16 Mar 2016 Is a Tiered Membership Model Right for You?
Membership trends continue to be a hot topic for associations and nonprofits. Recent reports from Advanced Solutions International (ASI), a global provider of nonprofit software, and Marketing General, Inc., a leader in membership marketing, suggest that, while a majority of associations are reporting a small increase in membership, retention levels are stagnating. Furthermore, associations continue to find challenge in engaging and recruiting millennials, a group crucial to the success of any membership-based organization. In an effort to demonstrate value added to association members and other constituents, many leaders are rethinking traditional business practices and adopting a tiered membership model. Is this approach right for your association, too?
A tiered membership model borrows an older marketing idea known as “product line extension,” which is, simply put, the idea that diversifying product offerings is a low-cost, low-risk way of engaging consumers and improving business. Tiered memberships allow members to choose, from among a portfolio of options, what benefits appeal to them and, consequently, what they’re willing to pay for such benefits in dues. Some associations are even offering a “freemium” model, which allows very basic membership benefits to members at zero cost in the hopes of both inspiring loyalty and engaging with members who will eventually pay more for additional perks.
Advocates of tiered membership models believe this approach is paying off. For one, developing various membership levels gives associations the opportunity to truly reflect on what it is they offer their members and what sets them apart from similar associations. It also encourages associations to engage directly with current and potential members; if you aren’t sure what benefits might appeal to your members, or what they’d be willing to pay for these benefits, you can simply ask them. Tiered memberships also work to introduce your association to members who may be unsure about its value or who are unwilling to risk joining at full cost. Millennials, in particular, are new to the workforce, tend to be skeptical of “joining,” and likely have less disposable income. Finally, a tiered membership model gives members the opportunity to choose the benefits that are most valuable to them which, in turn, leads to contentment, loyalty, and increased engagement.
What are the downsides? Tiered memberships can be more complicated from an administration standpoint. With more membership options come more data tracking, data entry, and even software upgrades. Other opponents of a tiered membership model believe that it might encourage full members to downgrade, thereby diminishing overall revenue from dues.
How do membership trends impact your association? Are you considering a tiered membership model? If so, contact us about how we can help your association address and overcome administrative challenges.