Membership Retention vs Membership Acquisition
We recently spotted this question a respondent asked in Sue Frogatt’s 2013-14 Membership Research Report:
“Is retention more important than recruitment?”
This is something that we feel quite strongly about, so we thought we’d write a quick blog post to summarise our thoughts.
If you’ve ever had a meeting or consultation with us, you may recall us talking about the ‘leaky bucket’. This essentially is an analogy we use to describe the problems membership organisations have when their membership retention rates are low.
You can top the bucket up with new members, but if you’ve got a hole in that bucket, you’re going to be leaking members out of the bottom – potentially at the same or faster rate as the new members being added in at the top. So no matter how effective your membership acquisition is, if you’ve got a leaky bucket, then you’re not operating as efficiently as you can be.
If you can fix the hole in the bucket and continue to add new members, you’ll soon find that you’ll need a bigger bucket, and that’s a great problem to have!
In a 2009 survey (it’s pretty old, but we imagine the stats still stand up), King Fish Media found that companies spend about 56% of their marketing budget on acquisition and only 35% on retention. In addition, they found that 91% of these companies said they measured the success of a marketing programme by the number of new customers acquired, compared with just 63% of companies that measured the success of the marketing activity by the increase in customer retention from current customers.
So the focus is generally always on finding new members. Your sales team may be hungry for new membership leads, and you may even be evaluated on the number of new members you help bring in.
But for associations that are well established in their field and are not in the early stages of market growth, membership retention is far more critical to their on-going success than membership recruitment.
So what retention activities can you put in place to try and reduce membership attrition? We’ve written about this in more detail in recent blog posts, see:
Putting steps in place to reduce membership lapses is vital for associations who wish to grow. It’s a well-known stat that it costs five times more to recruit a new customer (member) than retain an existing one, and although this is potentially a slightly inaccurate figure, the idea behind it is right. By looking after your existing members, and making sure they renew year-on-year, you’ll find your association growing much faster than if you focused on membership recruitment alone.