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Weekly Updates"FOR YEARS ASSOCIATIONS HAVE BANKED ON AFFINITY programs and recycled ideas to provide value for dues," says Dawn Moliterno, president and CEO of Introspect Associates, Ltd., Canfield, Ohio. "Offering members a one-size-fits-all benefits package can and will always be a challenge. So associations are left with this quandary: How can you realistically raise dues without adding value and not watch your retention numbers dwindle?"
Faced with this question, many associations are rethinking their membership structures. One of the most common structures used by both trade and professional associations is the fair-share structure where membership categories, benefits, and dues are determined by a specific characteristic of the individual or company. For example, a trade association might determine its company member dues based on annual revenue, and an individual membership organization might set dues based on professional specialty categories.
This model has proven problematic for some associations, however, because while all members receive the same benefits, some pay higher dues based on the established criteria.
As a result of member discontent with the aforementioned model, more organizations are exploring a tiered membership structure in which membership and subsequently dues are based on membership levels or benefits packages rather than on categories determined by specific demographic criteria. "Embracing one of the fastest growing trends nationwide, more associations are turning to a tiered membership structure to replace outdated dues structures that do not communicate value to members," says Moliterno, who has worked with several organizations in their transition from a fair-share model to a tiered membership structure. She outlines these primary reasons for the switch:
To give members control and choices. A tiered structure accommodates companies regardless of size (or individuals regardless of professional specialty) and ensures appropriate investment for the resulting delivery of services and products. Participants customize their memberships by selecting their levels of involvement and investment.
To realign business purposes to match customer needs. A tiered membership structure allows associations to easily adapt to rapid change and significant competitive challenges because they can adjust their benefits to address new trends while adding value to their memberships at specific levels. They can also demonstrate a return on investment for members, since the tiers are segmented to match specific products and services to member needs and desires.
To create one clear and concise message. Often, members say that they don't know what they receive for their dues. When shown the tiered concept, however, members appreciate the compartmentalized areas of information that they can easily digest.
HDI--an association based in Colorado Springs, Colorado, that provides professional development for technical support staff--offers five levels of membership, ranging from bronze to platinum-plus and priced from $75 to $1,295 per year. The Detroit Regional Chamber has a similar model. It offers four primary tiers, ranging from business builder to gold and priced from $495 to $5,700 per year. Both organizations established their levels with the goal of generating more revenue and increasing retention. In the articles that follow, you'll learn how each organization implemented its tiered structure.
Going for the Platinum
HDI HAS ALWAYS HAD a membership structure based on tiers or different levels of membership. During the past 15 years, we've expanded from two to five levels--bronze, silver, gold, platinum, and platinum-plus, ranging in price from $75 to $1,295. In 1989, we started with two basic levels of membership, and then we built up and down from there to address the different needs of the organization. We have always felt that the tiered membership structure enabled us to achieve the highest revenue per member as well as higher retention rates. Our approach is to focus on upgrading members to higher levels of membership at renewal time rather than simply renewing them at the same level every year.
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Currently, HDI has 6,000 individual members in the United States--7,500 members worldwide. Our members are customer service and technical support professionals who work in help desk and support center operations. They value our certification programs, online training, and annual meetings.
HDI's membership is divided 50-50 between those who have memberships at the gold or lower levels and those who have memberships at the platinum and platinum-plus levels. Our goal is to upgrade people to the next level during the term of their memberships. We have an online calculator for that purpose so that members are readily aware that not only can they renew electronically, but also they can upgrade their memberships and receive additional benefits and services, such as more copies of industry publications, access to online training, and self-evaluation tools.
Overall, the tiered dues membership structure has been successful for us, and we've learned some important lessons as we've worked to reinforce the value of membership.
Member input. We believe in asking our members what they want and then giving it to them. We have a member advisory board, and we value its guidance. Before making any changes to programs or membership levels, we present our plans to this board. In addition, we have an annual summit with our local chapter leaders every summer to solicit their input.
When we first considered introducing the platinum-plus membership, we actually polled our members to find out what additional deliverables they wanted to receive. For example, we asked them how many additional staff people they wanted to receive benefits from the membership along with the primary member. They told us five or six people, primarily middle managers, so we built the membership that way. In the first year that platinum-plus was available, we recruited 1,000 members at this level. Today, 30 percent of our members are platinum-plus.
Retention. Our retention rate is better at the higher levels of membership because our members see the value in all the deliverables that they receive. Members were pleased when we introduced the platinum-plus membership because they wanted our highest level of service, and they were willing to pay for it.
Our overall retention rate is 60 percent, and we are working toward our goal of achieving a 65 percent retention rate. The retention rate for our platinum and platinum-plus members is more than 70 percent. We believe this is the case because these memberships are tied to an organization. While there is one member of record, multiple staff members at the organization's site are taking advantage of HDI membership benefits. Renewing silver and gold memberships is more difficult because people change jobs, and it's hard to maintain contact with them. We truly believe that this is the reason we lose members. It's not because members don't value our deliverables.
Administration. The tiered dues membership structure has helped us resolve specific administrative challenges, while creating others as our benefit offerings become more complex. For example, the bronze membership was introduced to help us manage our relationship with local chapters more effectively and it has improved that administrative problem. Basically, we collect the dues for HDI's nearly 60 local chapters in the United States and Canada and send them the money to fund their operations. Prior to introducing the bronze membership, we didn't have any records for our local chapters. Local chapter members would call the national headquarters requesting their discounts on meeting registration and other products, and we had no information about them. Having the bronze membership solved this problem.
On the other hand, we have experienced some administrative challenges with our higher-end memberships. Pulling data to ensure that members receive the benefits to which they're entitled still involves some manual work. Further, our biggest challenge with the platinum and platinum-plus memberships has been devising a way to attach or connect people to companies. For example, if the member record is not updated properly, people may continue receiving discounts after their organizations' membership has expired.
For the most part, we've achieved our goals using the tiered structure, and we do not anticipate modifying our current membership levels a great deal. Of course, any additional services and benefits will be added at the higher membership levels. Our continuing challenge will be to reinforce value to our members.
BY RON MUNS AND PEGGY LIBBEY
Ron Muns is founder and CEO and Peggy Libbey is chief financial officer for HDI, Colorado Springs, Colorado. E-mail: support@thinkhdi.com.
Benchmarking the Concept
TO HELP OUR CLIENTS TO better measure the pros and cons of implementing tiered dues programs, Introspect Associates, Ltd., conducted a study with 50 local and state chambers throughout the country. The study was designed to assist Introspect's clients in benchmarking the tiered membership concept. Because tiers are customized, benchmarking can be tedious and misleading if not completed on a one-to-one level.
Each chamber submitted a written survey, and then we personally interviewed the respondents to ensure that they had interpreted and answered the questions correctly. A sampling of the data shows that at least six of the participating chambers have experienced an increase in new membership revenue since transitioning to a tiered dues membership structure.
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