International Museum Membership Conference: Improving Your Museum s Retention and Driving Revenue

Transcription

1 International Museum Membership Conference: Improving Your Museum s Retention and Driving Revenue Presented November 7, 2016 Avalon Consulting Group, Inc. All rights reserved, 2016 Avalonconsulting.net Cover Page 1

2 Here with you today John Perell, Director of Direct Response & Shared Services Friends of the Smithsonian Elizabeth J. Wilson, Assistant Director of Advancement National Air & Space Museum David Saunders, Director of Membership National Museum of the American Indian Allison Porter, President Avalon Consulting Group (also representing the National Museum of African American History and Culture) 2

3 In today s session Learn how to boost retention from the get go by attracting valuable, committed, long-term members. Identify tried-and-true cultivation strategies to engage and involve your members/donors and encourage them to systematically upgrade their giving. Maximize your renewal and reinstatement programs to most effectively drive revenue and retention 3

4 What we re up against 0.00% -1.00% -2.00% -3.00% -4.00% -5.00% -6.00% -7.00% Gross Revenue -4.10% Donor Growth -6.10% American fundraising industry has struggled to recover from the recession of *Source: Q donorcentrics Index of Direct Marketing Fundraising. 4

5 What we re up against Donor populations shrinking due to declines in new donor acquisition Revenue per donor has been increasing year over year, helping offset declines in donor file size While arts & culture organizations have not experienced as drastic of a drop in revenue and file size, they are not immune to the impact of these declines in other nonprofits. 5 *Source: Q donorcentrics Index of Direct Marketing Fundraising.

6 What we know: Retention begins at acquisition. $ $ $40-99 $25-39 <$25 $0 $100 $200 $300 $400 $500 Year 1 Year 2 Year 3 Year 4 Year 5 A donor s first gift amount is a key indicator of their potential retention and upgrading. 6

7 What we know: Must look at both upfront and longer term metrics when evaluating acquisition performance. 7

8 What we know: Donors acquired through different channels have different retention rates. 30% 25% 20% 15% 10% 5% 22.5% 18.3% 15.3% 11.5% 6.1% Year 1 Year 2 Year 3 Year 4 Year 5 DM Web Onsite 8

9 What we know: A reinstated member will have higher value and better retention than a brand new member. 9

10 What we know: Members giving to more than one channel have the highest retention and income/member. $100 $80 $60 $40 $20 $0 DM, TM, Web and DM and DM and Web Income/Member and Web DM and TM Retention DM Only 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 10

11 What we know: Touchpoints during the year all impact retention. To consider: Do you have the right mix of asks for additional support and cultivation outreach? Are you sending enough renewals? Lapsed reactivation efforts? Are you reaching out to members through multiple channels? And most importantly, are you looking at key metrics to understand the impact of your strategy? 11

12 Case Studies 12

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14 Situational Analysis: Friends of Smithsonian is a mature and robust membership program with a 51 year history. Currently, there are nearly 93,000 active Friends. After years of file and revenue growth, revenue and file size had been on a slow decline from 2007 until To meet higher revenue demands in 2015 and beyond, the Friends program needed to return to a revenue and file growth scenario. 14

15 The Friends program has very strong and steady retention metrics, but that doesn t mean there isn t a problem. Industry Ranges MY: 50-70% FY: 20-40% Overall: 45-65% 100% 90% 84.1% 80% 70.6% 70% 60% 68.7% 50% 53.7% 40% 30% 20% 10% 0% FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Overall Multi-Year 15 Overall w/reinstates First-Year

16 Friends of Smithsonian experienced a steady slow decline in revenue through FY14, when the trend started to change. $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Gross Revenue (in millions) Net Revenue (in millions) 16

17 Program Constraints Member File Decline Program lost 16,400 members from FY09 FY11, a 17% decline Increasing expense in providing Member benefits How to ensure benefits are having a positive impact? Are benefits even necessary for a national audience? With robust contact strategy already in place, need to devise new ways to improve retention 17

