United States Power Squadrons Norfolk VA Governing Board

United States Power Squadrons ® Norfolk, VA Governing Board 1

Recruiting & Retention Executive Summary • Dedicated to making boating safe and enjoyable • Teach classes in – Seamanship – Navigation – Related subjects • 450 Squadrons have the objectives to: – – – Community Service Continuing education Friendship camaraderie with fellow members • America’s largest non-profit boating organization • Membership has decrease 31. 5% in the past 14 years from January 1, 1992 through December 31, 2006 2

USPS Demographics • Boat owners and their families • Upper middle–class and above • Comprises 34% of the population • In 2005, top 15% of income earner (age 25 +) • had incomes exceeding $62, 500 Managers, supervisors, small business owners and other professional people 3

USPS Needs • • Increase members and retain members Appeal to a broader demographic population All boat owners and their families Non-boat owners who – Would like to own a boat – Would enjoy camaraderie of boaters • All socio-economic classes • Innovation is essential for continuing growth • and success Energized membership 4

USPS Trends • Aging population • Identity • Developing – Perception of benefits – Perception of individual development – Delivering on promises • Consequences 5

Growth Potential of US Market • Demand for recreational boating products • • • - 4. 8 % annually - $16. 7 Billion in 2009 - 45 + age group - Primary customer Boats fastest growing segment $10 Billion of $16. 7 Billion (60%) Powerboats dominant market performer 6

USPS Growth Goal • Match growth rate? • Exceed growth rate? • SET A GOAL 7

S W O T Analysis • Strengths • Weaknesses • Opportunities • Threats 8

S W O T Analysis • USPS Strengths – Community Service – Educational Service – Social Activities 9

S W O T Analysis • USPS Weaknesses – Steady decline in membership since 1991 End of Year Active Membership Since December 31, 1991 Year Membership 1991 62, 156 1992 61, 491 1993 % +/- Year Membership % +/- 1999 52, 148 0 -1. 00% 2000 52, 480 0 58, 884 -4. 00% 2001 50, 785 -3. 20% 1994 57, 971 -1. 50% 2002 50, 083 -1. 30% 1995 53, 686 -7. 40% 2003 47, 965 -4. 20% 1996 53, 112 -1. 00% 2004 46, 868 -2. 30% 1997 52, 336 -1. 50% 2005 44, 670 -4. 70% 1998 52, 184 0 2006 42, 574 -4. 70% 10

S W O T Analysis • USPS Weaknesses • Since 12/31/1991 – Decline of 19, 582 – 31. 5% decrease • Since 12/31/2000 – Decline of 9. 906 – 18. 9% decrease 11

S W O T Analysis • USPS Weaknesses – No comprehensive study to determine why members are leaving – Current and Potential Members bombarded daily with messages and offers – Decline in members = Decline in dues = Decline in services – Decline in members = loss of viability in public view =harder to obtain grants for projects 12

S W O T Analysis • USPS Opportunities – – – Recruiting & Retention is an ongoing relationship Integrated SYSTEM Customer bases • 5 Stages – Customer Lifecycle • Awareness • Recruitment • Engagement • Interdependence • Renewal 13

S W O T Analysis • USPS Threats – – – Less spare time to volunteer than ever before Work more hours Cocooning Will USPS react in a timely manner? Potential members/new boaters perceptions 14

Competition • Traditional Sources • Non-Traditional Sources 15

Competition • Traditional Sources – ABA (American Boating Association) • Free – NSBC (National Safe Boating Council, Inc. ) • Organizations – not individuals – U. S. Coast Guard Auxiliary • 27, 000 Members – Numerous others 16

Competition • Non-Traditional Sources – Fraternal Organizations – Civic Organizations – Church Organizations – Educational Organizations – Country Clubs – Social Organizations – Other groups that target members 17

Systems Thinking & Membership Recruitment • Don’t focus on isolated parts of the system • Don’t wonder why our deepest problems never • get solved Go to systems thinking – A conceptual framework – Makes patterns clearer – Help us see how to change them effectively 18

Systems Thinking • Don’t look at recruitment in isolation • It’s an ongoing relationship between each • member and – Squadron – District – National View the entire membership organization in order to succeed 19

Systems Thinking • Remember our customer lifecycle? – Awareness – Recruitment – Engagement – Interdependence – Renewal • To solve the problem of declining membership, an integrated look at the membership program is required 20

Systems Thinking • Awareness – One very important question! – Do prospective members know who USPS is? • Awareness is the measure of how successful our efforts • have been (think of USPS as a brand) to gain share of mind (market) with our target audience Target – Boat owners – Prospective boat owners – Those interested in learning about boat safety and educational opportunities • Until someone knows us they’re not likely to become a member (customer) 21

Systems Thinking Awareness • Do you know me? • Conduct a small test marketing effort to prospects – Determine what is an acceptable return? – How to measure • Think about a regional squadron test 22

