Market Penetration and New Member Retention

In marketing it is often said that acquiring new members is more expensive than retaining current ones. That doesn't mean effort shouldn't be made to acquire more members, but current research now shows that retention of new members is positively correlated with overall market penetration (see chart below).

Market Penetration by New Member Renewal Rate
Market Penetration	New Member Renewal Rate
	Less than 60% Renewals	60-79% Renewals	80% Renewals and Higher
Less than 60%	85%	68%	52%
60-79%	7%	17%	20%
80% and higher	8%	16%	28%

This seems like an obvious statement, right? The more members retained, the greater the overall market penetration. However, the chart below illustrates that this correlation is not present when compared to the change in overall renewal rates (new members and current members).

Market Penetration by Overall Change in Renewals in Past Year
Market Penetration	Overall Change in Renewals in Past Year
	Increased	Unchanged	Decreased
Less than 60%	70%	67%	73%
60-79%	17%	14%	15%
80% and higher	13%	19%	13%

Why not? If an association shows an increase in overall renewals, shouldn't the market penetration improve as well?  One theory is that new members not only revitalize an association, but are more inclined to share their positive experiences, and our research demonstrates that word-of-mouth recommendations are the number one method for becoming aware of an association.

As only 37% of participating associations report first year member renewals at 80% or higher, onboarding processes and member engagement programs become increasingly important. Evaluate the onboarding mechanisms employed by your association, and measure the awareness and usage of engagement programs by first year members. This group is more important to overall market penetration than realized. 

Data taken from Marketing General Incorporated’s 2013 Membership Marketing Benchmarking Report.