18 Challenge: Member File Decline 18

19 Addressing file growth Both direct mail joins and web joins have very strong member values at year 5, though the web value is 56% higher than direct mail. Expanded investment in both areas was key. 19

20 Addressing file growth: Focusing expense on maximum return Package Analysis Previous package was costly and resulted in high upfront net loss New Member Card package rolled out with a higher response rate, lower cost, and resulting 47% lower cost to acquire a member. Addressing file growth: Lists 20

21 Addressing file growth: Focusing expense on maximum return List Return on Investment Analysis showed: Co-op lists were returning their investment in Year 1 and were a key source of higher dollar donors. These lists were expanded Some lists cut from mail plans due to weaker upfront performance had exceptional long-term value. Addressing file growth: Lists These lists were added back into the plan Online Outreach was expanded to include search ads, web page overlays, and several multi- campaigns. The result? 2016 has more new members acquired than any year since 2009 and program revenue is up over

22 Challenge: Increasing Expense of Member Benefits 22

23 Member Benefits Are they necessary? In 2014, Friends of Smithsonian launched a national donor program that was based on philanthropic support without any benefits offered. Addressing file growth: Lists 23

24 Donor Program While still in its infancy, program has: 19,500 donors (vs 4,300 in FY13) 115% revenue growth from FY13 FY15 Cheaper to maintain -- no benefits Year 2 revenue per MEMBER = $152 Benefits costs = $41 Net to Smithsonian = $111 Year 2 revenue per DONOR = $122 $11 more than value of a member net of benefits 24

25 What about the impact of benefits on MEMBERS? Smithsonian magazine is one benefit of membership, but quite a few members decline to receive the benefit. Friends looked at retention rates and member value for these two groups: Retention rates, annual net value and cumulative net value are all higher for members declining to receive the magazine. Friends will be conducting additional analysis on this benefit and several others offered. 25

26 Challenge: Robust program possible to add contacts that improve retention? 26

27 Cultivation Call In November 2013, Friends tested a cultivation call to members prior to calendar year end. File was split into 3 equal groups: 1. Group to receive a Robo call 2. Group to receive a live call 3. Group to receive no cultivation call The result? Analysis showed the group receiving the live call had the highest response to year end giving (and gave higher gifts) whereas the Robo call suppressed year end giving. 27

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29 Situational Analysis: Membership program established in 1996 to help raise funds to construct the facility near Dulles. One museum, two locations: Washington DC location opened in 1976, with Dulles, Virginia complex opening in Current membership of 9,000 households nationwide. 89% of members are men Program was looking for faster, more strategic growth in revenue and file count. As an added challenge, the program experienced a very successful Kickstarter crowdfunding campaign in Summer 2015 that required special handling to ensure the strongest possible retention. 29

30 NASM program has benefited from slow but steady file growth since

31 NASM membership program has strong and steady retention. 100% 80% 60% 40% 75.6% 67.4% 38.5% 20% 0% FY10 FY11 FY12 FY13 FY14 FY15 Overall Multi-Year First-Year 31

32 Challenge: How to continue to improve upon strong retention? 32

33 Avalon revised the direct mail renewal series with art and messaging tweaks OLD SERIES NEW SERIES 33

34 NASM direct mail renewal changes MESSAGING: Focused on mission while still highlighting benefits. Appealed to members passion for aviation and patriotism over America s advances in this area. PACKAGE: Moved the reply form to the bottom of all letters, so not starting with the ask. Inserted Benefits of Membership brochure to highlight benefits in 4-color. Eliminated the 4-color design of the letter and carrier to save expense and make packages look more personal. SEGMENTATION: Changed to not suppressing any renewal segments from appeals. Renewal segments in appeals given renewal asks. 34

35 Avalon designed and implemented a new erenewal series with notices er0 through er4 RESULTS: To date, the series, combined with renewal asks to certain segments in appeals, has generated 165 more renewal gifts. Two additional direct mail efforts (and additional efforts) were added to the series in FY17. 35

