the process top-down and to avoid letting the 'tail wag the dog.' This means balancing the tactics used for specific events, products, advocacy issues etc. in a manner that doesn't swamp the organization-wide communications.


Learning From, If Not Using, the World of Mailing Lists

Many of us don't make good use of the infrastructure of mailing lists that have developed around us over the past 35 or so years—since the days of the punch cards.

As associations we are often not attractive customers for them, as we might need only one, comprehensive list for a membership or conference promotion, if that. However, proactively engaging one who can filter various list providers is a sensible approach.

When you work with one, be sure to request the full datacards from them and check out the optional selects that the list includes. They will always be eager to rent a large file to you, but generalizing from many past campaigns, I can say that you rarely benefit from mailing outside the 1 or 2 segments that are most appropriate, within a much larger list or masterfile.

A good datacard typically provides one or two pages of description regarding profile and source of names: a box on the upper left will show your incremental CPM for using specific selects. For a sample, visit MGI or InFocus, two of the two major managers working in the association space.

Of course I'm assuming that you deal with smaller volumes of rental names and much narrower selects than do our peers in philanthropic and commercial marketing. If so we are less profitable customers-it takes more to make us happy and we generate less gross revenue for the list brokers & managers. If not, consider subscribing to SRDS for a year—it's a sensible investment that will give you some very large catalogs of lists that, at least in my case, are resources I have used for years. Counts may change, sometimes list managers will, but enough lists stay on the market in the same place to give you a good starting point when shopping for prospect lists.


Two Kinds of Premiums (Post #2 of 2)

While we discuss the value of premiums in association marketing, it's important to keep in mind that there are actually two kinds. Many of us who think of premiums think purely in terms of back-end premiums, items that are probably in a $3 to $5 per item production range: thank-you gifts for joining or registering for $160 memberships or $495 conferences.

It's also worthwhile to consider front-end premium: items that fall in a very low-cost price range, such as the Habitat for Humanity version at the right. Front-end premia almost always outpull back-end premia, and by a wide margin. This is because they help with the first part of the direct marketing equation (get opened) rather than the second part (read me/take action).

Since there is always a delay in fulfillment and we live in an instant gratification world, the back end item is also less effective because it's only peripherally related to the offer. It helps, but probably won't contribute that much to put prospects over the edge (i.e. 'I'm thinking about joining, but the bag closed the deal').

For these kinds of items, consider items such as a custom-struck token or cling window sticker—a test cell of these items affixed to the reply or inserted in your standard approach might boost open rates sufficiently to generate enough lift in response compared to the control package, and enough to offset the probable 5- to 7-cent incremental cost you incur at rollout quantities.

At CRS I know the former lifted our donor acquisition response rates about 30% when we first tested and remained at that level at rollout, although we continued to test token designs and metal colors/finishes to be sure we had the right one. We also found the lift in response was offset by smaller gifts and somewhat lower renewal rates, but of course in your association, you can determine this through your own testing.


Using Promotional Items in Membership and Other Association Marketing

(Note: this is the first of many posts repurposing some of our contributions to the ASAE, AFP, and DMA listservs. Sorry if this feels like "Deja Vu All Over Again" but it seems like a sensible approach to take what we've learned and shared specific to an association or non-profit's problem, and to put it in what we hope is a more permanent setting!)

Associations generally make little or no use of premiums in their marketing programs, which is unfortunate. When SHRM staff recently asked what's working (tote bags have worked well but they were looking for alternatives), my take was that any association program, particularly large ones, might consider emulating similar- or larger-scale programs on the philanthropic side, and to consider/test items with similar per-unit costs.

The DMA Nonprofit Conferences are a great resource here. I don't attend many after completing my succession ladder as chair of things, then the exec committee and my vice-chair role, but they share comparative results of tests, including response rates and average gifts for tests and programs.

It IS 'TMI' for those of us in associations who have fixed dues levels/offers, but they can inspire many creative ideas regarding back-end premium items for not only membership but also conferences and subscriptions that are often more expensive than the membership.

Some items that have stuck out in my mind over time include umbrellas, tote bags, t-shirts, and more professional-tone items such as personalized mugs and desk paperweights.

As associations we often have to balance 'tasteful' with 'effective,' and these two can have an inverse relationship. You might find yourself choosing items that make sense but don't perform as well as another more tacky option.

In SHRM's case, bags tested well, but they're not sure why... most of the successful premiums I tested into at CRS program didn’t make intuitive sense to me, either. In fact, while searching for an example of my past work, I found this hilarious, very public critique of my work! For any of you doing association marketing and who live in fear of complaints, nothing will help cure you of this like developing the thick hides we often need in the charity world.