17 May Straight Talk about Membership
As many of you know I am working with the Pennsylvania Land Trust Association (PALTA) on a Feasibility Study related to membership. As part of that work, I have been revisiting much that I have written and shared related to membership programs – including Rally workshops on which Anita O’Gara and I have collaborated these past two Rally conferences. (Anita and I will reprise our session at Rally in Minneapolis this year – come see us!)
Here are some of the highlights from that work:
- By “members,” I simply mean donors whose annual gifts are both expected and unrestricted. Members might mean “voting rights” for some organizations, but I don’t use it that way.
- Members provide the single most reliable – most permanent – source of unrestricted funding available. This means money you can spend on operations.
- Membership recruitment rarely breaks even – it’s almost always revenue negative. Recruitment needs to be a line item in the expense budget, not revenue.
- Organizations raise money from membership through renewals and appeals sent to existing members. Existing members give between $25 and $25,000 on a regular basis. The essential argument for a renewal is, “You did it last year. You did it the year before. It’s April. It’s time.” This argument is easy to make and hard to screw up. And it works regardless of the dollar amount you are renewing.
- Membership is also an important starting point for all major gift cultivation. And sustained membership over a long period of time creates fertile ground for planting seeds of planned giving.
- Members can be recruited in MANY different ways. One of the most efficient is direct mail, but it’s not the only way. HOWEVER – Members tend to renew the same way they were recruited. Direct mail recruits renew through the mail. Canvass recruits renew off a canvass. Someone who joined from a table or booth at the State Fair will need to see you there again next year to renew. And people who find you on-line to join will need to find you on-line to renew as well. Of all these methods, the one most solidly in your control is direct mail. It’s been the method that has worked the best for years, and it still outperforms everything else out there.
- It is far less expensive to renew current members – through second, third, and fourth letters, or through phone calls and/or visits – than it is to replace them. BEFORE you launch any kind of serious direct mail effort aimed at building membership, make sure you have your renewal systems humming.
I know of only one conservation organization with 1,500 members or more that does not invest heavily in direct mail recruitment. If your organizational goals depend on having more members than you have now, you should consider investing in direct mail recruitment. The best approach is a solid strategy consistently applied over a period of years. Be predictable, and you will cultivate loyalty over time.
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How many members do I need? Here’s one way to calculate it.
Start by calculating your annual average gift. Most organizations have an annual average gift of $100-160, but then again most organizations are not getting what they could out of their membership. Some are getting less than $100; others are getting more than $400. For this exercise, I typically use $200.
So the division of your average gift into your operating revenue goal will yield the number of members you need.
EXAMPLE: Say I need $50,000 in new (additional) operating revenue. I will need 50,000 / 200 = 250 members, assuming an average gift of $200.
Your actual experience may differ plus or minus, depending on your average gift.
Now, calculate your actual renewal rate. Take the number of people who gave you money in any given 52-week period. Count how many of those people gave you money in the following 52-week period. The ratio will give you your renewal rate.
For most organizations, a 70-75% renewal rate is very good. If you are renewing substantially less than 70%, you may want to look at adding a follow-up letter (or two). If you are renewing substantially more than 75%, you may not have enough new members coming into the system each year. For this exercise, I typically use 75%. OR – alternatively stated – an attrition rate of 25%.
You use the attrition rate to calculate how many new members you will need to recruit each year to maintain the desired membership level.
EXAMPLE: Say I need 250 members from the first example. Assuming a 75% renewal rate, or a 25% attrition rate, I will need to recruit 250 * 25% = 63 new members each year just to maintain my membership (assuming NO growth).
You should keep track of how much it costs you to recruit members. Calculate all of the costs associated with a particular effort and divide the number of members recruited into it. My rule of thumb has recently been $80 per new member, which is pretty normal using direct mail.
EXAMPLE: To recruit my 50 new members, I will need to invest 63 * $80 = $5,040 each year in membership recruitment.
So – to work myself into a position where I have $50,000 in new operating revenue from membership, I will need to invest about $5,000 each year in membership recruitment, make sure I am renewing at least 75% of my membership each year, and achieve an average gift of $200.
Photo by Jamie Hamel-Smith courtesy of Stocksnap.io.
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Will I see you there?
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Here’s what I’m thinking about for May. What are YOU thinking about?
Second Spring Appeal Letters: I want my donors to give to the organization twice each year, once to renew their membership, and once in response to an “appeal letter.” Because most donors renew their membership in the fall months, and because I don’t want them to receive the two requests right on top of one another, the Spring Appeal is important. The first letter should have gone out in April, but there’s still time to get a second, “reminder” letter out as long as it is mailed before Memorial Day.
“Assume that you are not there a year from now – not anywhere around, in fact. Write your replacement a letter explaining where you are after four months this year. Talk about what your priorities were and how they may have changed over time. Be analytical and reflective, but most of all, be candid.”
If you followed my advice last year, you will have a file somewhere in your computer containing your reflections on the first four months of last year. Use it as a baseline to make the same evaluation this year. If you did not, do it now for next year!
Donor Events: In May, I’m already thinking about my donor events in the Fall. WHY? – because it takes that long to do it well.
Securing Prospecting Mail Lists: It’s not too early to think about fall mailings to recruit new members. Getting the lists together is a big part of that. Certainly recreate my “house list” of lapsed and former members and donors, program and field trip participants, and volunteers. But also begin trading or buying other lists. I don’t know of any land trust organization with more than 1,500-2,000 members that does not depend on a significant direct mail program and budget. Those that have curbed it to save money (or in consideration of using less paper; or in favor of email, social media, or crowd funding) have lost.