36 Challenge: Managing through a Successful Crowdfunding Campaign 36

37 Reboot the Suit Campaign Original goal to reach $500,000 was achieved in Day 5 Stretch goal of $700,000 was added in Day 8 9,477 responses - almost all new to NASM 37

38 But how to retain these donors after the campaign is over? About 650 donors who gave $100+ to the campaign were given complementary NASM memberships. Previous industry studies have shown this audience is less likely to give to NASM on an on-going basis, so key is to manage reengagement expense carefully. Donors under $99: Added to welcome series and asked to join NASM Included in direct mail acquisition Donors given complementary memberships: Included in direct mail and appeals Included in 2 upcoming direct mail renewals and all renewals To date, 80 Kickstarter donors have given a second gift to NASM. 38

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40 Situational Analysis: Membership program established in 1991 as part of the Smithsonian s capital campaign to open the Cultural Resources Center and the Museum on the National Mall. The museum opened in Sept Current membership of 40,000 households nationwide. 70% of members live outside the DC and NYC metropolitan areas. Members and revenue increased dramatically through the opening of the museum, and then experienced a sharp decline. NMAI has been hard at work to stabilize the program since this time. 40

41 Millions A long term view shows the build up in revenue prior to the museum s opening with a decline in revenue following until $5.0 Museum Opening $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $

42 After growing in 2013, the membership file has declined slightly in the past two years. 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,

43 Retention metrics are strong, and even increased slightly in 2015, so declining file size is due to under investment in acquisition. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY % 67.7% 57.0% 24.0% Overall Overall w/reinstates Multi-Year First-Year 43

44 Challenge: Reinvigorate acquisition response 44

45 Up-front premiums improved acquisition response in FY15 Given NMAI s success with acquisition premiums in the past, Avalon recommended testing a label and notepad insert in an effort to boost response. The notepad had a 29% increase in response with a better net loss/donor of ($31.22) vs. ($33.19) for the control. The notepad insert was rolled out in December

46 Challenge: Increase reinstatement of lapsed members 46

47 Anniversary ereinstatement Campaign Goal: To reinstate as many members as possible prior to calendar year end fundraising. Result: Campaign reinstated 88 members, far exceeding its original goal of 25 and extended goal of 50 new members. 47

48 Challenge: Increase renewal rates of current members 48

49 Expanded Renewal Series The 6-effort series was netting revenue, so an R7 was added to the series to increase member retention through this inexpensive channel. Response rate and average gift are healthy at 2.25% and $45.25, respectively. Cost-efficient R7 format allows for positive net revenue of $7,

50 Challenge: Increase value and retention of current members through sustainer conversion 50

51 NMAI maintains a successful multi-channel Sustainer Program, reflecting year-over-year growth $160,000 12,000 $140,000 $120,000 $100,000 $80,000 10,000 8,000 6,000 $60,000 $40,000 $20,000 $0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 GROSS GIFTS 4,000 2,

52 Industry-wide, sustainers have more than twice the value of regular members 100% 90% 80% 97.0% 99.3% 70% 60% 50% Year 1 Year 2 Year 3 Year 4 Year % 59.2% DM TM The average non-sustainer member retention for DM joins at 5 years is 12%, in comparison to 59.2% for sustainers. 52

53 A multi-channel approach is key in maximizing Sustainer Acquisition Sustainer efforts include two Invitation efforts, one of which includes a goal of 25 new Wellspring Society Members. The second effort is coordinated with the direct 53 mail effort.