Systems Thinking Awareness • • Pick 2 squadrons in each region of the U. S. Establish the test Run the test Evaluate the test North (1– 2 Squadrons) - West (1– 2 Squadrons) East (1– 2 Squadrons) South (1– 2 Squadrons) 23

Promotional Testing • • One of the best ways to test to help us define the most effective message we’re sending to our new and potential members is pricing and marketing media. USPS should test the impact of a new-member dues discount Determine a target group, i. e. new boat owners Split squadrons into four quadrants; north, south, east, west Let the south and west squadrons offer new memberships at full price and the north and east squadrons offer new memberships at a discounted price; say $25 off, ½ off, or whatever is determined – Chances are the discounted group will have as much as a 40% higher response rate than the group that offered the full price dues. – Test to see if the increased response rate more than pays for the discount – Track the new members in both groups over two full renewal cycles. – It is estimated the discounted group renewal rate will outnumber the full price group by as much as 33% 24

Systems Thinking Awareness • Pros of a small, regional squadron test – Inexpensive – Easy to control and monitor – Micro-managed • Cons of a small regional squadron test – Delays nationwide effort – Another potential 5% + loss in membership – 2, 200 -2, 500 members – Loss in dues and associated • Recommendation – GO ALL OUT! 25

Systems Thinking Recruitment • Recruitment is the second part of the membership life cycle. It is the process of getting a member to join USPS. Or perhaps better described, it is the process of getting a potential member to “try” USPS • Membership in USPS is typically what a marketer would call a “push” product rather than a “pull” product • Definitions: – A “pull” product can be compared to the famous statement made in the movie Field of Dreams; “if you build it, they will come. ” – However, membership tends to be something that needs to be sold, or “pushed” in order to get returns. A pro-active plan needs to be put in place in order to attract large numbers of new members to USPS. Make sure the pro-active plan includes a new member goal. 26

Systems Thinking Recruitment • Here’s what we have to determine: – Our “marketing” message – To determine what value(s) are most attractive to prospective members. – The membership offer – To determine what price points, benefit packages and special incentives will attract members. – The target market – To determine what market segments or lists of prospective members are most responsive to the message and offer. 27

Systems Thinking Engagement • An organization that has good awareness and a successful recruitment program will next want to focus on engaging new members. We can define member engagement in a simple term: initializing a second transaction or interaction with our new member • An interaction or transaction is a positive predictor of renewal! Here a few predictors of renewal: – If a member is part of an active local squadron, he or she will be more likely to renew. – If a member joined a special group or committee, he or she will be more likely to renew. – If a member attends an annual convention, he or she will be more likely to renew. Predictor: the more annual conventions or national/regional meeting attended, the greater the probability he or she will renew. • To simplify: an important predictor of membership retention is behavior. Squadron that actively seeks to engage members-at almost any level-is one that will be more likely to enjoy higher membership retention. 28

Systems Thinking Interdependence • Interdependence is a relationship where new and existing members have his or her identity tied to USPS • Think of USPS and your alignment with it • Why do you feel that alignment? • Chances are you’re held by one of three “glues” of interdependence • What are these “glues”? 29

Systems Thinking Interdependence • What are three “glues”? – The glue of Common Vision. The glue of common vision is a very powerful force that ties us all to the USPS. Has USPS established a common vision that you and all the other members are striving to accomplish TOGETHER and that we can all believe in and help each other achieve? Members who are sold on the vision are interdependent with the USPS. To quote Jim De. Graffenreid, the chief operating officer of the United States Naval Institute: “We don’t want someone to pay $39 to our organization solely to get a magazine, but to pay $39 because they also believe that through their membership, USNI is contributing to a better national 30 defense for the United States of America”.

Systems Thinking Interdependence • What are three “glues”? – The glue of Reward is something we all want. It is getting something back from our dollar. As an example: the reward of membership in AAA (American Automobile Association) is that if my car breaks down on a rainy night, someone will come and give me a tow or a jump. The towing benefit is something that we would all like to have • The most common reward that our members look for should be as a valuable information resource and effective advocacy. We need to measure how our members think we’re doing in these areas in order to establish their interdependence with USPS. 31

Systems Thinking Interdependence • What are three “glues”? – The glue of Recognition means that you know me, and I want to be known as one of you. It can be as personal as the great feeling of getting together with old friends at the national convention. But the fact is that you are known, and this deepens your commitment and interdependence to the USPS. 32

Renewal • Our last system is renewal. Renewal is the quantitative evaluation of how effective we in the USPS have been with the earlier components of our membership system. An aware, engaged and interdependent member is much more likely to renew that one who is not. • We con not lose track of one important ingredient. Any renewal program needs to take into account that people are busy and overwhelmed with communications. • Studies have shown that the number one reason that people leave organizations is not that they are unhappy with the service or angry about something. No, the key reason most people do no renew their membership is because they forgot. • In some cases, the member moved and did not provide the association with a forwarding address. In other cases, the “brand” did not stand out enough in the renewal notice and it was overlooked. Whatever the reason, more members leave organizations by omission than commission. • USPS would benefit by every squadron moving to Anniversary Billing and automatic credit card payment. In order to break through the omission challenge, the USPS renewal program needs to break through the clutter of competing communications. This means our renewals need to have adequate frequency and take advantage of multiple mediums (mail, phone, e-mail) in order to 33 be effective.

