Here at Zoo Advisors, we spend a lot of time thinking, writing, and learning about data on an industry-wide scale. With well over 200 AZA institutions reporting data, and dozens of other external sources, there’s a lot to sink your teeth into.
While that’s certainly useful and interesting stuff, this month we’re going to be taking a look at how you can use the data you’ve already been collecting to help maximize an important part of your fundraising program: membership renewals.
Before we dive in, a word of advice: this piece will get pretty far down into the weeds. While we’ll be talking specifically about membership here, the strategy is certainly applicable to many aspects of your operation. That said, if you’re a director or other senior staff, please feel free to share this with your membership managers, for whom this will be more directly relevant. We’ll be covering membership programs from many more data-specific view angles in this newsletter as time goes on.
Nearly all AZA organizations have a membership program, and while some have more member-support than others, we can safely assume that membership represents a significant source of revenue. Your organization spends good money to acquire and serve these members—are you maximizing your efforts to retain them?
I want to clarify that “maximizing” your renewals is not code for throwing more money at them. Sure, you could probably grab a few extra renewals by sending a dozen notices (ahem, New York Times), but that doesn’t make it good business. “Maximizing” means taking a close look at the methods, costs, and successes of each renewal effort, and to ensure that your money is being wisely spent.
In this case, let’s define a “renewal effort” as an individual notice. Most programs send multiple notices (typically between three and five), with the first arriving at some point prior to expiration and the last at some point after. The program we’re examining sends 5 notices at roughly the following intervals:
R1: 90 days prior to expire
R2: 60 days prior to expire
R3: 30 days prior to expire
R4: immediately after expire
R5: 30 days after expire
Here’s how many of each they mailed in 2014, and how much it cost them:
This is nice info to know, but ultimately not very useful in terms of actionable data. Thankfully, this zoo is ahead of the curve, and also has in place a sophisticated system of mail coding. That’s where the really good stuff happens. Every single piece of renewal mail that is sent has a specific code printed on the reply form. They look something like this:
The first two positions (R1) indicate the notice, the second two (02) indicate the month the piece was mailed (February), and the next two (14) indicate the year. “What about those trailing zeros,” I can hear you asking. Those are currently in reserve for future package testing, which we’ll get back to a bit later. When the membership staff receives the reply form in the mail, this code is entered into their database. Or if the member chooses to renew online, they are prompted to enter this code for a small discount or premium, and it is then transcribed into the database.
Suddenly, not only do we have outbound data (how many we sent, how much it cost us), but we have inbound data, too. How many of each mailer, from each month, were returned? What was the average membership amount?
Hey, that’s pretty neat. But net revenue really took a dive on that fifth renewal notice. Let’s zoom in on the monthly picture for R5.
Here’s where it gets interesting. During the first five months of the year, the fifth notice was seeing extremely low response rate, even in the spring. So this zoo made a decision to add a new discount offer to the final renewal. And what a result! They nearly doubled their response rate (from about 2.5% to about 4.25%) for the remainder of the year. With such measly response rates, R5 could initially have been a candidate for elimination. Without the mail coding we reference above, they were flying blind. Instead, they more than doubled their net revenue on the last renewal notice for the second half of the year, and kept those members from lapsing. Because this zoo was dedicated to good coding, they were both aware of the problem and empowered to fix it.
The above is just once example of literally dozens of ways a renewal program can benefit from individual coding of their renewal efforts. For another quick example, let’s circle back to those mysterious double-zeroes we talked about earlier. Because of this zoo’s commitment to data, they are aware that they have a problem renewing members who join at the front gate. This isn’t uncommon—a lot of those are typically impulse joins, and they have lower renewal rates industry-wide. In this case, they’re renewing at an 11% lower rate on an annual basis then all other member join categories, and they want to try and close that gap.
Their strategy is to offer one half of that group (the test panel) a slightly increased discount than the other half (the control group). The test group will have renewal codes that look like R1-08-15-01, while the control group will get R1-08-15-02. When results start piling up, they will know down to the last penny, what impact the discount offer had on their ROI, and ultimately if it was worth it.
Membership is in large part a numbers game, and the best results will go to those programs who have a very close eye on the details. None of what we’ve talked about is out-of-reach, even for the smallest zoos! Shoot Zoo Advisors an email if you’d like to talk shop, or to learn more about how we can help you get your membership program on the right track.