Lifetime Value: The Multiplier Metric That Goes Beyond Today's Dues

Membership Associations Now March/April 2015 By: Joe Rominiecki

Every new member is worth potentially much more than just the initial dues he or she pays to join. Lifetime value measures a member's long-term worth to the association, in both monetary and engagement contributions.

In the constant quest for membership growth, it's easy to get tunnel vision, focusing narrowly on the dues dollars that each new or returning member brings to your association.

But that view fails to account for the potential value a member brings over the long term, in dues renewal year after year, in nondues revenue, and through nonmonetary engagement. That's why Lifetime Value (LTV) is such a useful membership metric, says Kerry Stackpole, FASAE, CAE, managing director at Neoterica Partners—if you can keep it in mind.

A lot of membership pros will think, "All I am trying to do is get this guy to write a check for

$1,200 to join, that's all I want him to do. I don't care that he is going to be a member for 20 years. That's nice, but none of that matters unless I get him to write the first check," Stackpole says. "And so, folks, especially marketing and membership sales folks, sometimes get frustrated with this idea [LTV], because it doesn't seem to have any relevance to the immediate goal."

The traditional LTV calculation looks like this:

(dues + nondues revenue) x average tenure = LTV

But Stackpole says associations have greater ability today than ever before to track and assign a dollar value to nonmonetary engagement like committee service, knowledge contribution, grassroots advocacy, or anything else the association deems important. Adding those elements to the equation can reveal the long-term worth of an association's most engaged members.

"I suspect the lifetime value of a member is a lot higher than most people think," Stackpole says. "We think about the dues, and we say, 'How long has this guy or gal been a member?' Five hundred dollars a year for 20 years, $10,000, fantastic. That's great to have a long-time member like that, but it never takes into consideration all of the other variables."

Building those variables into LTV, with its long-term multiplier effect, gives the association a clearer picture of how it can solidify its future most efficiently.

"When you look at lifetime value," Stackpole says, "you 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."

[This article was originally published in the Associations Now print edition, titled "The Value of a Lifetime."]

Joe Rominiecki

Joe Rominiecki is a contributing editor to Associations Now.