Memberships Matter – Make the most of Your Membership Program.
There are two types of measurement that must happen in a Member Success Management organization:
How are the members doing?
How are we doing?
If the second one (How are we doing?) is not based on the first one (How are they doing?), you’re doing it wrong.
When it comes to Member Success, you actually want to pay attention to a financial metric (usually Net Revenue Retention or NRR) and a Member Success-specific metric like Success Vector.
Every trade association or sales organization wants predictable revenue; most turn to new memberships or business sales to get it. They create a goal they want to hit – essentially a target number the CEO or Board wants to see – and then they try to figure out how to hit that number.
The “predictable” part of all of this comes down to ensuring your pipeline is loaded with (at least) 5x more leads than your target goal so you can hit it with a 20% close rate. Math!
While that may be “predictable” in a spreadsheet, in reality, hitting that goal requires a lot of work, coordination, effort, hustle, incentives, and even a bit of luck. Yet, historically, this is where companies look for new revenue by default.
That’s changing as companies realize it doesn’t get more predictable than being able to look at your existing members. Now, say these 100 members will reach a particular Success Milestone in the next month, that milestone has a logical upsell associated with it, the value of that upsell is $500/ARR, and the percentage of members that should take the upsell based on their Success Vector is 90%.
That means, for that cohort, we’ll add $45k/ARR next month. Then, by combining the expansion value of all of the milestone cohorts, an accurate prediction can be given of the revenue generated from our existing members.
That’s actual, real predictable revenue.
Historically, the Member Health Score was a Key Performance Indicator (KPI) for Member Success, but it doesn’t give what we need in this new world of Member Success-driven Growth, so APM went into a sort of Research and Development mode and tore the idea of a Member Health Score apart with the sole purpose of giving a real way to see not just what’s happening with members today, but where do we think they’re going in the future.
And the Success Vector was born. Now, let’s dig into the real concept behind the Success Vector.
Why “Vector” instead of “Health”
Aside from the reasons already stated above, the term vector appeals to us – the idea of having something that doesn’t just tell us where we are, but where we’re going, seems so much more powerful – and appropriate in the context of Member Success-driven growth – that it’s the most logical progression.
Vector is defined, according to a quick Google search, as “a quantity having direction as well as magnitude, especially as determining the position of one point in space relative to another”. That’s exactly what we’re looking for – Direction + Magnitude.
It All Starts with the Member
One of the biggest mistakes we see in Member Success is when the CEO of a company hires a Member Success Manager declaring they (the association) are now member-centric, and then telling the Member Success Manager to “figure it out” without giving budget or resources. Though sometimes, if any resources are given, it’s to buy the software. Because software solves all the problems.
Look, people are a huge part of Member Success Management. Systems are absolutely necessary. Processes and Software tie all of those together for efficient scaling. But if the implementation of those things isn’t predicated on a deep understanding of the member – and knowledge that the member will evolve over time so your understanding must, too – then the people are going to be set up for failure, the systems won’t do what you “designed” them do, and the software will fail to deliver a real ROI.
If we want our members to grow with us over 1, 3, 5, 7, or even 10 years, ensuring the member is engaged and continues to achieve their evolving Desired Outcome is critical. In fact, it’s why your organization actually exists in their world.
Before you can Orchestrate, Operationalize, Instrument, and Intervene – or develop a Success Vector – you need to be clear about the Desired Outcome for each of your discrete member segments.
And remember, Desired Outcome has two pieces: Required Outcome and Appropriate Experience.
Required Outcome is what they need to achieve; there are some things that must happen otherwise you know they couldn’t possibly be achieving their Required Outcome.
So you measure their progression through the required activities and Success Milestones (are they making progress; completing the right activities to move them forward?), check on Joint Accountabilities (are they doing what they need to do, are you doing what you need to do?), look at Ascension Velocity (are they buying more, expanding use, etc. ? Because if they are, they’re likely finding success), and other things that indicate whether they’re actually achieving their Required Outcome.
Appropriate Experience is how they need to achieve their Required Outcome, so it takes some of the previous measures into consideration, as well as satisfaction & confidence, support interactions, and other contextual inputs… including the gut feel of any human interactions/interventions that took place with the member.
Together those make up the core of the Success Vector of the member and will tell you if the member is on track, needs help getting back on track, or is heading out the door.
Key Success Vector Inputs
The inputs that are 100% required for Success Vector to be meaningful are:
- Success Potential
- Success Milestones
- Joint Accountabilities
If a member doesn’t have success potential, that’s something you’ll need to address (possibly by actively separating from those bad fit members).
When it comes to Success Potential, there are several things you’ll need to look at:
- Technical Fit – What this means is that you must look at each member and determine if they are or aren’t using or do or don’t have (and possibly can’t / won’t acquire) a key piece of technology needed to succeed with your tool or resource
- Functional Fit – this may mean that your resource or product is missing a key piece of functionality for them, and it may not even be what they need. Do you have another, a better solution for them?
- Resource Fit – They can invest – beyond simply paying for membership – in what’s required to be successful as our member
- Competence Fit – They have – or can acquire – the expertise internally (among their staff) required to be successful
- Experience Fit – They may not have the experience internally and cannot get/are unwilling to source or train resources that have the necessary experience to be successful with your product
- Cultural Fit – They have beliefs, morals, attitudes, etc. that you know aren’t in line with the association’s ideals for success
If we can’t check all of the Success Potential criteria, then we can be absolutely sure that those members are not going to achieve their Desired Outcome – both their Required Outcome and the Appropriate Experience – so you’re setting everyone up for failure if you keep them around. We’ve stated this before – you DO get to choose your members. Keeping members that drain your resources for them and monopolize the staff’s time is counter-productive for everyone. This can be avoided early-on in the membership courtship process before they become a member you don’t want.
