Thursday, October 28, 2010

Case Study: Membership Retention

Many associations are struggling with their membership renewals and Arrowhead Management has successfully increased membership renewals with our clients by analyzing our client’s database.

We’d like to share a sample case study.

The Association of Good People (AGP) is examining ways to increase its membership retention rate. Currently, AGP’s retention rate is at 76% and they wanted to see the retention rate at 80%.

Our first question wasn’t why should people renew, but rather, why do people allow their membership to lapse?

We looked at the behavior of members to see which subsets renewed memberships. Not surprisingly, we found that the more involved somebody was, the less likely that person was to lapse.

AGP’s retention rates:

Involvement Level

Members


Renewals

Retention Rate

Board Members

25


24

96%

Committee Members

91


85

93%

Donors

75


68

91%

Attended 3 + events in previous 12 months

48


42

88%

Attended 1 or 2 events in previous 12 months

132


109

83%

Opened newsletter

96


72

75%

Total Involved Members

467


400

86%






Uninvolved Members

183


94

51%






Total Number of Members

650


494

76%

Now that we know why members lapse – they are not involved – we could implement strategies to reduce membership lapsing.

The Board split up the list of “Uninvolved Members” and called everyone to invite them to the next event. The goal was for 50% (91) of the 183 uninvolved members to attend the next event. If this happened, it would increase AGP’s overall membership renewals.

Watch what happened when this was successfully executed (the blue marks the changes to note):

Involvement Level

Members


Renewals

Retention Rate

Board Members

25


24

96%

Committee Members

91


85

93%

Donors

75


68

91%

Attended 3 + events in previous 12 months

48


42

88%

Attended 1 or 2 events in previous 12 months

223


185

83%

Opened newsletter

96


72

75%

Total Involved Members

558


476

85%






Uninvolved Members

92


47

51%






Total Number of Members

650


523

80%

You’ll notice that a total of 523 members renewed, for a net increase of 29 renewals by current members and the overall renewal rate is AGP’s target rate of 80%.

By increasing the engagement and involvement of members through event participation, AGP not only improved its retention rates, but also tangibly impacted its bottom line; its annual membership was $1,000, so these changes translated into an increase in gross revenue by $29,000!

Saturday, January 30, 2010

Should You Buy A Donor List?

As the new year of fundraising gets underway and you’ve evaluated your 2009 year-end performance, you may be considering purchasing a donor list to bolster your 2010 giving. But, should you? How do you evaluate whether this is a good idea?

Take Arrowhead Management’s quick quiz to determine whether your giving program – and organization’s bottom line - would benefit from purchasing a list:
  1. Have you experienced high donor retention, but negligible donor growth rate over the last two years?

  2. Do you understand why your donors give to you?

    • By this we mean, statistical analysis to determine the top drivers that motivate your donors to give, not the musings of an occasionally engaged Board member. For instance, if you’re Planned Parenthood, your donors are liberal and well-educated women.

  3. Do you have the time and capacity necessary – as well as a strategy – to cultivate this list over the next 12 months?
At the minimum, you must answer yes to questions 2 and 3 before buying a list will increase your revenue. Also, if you have short-term cash flow challenges and think buying a list will solve these, we advise against it.

Prospecting requires a significant investment of both capital and human capital and you likely won’t reap the financial benefits for at least one year. Just sending out your “best” appeal from 2009 to this list won’t significantly improve your bottom line.


If you’re thinking about buying a list, we recommend doing so sooner rather than later, so you have an entire giving cycle to introduce and cultivate prospects before your next year-end ask.