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.

-Kevin

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.

 -Kevin

How do You Hide Your Weak Spots?

As the coach of my 10 year old son’s baseball team and my 12 year old daughter’s soccer team I have the good fortune of trying to teach both athletic and life skills to 25 girls and boys. I really enjoy it and try to make it really fun for the kids.

One of the biggest challenges I face is how to manage the desire of many of the kids to do well and win with the fact that some of the kids are simply not as athletically gifted as others. This is a constant struggle and I think it directly correlates to the business world. I have worked with, and worked at, many organizations, and I typically find there are weak spots on any team. Some times these weak spots are caused by lack of desire to give 100% but many times it is because a team member simply does not have the knowledge or the skills to do their job.

When I am arranging lineups for baseball and soccer I do my best to cover up for the weaknesses that some of the players have. This is my way of making sure that the kids who want to win have the best chance of doing so while not ruining the confidence and morale of the players who are not as strong. I also try to teach every player as much as I can so they have the tools to play well but unfortunately there is only one of me and I often do not have the time to give every player exactly what the need. I do not think this is the best strategy in the business world but I do believe it happens. How do you address weak spots on your team?

 -Scott

What is a "Membership Model" Anyway?

On the ASAE Membership Section Council we have been working on "identifying, cataloging, and developing a framework so that leaders can understand how associations are addressing a new world of membership and affiliation in the 21st century." (Well, that's verbatim from our list of Strategic Initiatives for 2009/2010 as any association exec or consultant recognizes the lingo.)

What has it meant in practicality? One of our early efforts in this area was a poll that we conducted online in November to collect potential case studies. We're only now following up with interviewees, but we have also developed some draft white papers regarding what those models could or should be. Not surprisingly, many of them don't look like most associations do today; I think of it as a corollary to Kevin Holland's key question "Why we all do the same stuff?" We are all shaped by the same forces and we react in similar ways, as individuals and organizations. I liken it to the same primeval factors that account for, say, why hills look pretty much the same all around the world—plate tectonics, volcanic activity, erosion, man's presence—all work the same, so why should they look any different?

One could argue that people have free will, and we're free to cast out to find and implement truly innovative membership models, but something always seems to holds us back. The actual report we're developing is much more interesting and constructive, but anyway I'd choose to slice it, our empirical review of membership organization structures in terms of their economics, the kind/degree of bundles of services, the number of tiers, the conscious structural relationships between members & customers, all might be described as falling within 'plus or minus 20%' of each other. You rarely see radical mutations, or structures that appear to be truly unique adaptations to the industry or profession that they serve.

Perhaps it's because we are (as staff and volunteers) risk-averse and we're more willing to act to fill holes in our existing slate of programs that we are to tinker with the fundamentals of what we've done that's gotten us through the first 25 or 50 years of our existence, but I know most of the innovative structures we describe in this project will be very different than what most of us have today. For inspiration we'll be looking to churches, retailers, online communities—a mix of traditional and new entities who have found ways to succeed relative to their mission, which hasn't necessarily equated to being profitable.

I think back to how we initially introduced this project to our peers in the association community: "Given the unprecedented economic downturn and ever-expanding technology landscape that is widening the range of choices that individuals and organizations have, we are seeking to identify associations who have or are in the midst of revitalizing, revamping, or resetting their business/association and membership models to steer a new course in advancing their mission." We have had some fascinating discussions, but to describe true innovation, we will be relying more on our imaginations than on current practice.

 -Kevin

Are we Educating, Engaging and Satisfying ... or Overwhelming and Stressing Out Our Members?

Here is what I have to read right now—

A bloglines reader with 371 unread blog posts
Tweetdeck filled with 734 unread tweets
The latest issue of Associations Now which is still in its polybag
The latest issue of Folio which has not even been touched
The last Membership Developments quarterly e-newsletter still unopened in my outlook inbox
Almost all of this is work related as I don’t really use blogs or twitter for a lot of personal stuff.

It is stressful to look at this list let alone think about the amount of content that is hiding behind the list. I have been working incredibly hard to manage the constant deluge of information but I have to admit that there are not enough hours in a day to read everything I want to. That is part of the reason why this list is so long.

I am writing about this because I assume that members of our associations are having the same challenge that I am having. Is providing content through social media, and all of the new media distribution channels in addition to the traditional methods a positive or a negative? Are our members having to decide what content is most important or most pertinent so they can prioritize all of the different content streams they receive from us as associations? Are we stressing out our members because they feel guilty about not being able to read everything associations are putting out there? Are we really providing valuable content or just repeating ourselves over and over again through different media and formats?