Summary Membership recruitment is a lever to grow United States Power Squadron. Without new members, our organization cannot grow. Some members will always leave USPS. Our challenge is to take the time to step back from the isolated problem of getting new members and to look at the entire membership system. 34

Benchmarking & Reporting Add the following to our Monthly Membership Report • Membership conversions by Month – – – First year members eligible to renew First year members who actually do renew Conversion renewal rates (renewing new members / eligible to renew membership • Year 2 and Subsequent Renewals (Y 2+) by Month – – – Y 2+ members eligible to renew Y 2+ members who actually do renew Y 2+ renewal rates (renewing members / members eligible to renew) • Total Renewals by Month – – – Total members eligible to renew Total members who actually do renew Total renewal rate (renewing members eligible to renew) 35

What Is The Annual Value Of A Member? 1. National Dues 2006 $1, 255, 000. 00 2. Average 12 Months Membership 2006 44, 000. 00 3. Ships’ Store Sales 2006 – Less: Cost of Goods Sold 96, 000. 00 (67, 000. 00) 4. Education Sales 2006 – Less: Cost of Goods Sold 941, 000. 00 (529, 000. 00) 5. Gross Margin Ships’ Store 28, 000. 00 6. Gross Margin Education 412, 000. 00 7. Average Dues / Member 28. 52 8. Average Ships’ Store Gross Margin / Member . 64 9. Average Education Gross Margin / Member 9. 36 36

What Is The Annual Value Of A Member? $38. 52 37

What Is The Average Tenure Of A Member? • This measures how long, on an average, a member stays with USPS – USPS over the past 2 years has lost members at an average rate of 4. 7% per year – Reciprocal of Renewal Rate: • 1 - Renewal Rate or 1 - 0. 953 =. 047 – Divide the Reciprocal of the Renewal Rate into 1 or: • 1 ÷. 047 = 21 years 38

What Is The Lifetime Value (LTV) Of A New Member? Total Annual Value: $38. 52 Average Tenure = 21 years LTV = $38. 52 × 21 = $809. 00 39

What Does This Mean? • We’re acquiring a Revenue Stream many times the value of 1 year dues • If we target a net growth rate of 5% per year or 2, 200 new members (44, 000 × 5%), our new member budget is 2, 200 × $38. 52 = $84, 700 • Remember, renewal dues in year 2 and beyond drop straight to net revenue. 40

Recruiting Is Everyone’s Responsibility 41

What Does This Mean? • Let’s reward every member of every squadron that performs a VSC • (Vessel Safety Check) 2006 VSC Program in retrospect – – 30, 458 VSC’s were performed 33 Districts 386 Squadrons 2, 207 USPS Members • HOW DOES IT WORK? – For every vessel checked, the member receives 1 raffle card – Squadron awards 10 extra cards for the member of their squadron that performs the most VSC’s – District awards 50 extra cards for the member that performs the most VSC’s – The Commander’s Award of 100 extra cards for the member that performs the most VSC’s – All cards are put into a drum at the national meeting – Winning Card is drawn 42

st 1 PRIZE IS: 43

WHAT’S THE FIRST PRIZE? • 1 st PRIZE IS: – 1 week Windjammer Cruise for 2 on the S. V. Legacy, a four-masted Barquentine out of Playa Herradura, Costa Rica – Includes Round Trip Air Fare from members closest airport to San Jose – Burke’s Berth Cabin with private head – All Transfers – All Departure Taxes 44

WHAT’S SECOND PRIZE? 45

WHAT’S THE SECOND PRIZE? • 2 nd PRIZE IS: – 4 day Windjammer Cruise for 2 on the Mistress out of Camden, ME – Includes Round Trip Air Fare from members closest airport to Portland – Round Trip Limo from Portland to Camden – Double bed cabin with private head 46

Everyone Who Participates Has A Great Chance Of Winning – Last year there were 30, 458 inspections × 1 card =30, 458 cards – Last year 386 Squadrons participated × 10 cards = 3, 860 cards – Last year 33 Districts participated × 50 cards = 1, 650 cards – 1 Commanders Award = Total Number of Chances =36, 068 2, 207 members/36, 068 cards =6. 1% 100 cards The more inspections each member performs, the more cards he/she has and the better the chance of winning As an example: last year one member did 1, 101 inspections out of the total 30, 458 47