Memberships Matter – Make the most of Your Membership Program.
Why Members Leave
It took months of preparation. Nick learned about your organization through some peers, and then he discovered not only your website but your social media content marketing, where he began to see that a Membership and the benefits which it offered him was maybe the next step in growing his business.
He reviewed your products and resources several times and thanks to your well-designed website, social media presence, and content promotion. Even his peers’ respect for the organization and other influencers’ buzzing about you on Twitter, and one of his own product providers had good things to say about the organization which they also support; he’s decided to move forward with Membership.
After speaking with your Membership Coordinator, he didn’t bounce. He stuck with it through the signup form, the activation email, and the onboarding tour. He even invited the rest of his team to try the main resource which brought him to join in the first place.
Over the course of the first few weeks, Nick was engaging with the product less and less, and ignoring emails from your Member Success team. Before the first year with the organization was over, he did something heartbreaking — made the decision to non-renew his Membership and churned out.
There’s Nick. Most people in the world won’t make it as far as him. He had multiple chances to lose interest before he made the final choice not to renew – and, in fact, probably had made up his mind within weeks of joining. But, when dues renewal time came, he just let it pass on by.
You never found out why, so you can’t help him, or Members like him. He was out as quickly as he came in, churning before he could truly become a valuable Member.
What is Churn?
Churn is the enemy. Churn is the sickness that will kill your association.
Churn is the rate your members are canceling their membership.
One of the key outcomes of any Member Success strategy is to reduce churn by helping disenfranchised members continue to get value from what you’re offering them.
The pricing model of associations lends itself well to be extremely profitable. The nature of memberships means that your members are paying you regularly which brings in recurring revenue but also puts you in a precarious position. Every time your member gets the dues bill for their membership, they’re asking the question: This month (or this annual term), did this product save me more money than it cost me?
It all boils down to one thing. Member Success teams and strategies are in place to keep members from canceling. The teams and processes exist to reduce churn. Let’s look at this in more detail.
How is Churn Calculated?
Churn is a notoriously difficult thing to calculate properly.
Churn is the inverse of your renewal rate. If you have a renewal rate of 80%, you have a churn rate of 20%.
The calculation of churn can be straightforward to start off with. Take the number of members that you lost last member term and divide that by the number of members that you started with last. The resulting percentage is your churn rate. As an example, a company that started last year with 1000 members and lost thirty (30) over the course of the year would have a churn rate of 3%.
There is, however, another way to do it. A way that shows churn in a more useful and realistic way. A way that considers the fact that every day that a member uses your service is an opportunity for them to churn.
Imagine your membership starts July with 1000 members. Of these original members, 5% leave by the end of the month. We also add 500 new members; 12 of whom leave by the end of July. By the basic definition, our churn rate is 6.2%.
Now, let’s imagine we have the same member behavior in August. We start with the 1,438 members from the end of July (of whom 5% churn), add 500 new members and lose 12 of them. The basic definition produces a 5.8% churn rate in August.
Hooray, your churn rate went down! August must have been a great month. But, there was no difference in member behavior. You began August with more members than in July, which made the denominator bigger, decreasing the churn rate.
After working out the annual churn rate, look at what percentage of the total ARR (Annual Recurring Revenue) those members made up. If you find that those members who churned were collectively only bringing in 5% of the ARR, they weren’t all that valuable anyway. So, what’s the message here?
For one, it’s that churn rate can be extremely deceptive. You must calculate it in a meaningful way and account for member value. The second point is that low-value members are more likely to churn. They aren’t paying much, and they’re not using the membership to its full advantage to them, so they can drop it if they need to and cut their losses.
Member Success strategies reduce this problem by ramping up the unsure members into loyal power users who spread the word about the benefits they’ve found extremely useful to their business and share it with their industry peers.
Today, we’re going to look at the reasons members churn and how you can stop them with member retention strategies.
Voluntary churn: it’s not me, it’s you
Voluntary churn is what happens when the member decides your product isn’t worth their time, money or attention. Maybe they’re wrong and can’t see the value, or maybe they’re right and your product isn’t a good fit.
Churn can be your fault, or it can be out of your control. If your product doesn’t appeal to everyone, that’s likely a good thing because it’s highly targeted at a certain type of person.
Somebody once said, “Crapiness is sanding all the edges off to make everyone happy.”
You don’t have a crappy product, right? Well let’s focus on the areas that are your fault — the areas in your control, such as:
Poor Member onboarding
Reinforce the value of your resources and tools during the Member’s official welcome into Membership.
