One of my least favorite questions is when an association membership professional asks something to the effect of: “My membership retention rate is 75%. How does that compare to your association?”
As I’ve written before, this question frustrates me because comparing retention rates, without context, provides absolutely no information as to whether 75% is good or bad. It is somewhat analogous to the question “My most recent mailing had a 3% response rate. Is that good or bad?”
Well, if you were giving away $500 gift certificates with no strings attached, then I’d say 3% is pretty bad. If you were selling $100,000 cars, I’d say 3% is pretty good. But again, without context, the 3% number is meaningless.
And so it goes with retention rates. Retention rates are important relative to your organization’s structure and needs. For example, one association I’m familiar with has nearly 100% retention. Why? Because every membership is a lifetime membership. That is, after the member joins and is accepted into membership, their membership is good for life.
Another association I’ve worked with has retention below 50%. Why? Because their primary benefit is for traveling college students, and once they leave college, they have little need for the membership.
Now, is the first association doing better than the second? And does knowing the first association’s retention rate help the second association at all? The answer, of course, is “no” to both questions.
Like most metrics within our association, the metrics are only important in context to our desired business objectives. In the case of the second association, if the objective is to expose as many college students to travel as possible, then having a high churn rate (i.e., a low retention) is not necessarily bad.
So before you ask “Is my retention rate good?” be sure you understand your business objectives. And be sure I’m not standing in the room with you.