54 Challenge: Increase value and retention of current members through upgrading 54

55 Major Donor upgrade efforts also benefit from a multichannel approach, and aids retention in securing more committed, higher level donors $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 FY10 FY11 FY12 FY13 FY14 FY15 DM TM Overall NMAI uses both telemarketing and direct mail to upgrade members to $1,000+ giving levels. 55

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57 Situational Analysis: Program established in Sept 2009 to build a membership base to support the building of the 19 th Smithsonian Museum, opened on the National Mall on September 24, NMAAHC has grown dramatically since that time, reaching a high point of over 80,000 active members to date. Maintaining a strong and stable base of membership support beyond 2016 is a priority for the new museum, and using lessons learned from the opening of NMAI, a strategy was put in place to limit post-opening drop-off in revenue and file size and stabilize the program faster. 57

58 Overall income has grown steadily each year since 2009; 2015 saw an increase in new join income over the previous year. $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $

59 Members grew notably in 2015 in part due to more new joins than the previous years FY15 reflects gifts from a large acquisition campaign mailed late in FY

60 Overall retention increased in FY15 due to a larger percentage of multi-year joins on the file. 100% This retention graph looks at active members on file at the start of the year who give a gift at some time during the year. It equates to 0-12 month retention. 80% 60% 40% 68.4% 62.9% 52.0% 34.2% 20% 0% FY10 FY11 FY12 FY13 FY14 FY15 Overall Overall w/reinstates Multi-Year First-Year 60

61 Challenge: Manage anticipated post-opening drop in file size and revenue through strategic program investment 61

62 MEMBERS Long-range forecasting was used to predict future trends and the level of investment needed to produce stability. 50,000 45,000 Museum opening end of FY16 $4,000,000 $3,500,000 40,000 35,000 30,000 25,000 20,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 REVENUE 15,000 10,000 $1,000,000 5,000 $500,000 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 continuing reactivating 2nd year new Gross Revenue Net Revenue $0 62

63 Challenge: Maintain strong acquisition response after museum opening 63

64 Acquisition Testing Control package is institutional, balancing benefits with mission-based messaging focused on Charter membership status (used through opening year) Upcoming tests include: Collections vs. Mission testing Use of premiums (commemorative photo, museum map) Compiled lists, such as Abacus, Donorbase, ibehavior, and Wiland have been tested and show strong upfront and long-term returns 64

65 Challenge: Ensure existing members stay engaged with the museum after opening 65

66 6-Effort direct mail renewal and reinstatement series Institutional message, stressing Charter membership status and highlighting the excitement surrounding the museum s opening year. Lapsed audience included in the full series. Supported by 6 renewal efforts. 66

67 Membership Month eacquisition and eappeal Membership Month an involvement and upgrade tool for current members, reminding them of their essential support opportunity to acquire new members The campaign had a goal of 100 new members by June 30 surpassed goal after the third new goal of 225 was set for the remaining s The campaign acquired a total of 382 new members, additional 84 new members from the website lightbox. The eappeal generated over $40,000 in additional revenue from current members, and was the most successful effort of the year. 67

68 NMAAHC is building upon lessons learned by NMAI by starting their Sustainer Program right away Branding sustainer membership as North Star Society Establishing multi-channel approach, with DM and EM efforts, and a planned rollout of a TM invitation, reinstatement, and upgrade effort 68

69 Our American Stories Quarterly ecultivation : eseries educates the Membership on the Museum s mission and need for continued support. Includes soft ask in the PS, raising almost $30,000 in FY16. 69

70 In conclusion 70

71 How do you do this for your program? Quarterly and annual oversight of key metrics through dashboards and full file analysis. Identification of changing retention trends. Continuous goal evaluation, resetting, and forecasting. Education and reporting to leadership. REPEAT. 71

72 Questions? 72

73 Improving Your Museum s Retention and Driving Revenue John Perell Director of Direct Response & Shared Services Friends of the Smithsonian perellj@si.edu David Saunders Director of Membership National Museum of the American Indian saundersdf@si.edu Elizabeth J. Wilson Assistant Director of Office of Advancement National Air and Space Museum wilsonej@si.edu Allison Porter President Avalon Consulting Group allisonp@avalonconsulting.net x