I say ‘reinforce’ because the Member understands the value since they signed up in the first place. Recall the promises made in the Membership presentation and connect them to the actual Member experience of your resource. If your Member doesn’t understand the relationship between what they saw in your initial conversation, or what they saw presented on your website or Facebook page and the real thing, that’s a big problem for you.
Clarify your resource or tools’ features with an onboarding tour.
If a Member is just completely confused about how to get started with a tool or resource especially when they are trying to use it to accomplish a specific task, it can be extremely frustrating.
Make sure if they became a Member to use a certain resource that can potentially help them increase revenue significantly, that you’ve made time to give them not only an overview of the tool, but help them get logged in, or signed up, or a profile created – and then a complete tour with aid in using that resource the first couple of times . They’ll be forever grateful, and it could be the one thing that they think of when it comes time to renew.
Involuntary churn: it’s not you, it’s me
Involuntary churn is what happens when a member can’t continue to use your product because of reasons out of their control. It’s not worth dwelling on ways to stop this because it’s not your fault, but understand that a lot of the time, Members don’t choose to quit.
- Their boss decided to go with another product. (This could be related to your tool’s features, but it’s a gatekeeper’s choice, not your member’s).
- They didn’t like the result they got, even though they correctly used the tool or resource.
- Their company went broke and closed.
First steps for patching up your leaky product
- Gather Member feedback
This is monumentally important. For starters, it can be as simple as attaching a survey to your automated email that gets sent out when a member cancels.
- Work out what your Membership’s Aha! Moment is
The journey from awareness to long-term use is a rocky one.
You need to get your Member from their first few seconds inside your website to their moment of first value as quickly as you can. When you begin to think about the ways you can do this, your brain should boggle at how many different strategies there are.
One good way that straddles the Member experience and Member success disciplines is analyzing what today’s power Member did with your resource when they signed up.
What do your best Members all have in common? How did they start out with your resources? Answer that, and you’ll know what to emphasize during your tool’s first-time use.
- Start targeting the right kinds of Members
Let’s suppose we look at our data one day and find that from our best members, 90% of them are marketing professionals. That means that there’s something particularly appealing about our resource to that segment, even if we don’t know what it is.
So, what would we do? Probably get in touch with them for a start. Ask them what they like about your Organization’s collection of resources — have a chat with them or send them a survey.
Then, we’d gear our marketing material towards that resource or tools. We’d start writing content they’d be searching for, and maybe even make custom landing pages targeting keywords they’d search for. From the survey responses we’d get back we’d know which features are most important to them, and we would be able to emphasize them early on, develop them further and make the ultimate marketing operations tool.
Maybe that would mean we’d not be so widely appealing, but remember the quote about crappiness?
Crappiness is what happens when you try to be the best product in the world for every member. Being the go-to product for every member – whether they’re the right fit or not – is sufferable and it’s not like there’s not enough money in that world.
If it means reducing churn, don’t worry about going after what you thought was just a subset of your Members. Go for the ones that are right for you; the ones that will find value in what you offer, who’ll keep coming back year after blessed year. Remember, you get to choose your members, they don’t necessarily have to choose you.
Also, Keep in mind that every member has a Desired Outcome. Desired Outcome is the thing your member needs to achieve, the thing they are trying to accomplish; helping them achieve that is ‘why’ you exist in their world.
Now, when you mix Desired Outcome with a well-designed Ideal Member Profile… you’ve got Growth Rocket Fuel!
“Memberships are the most important asset in our industry today. Are you making the most of your membership program? Is it growing your organization? Are you putting enough resources into growing your member base? Do you have a targeted plan for Recruiting, Engaging, and Retaining your members? We can help.” – Andrew McElhannon, CEO – Association Project Management, LLC®.
APM® helps member-based organizations & professional Trade Associations achieve Member Success, stabilize their member retention and guarantee membership growth through Prospect Development and Member Recruitment, as well as Member Engagement and Concierge Onboarding.
Organizations implement APM’s® programs to sustain their current revenue, reduce losses due to Churn (member non-renewal) and generate new revenue by creating Raving Fans® who evangelize new members that over time becomes automatic, organic growth. “Members begetting Members”.
Association Project Management, LLC® also provides a list of other project management and project completion services through a virtual staff member – a committed, trusted expert who helps to reduce costs, lower risks, improve efficiencies, meet deadlines, solve challenging problems, support strategic initiatives and produce better outcomes for your association staff. Visit them today at www.associationprojectmanagement.com