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To order reprints of any article in its original format, visit Scoopreprintsource.com IntelligenceRetention Rates in a Recession ASSOCIATIONS NOW, February 2009 By: Stephen C. Carey, CAE
The current recession will certainly have an effect on the retention rates of both trade associations and professional societies. The table to the right displays average retention rates in recent years, but with associations just starting to feel the full effects of this recession, we would expect these percentages to dip, depending on how long it lasts and when the needle turns north again.
In today’s environment, if you are running below 80 percent, you probably need to tune up your retention machine and develop additional incentives that address your specific value equation. If you’re running below 75 percent, your value equation is probably in need of a major overhaul. That said, however, it is best to benchmark several like associations in your industry and use the average as your guide, as rates do change by industry segment. It would also be important to measure your retention rates among your several member segments and address each specifically with their unique value equation. In calmer times, given a maturing association that has gone through its initial growth spurt, a combined membership growth rate (after drops and adds) of three percent or better on average is acceptable as a rule of thumb. With this recessionary environment, if you are breaking even or are above a negative net five percent growth rate for the next year or two, you’re probably doing the best you can do. Many associations will be losing 10 to 20 percent as a result of the trickle-down effects of the current recession. Contrary to some popular beliefs, sometimes members do not look to associations for help during hard times, but instead drop their memberships for budget reasons, with many returning as the economy turns around. This is especially true of associations that are secondary in their industry or profession. This means that associations must redouble their efforts to elevate the visibility of their value equation and better quantify their benefits and services and equate them to dues. Now is probably the time to start thinking about discounts for many products and services. We also recommend that you figure your "true retention rate," which is your drops minus those drops that have changed fields, passed away, have budget problems (use the recession as a specific element on your former member/nonmember surveys), or other issues you cannot control. This will give you the best gauge as to whether your value proposition is out of whack and you really have a problem or your boat is just at low tide like most everyone else. A series of quarterly in-depth interviews or informal focus groups combined with a more formal quantitative survey can illuminate many of the issues you need to address during these recessionary times. Use your reserve fund to help fund some of these remedies; after all, that is why you have a reserve fund—to help during hard times. If your association does need membership first aid, the first step is to stop the bleeding. This means spending as much, if not more, on your retention program as you do on the recruitment program. If you don’t, you’re just throwing new members into a net with a hole in it and wasting your recruitment dollars. We still find many associations that have not mastered this piece of strategy just yet. In a recessionary environment, these last two paragraphs take on even more importance. Stephen C. Carey, Ph.D., CAE, is lead strategist for Association Management + Marketing Resources. He is a member of the board of examiners for the Malcolm Baldrige National Quality Award, the highest level of national recognition for innovation and performance excellence that a U.S. corporation or association can receive. Email: scarey@ammr.com
More Articles From Associations Now, February 2009
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