I am still trying to figure out the answer to many of those questions. I do have to tell you I am getting slightly burned out on social media. I know this sounds like blasphemy since I do think that social media can be a very valuable and effective tool. I just think there is so much content out there and that most of the social media outlets I participate in do not have much difference in thought or topic. Maybe I am doing something wrong but those days I am not able to get to all of the blog posts, tweets or facebook, LinkedIn or plaxo updates are no less satisfying or educational than the days that I somehow find time to read all of these things. Are you feeling this way, too? Any tips, suggestions or thoughts you have to share would be greatly appreciated.

Scott

Auto-renewal—Holy Grail or Holy Fail?

During my career working for and in associations I have heard regular conversation about how to get members onto an auto-renewal program. Fortunately I have worked at a few large associations (AARP, National Geographic and American Association for the Advancement of Science) where we tried really hard to make auto-renewals work. We knew there were obvious benefits in that you could better project membership numbers, save money by cutting down the number of renewals notices being sent and better project cash flow to name just a few. My experience showed it was a very tough thing to make work. Here is a little about why I am curious to know if you think automatic renewal is the Holy Grail or the Holy Fail.

There are two types of auto-renewal: 1) credit card auto-renewal where are member gives you their credit card number and allows you to hit it at some agreed upon time and 2) what I like to call bill-me auto-renewal where a member basically agrees they are going to renew so you then bill them for their membership instead of sending them a renewal notice.

I know that bill-me auto renewal might sound like you are just changing the name of what you already send from a renewal notice to an invoice but it is not. For whatever reason, getting people to commit and then sending them more of a "you committed to renewing" notice instead of a "please renew" letter has shown to increase response rates. There is a lot to think about as you implement auto renewal. Some of the biggest things include:

1) How obvious are you going to make what they are signing up for? For some time, orgs were basically hiding the details of their auto-renew program .Personally I think it is better to disclose to members that they are signing up for auto-renew so you lessen the number of complaints/questions you receive.

2) What sources are you going use to implement auto-renewal? From my experience it is much easier to introduce auto-renewal in retention activities as opposed to acquisition. Members seem to be more comfortable giving a credit card number to an organization they are already involved with and know and trust.

3) Are you going to use a link-letter? A link-letter is basically a short letter that reminds people they have signed up for auto-renewal and that you are getting ready to hit their credit card.

4) Is your system set up and ready for auto-renewal? Most systems can handle this these days but before you jump into it make sure your system is ready. 

Most of us now pay our cable bill, our newspaper subscription, our cell phone bill, our ISP and more by auto renewal yet getting people to agree to auto renewal for their membership seems to be a challenge. So do what you think? Is auto-renewal the Holy Grail or Holy Fail?

 -Scott

What is more important? What I say or what I do?

Test, test, test. That is the mantra of many traditional direct marketers. People like me believe that if you are not testing then you are not pushing the envelope in a way that allows you to make data based marketing decisions. Basically you are marketing in the dark and that is not beneficial for any organization.

Testing is a way to determine what will make your audience response. It is a way of listening to your audience so you can utilize that knowledge to attract more people in as cost effective manner as possible. Direct response tests, where the recipient is actually purchasing something whether it be a membership or a book or a meeting registration, provide the sender with actual potential purchasing behavior. This is great information to have because the sender can actually see what a recipient is willing to actually put money down to purchase.

In contradiction to this is trying to understand your audience through market research. Market research is very valuable so please do not think I am saying it does not have its place in any strategic marketing program. Ask my colleague Kevin Whorton if I know the value of market research, and I know we will agree. One of the shortcomings of testing potential purchasing behavior through market research methods such as surveys and focus groups is that it is primarily theoretical and there can be inherent biases. Participants are not asked to literally plop down a credit card, check or cash, so their actual purchasing decision may be different than if they were to literally "feel the pain" in their pocketbook or wallet. Participants may also be biased in that they want to provide a "strategic response"—they will try to tell you what they think you want to hear, not what they would actually do. This could be due to peer pressure, personality traits, or many other things that could lead to their not being 100% accurate in their response in the research study.

I will never forget an example from one of our CAM groups at a focus group the client association sponsored a few years back. The focus group was designed to help a publisher better understand what type of magazine participants were most interested in purchasing. The facilitator put out a wide range of magazines for attendees to review, ranging from “trashy” to “intellectual” magazines. During the focus group almost all participants said they would most likely read the more intellectual publications. At face value this could be very valuable information and a good predictor of future purchasing behavior. Before attendees left, they were told they could take any magazines home with them that they wanted to read later. Almost every person took the “trashy” magazines they just said they were not interested in reading. This is a great example of the bias inherent in some research that you should be aware of.

To me both ways of getting at customer/member/purchaser preferences are valuable. As long as we understand the type of information we are receiving, and know how to combine them to get a complete picture of current and potential purchasers, then we are headed in the right direction. Do you agree?

-Scott