Success Milestones & Joint Accountabilities
The biggest problem with Member Health Scores is they rarely include whether or not the member is actually doing the things necessary to put and keep them on the path toward achieving their Desired Outcome.
For Success Vector, knowing where the member is on their path toward success – including whether they’re holding up their end of the bargain on the joint accountabilities you agree to – is the main input.
In fact, if you don’t pull in any other contextual data and only look at Success Milestones and Joint Accountabilities, you’d be better off than most organizations that pull together complex Member Health Scores.
If the member does have Success Potential, but they aren’t doing what needs to be done to achieve success, then there is still a problem, and we need to intervene.
If those things aren’t included in the Success Vector, then what purpose does it really serve? It’s like creating a Member Success strategy without starting with the member (which, sadly, is pretty common still).
When it comes to predictable revenue, this is where it gets good.
Some Success Milestones will have a logical Upsell or Advocacy opportunity associated with them. Based on which Success Milestone our members will hit in the next month we should be able to accurately predict the revenue expansion from our existing member base. Here’s a roadmap:
Revenue Ascension Pipeline vs. Expansion Quotas
When you can build a revenue forecast model based on actual member Success Vectors, then you can manage against that rather than the other direction where we have expansion quotas. You can say “according to Success Vectors, this group of members should deliver $45k/ARR in the next month.”
When you have Success Vectors in place, internal expansion quotas are not needed, which means you won’t be trying to promote resources or products to a member when they aren’t ready for them, don’t need them, or are otherwise not in a place where that is the logical next step.
Rather, we can say “this is the expected, logical expansion from this group of members in the next 30, 60, or 90 days” and if you hit that, it means you simply did your job.
However, if you miss that mark, it means the member didn’t hit that Success Milestone, because if they had, according to the Success Vector analysis, they would have taken the upsell. So that’s a fail on Member Success Management; not that they didn’t make the upsell, but because the member who we thought would reach that milestone didn’t.
So there’s no need to quota on expansion; instead, use the Success Vector-based projections to manage the success – or failure – of your Member Success Management team.
Additional Success Vector Inputs
Organizations with more robust Success Vectors also have inputs like:
- Ascension Velocity – Are they procuring other resources when they’re logical?
- Meaningful Product Activity – Also known as product usage data. It has to be meaningful activity, though.
- Adoption (implementing meaningful use of the resource) – Did they meet initial adoption goals? Are they meeting ongoing adoption goals?
- Advocacy – Are they advocating for us in appropriate ways where logical?
- Usability Issues – Are there problems or missing features keeping them from achieving success; missing features would indicate a lack of Success Potential and should be noted as such, action may be needed to correct this for them and other members also – be proactive
- Member Company (Account) – Are negative things happening with the member’s business, are there external indicators, such as lack of business to sustain the company, M&A activity, etc.
- Support – Support tickets aren’t bad unless they’re not being closed in a positive or efficient way; also if support tickets slow or stop altogether this can be an indicator.
- Satisfaction & Confidence – NPS scores come into play here.
Success Vector Status Definitions
The Success Vector of a member will change from time to time, but we ultimately want all of our members on a Positive Success Vector. Stagnant members on a Neutral Success Vector simply renewing at the same level is no longer considered good enough.
The new measure of success is members that are engaging, evolving, and expanding.
Positive Success Vector
- They’re on the right track
- “the right track” means that they aren’t just static, but are hitting their Success Potential, or are on-track to do so
Neutral Success Vector
- Stalled or Stagnated
- Does not fit with the new measure of success
- Need to get the member back on track to achieving their Desired Outcome and on a logical Ascension Path
Negative Success Vector
- They’re not on the right track and intervention is needed
- Come up with a specific plan to move the member into a positive – or at minimum, neutral Success Vector
- Your key contacts at the member have stopped engaging or responding
- This member is about to churn
Situational Awareness and Member Triage
If you’re just starting out integrating the Member Success program philosophy into your organization (and, by the way, we’d love to help you do that!), there’s a really good chance you’ll have some members that have gone dark. For the members that are a good fit and should be saved, you need to do what have to do to save them. Just know… that’s not Member Success!
To pull them from darkness back into the light or otherwise save them from churning, you’ll need to reach out to them and implement a plan to rescue them by making good on what was promised to them – as best you can, and it has everything to do with actually helping them achieve their Desired Outcome. They’ve given you another chance, but they should be considered to still be on a Negative Success Vector.
Member Success would have been ensuring they didn’t get to this point, to begin with!
You now have to work to take that member, plus any other member that’s on a Negative Success Vector and move them to Neutral and then Positive.
At first, you’ll have members in each category, but eventually, as you Orchestrate and Operationalize your Member Success Management processes, you’ll get to a point where you only have Neutral and Positive Success Vector members.
Success Vector shares many of the underlying qualities of Member Health Score, but the big differences are what make this the KPI for Member Success-driven Growth.
It doesn’t matter if we’re hitting our retention or expansion goals if we’re doing it in a way that’s not aligned with our member’s success, that new (or renewed) revenue won’t stick around.
If you meet your NRR goals for the time period, but your Success Vector is getting worse, that could mean you did things to meet the financial KPIs in a way that had a negative impact on the member.
“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