Step 1: Admit that some members are more valuable to your association than others. Then, a metric like Lifetime Value can help you see who brings the most value to you over the long term.
Accurate or not, we tend to view our associations as democracies. Created by the people and for the people, with a governance system on top meant to embody their will. And accordingly with that set of values, we also tend to believe that all members are created equal.
When you’re in an association, you want to be perceived as being fair, and so segmentation is a hard thing to do.
Except maybe they’re not. In fact, we know they’re not. Typical engagement patterns in any association tell us that. Call them committed members or mailbox members, or call them creators, commenters, and lurkers—there’s no denying that some members contribute more than others.
It’s that difference between the ideal world and the real world that might sometimes cause associations trouble. Robbie Kellman Baxter, president of Peninsula Strategies and author of The Membership Economy, says it’s a big reason why associations have trouble with market segmentation.
“[Segmentation] is just hard because then you’re saying this group is really important to me so I’m going to optimize for them,” she says. “When you’re in an association, you want to be perceived as being fair, and so that’s a hard thing to do. It’s possible, but it’s hard.”
Baxter gets at an important distinction about segmentation: It’s about knowing not just different types of members but also which ones are most valuable to your association—and the implicit first step of acknowledging that some members are worth more than others.
“But every new member pays the same amount in dues!” you might protest. This is, at face value, true (at least within whatever membership categories you might have, like regular member, educator, supplier, and so forth). But it’s also the the most shortsighted view you can take on the value of a member. Ideally, a new member will bring value to your association well beyond her first-year dues money: She’ll renew and continue as member for many years to come, she’ll pay to attend meetings and purchase additional products, and she’ll contribute in myriad possible other ways, ranging anywhere from sharing knowledge on a discussion board to chairing your board of directors.
This is why a broader, more encompassing metric like Lifetime Value (LTV) can be so useful for membership pros, says Kerry Stackpole, FASAE, CAE, managing director at Neoterica Partners. In the March/April issue of Associations Now, Stackpole urges associations to use LTV to understand how members differ in value. “I always have found that lifetime values starts the conversation. It’s a great conversation starter because you can begin to sort of dissect what makes your organization hum,” he says.
Traditionally, LTV has had a monetary focus: (dues + nondues revenue) x average tenure = LTV. Lately, though, Stackpole and others have suggested that even basic levels of engagement tracking can allow an association to add nonmonetary contributions (e.g., knowledge sharing, volunteering, etc.) to the equation. “Once you know what your engagement is, then you can begin to figure out the value of those contributions to your organization,” he says. Add it all up, and you can get an even more refined look at who brings the most value to your association—both how and for how long.
That knowledge, in turn, helps with segmentation and prioritizing recruitment efforts. “When you look at lifetime value, you can say, OK this audience is the target. This is the audience that we get the most from, and these are the groups who seem to get the most from us. Let’s focus our marketing there for better results,” Stackpole says.
All that’s left to you is to determine the value of different types of engagement and the best way to prioritize your member segments. Easier said than done, for sure, and a task that will likely be unique to every association. But placing more value on some members (and potential members) doesn’t have to mean you completely ignore others. Tiered membership structures, for example, offer a way to diversify membership options and accommodate varying ranges of commitment levels. An association with a tiered structure might put most of its effort into recruiting or converting people to its high-value tiers, but a low-value, entry-level tier still creates room for less-committed members to live under the same roof.
If that seems like a departure from associations’ democratic principles, bear in mind that most associations’ competitors in the for-profit realm bear no such philosophical restrictions. Even the ones who are adopting membership dynamics to their business models are still guided by the pursuit of value. A thorough understanding of how your members differ in value to your association will at least leave you better equipped to decide when to be egalitarian and when to be selective.
How does your association segment and prioritize member types? And how do you balance that with the interest of fairness in your community? Let us know in the comments.