Tuesday, 10 September 2013

Not all attrition is created equal

You’ll sometimes hear people point out that 10% annual attrition means you are replacing 30% of your membership every 3 years (assuming you’re keeping the membership levels up).

It’s a pretty galvanizing statement, and handy as a rule of thumb. But the problem is, it’s not true.

Well, it’s true if you’re talking about the number of members you have to recruit. But it’s not true if you’re talking about your overall membership base, unless your membership is homogenous. Which most aren’t. Sometimes a 10% churn rate after 3 years can mean you still have 90% of the people you started with.

Let me illustrate. To keep things simple, let’s assume we’re talking about organizations that can replace any members they lose, but keep membership flat overall.

In Association ABC, the members are indeed homogenous. Any member is equally likely to leave as any other. Imagine it as 10 people entering a room together in Year Zero. In Year One, someone leaves, and is replaced. In Year Two, a different person leaves, and is replaced. Same thing in Year Three. The comparison between the membership in that 3-year time span would look like this:

As you can see, within 3 years, the organization only has 70% of the members it began that timeframe with. A full 30% are new within 3 years. 

Now, let’s look at another organization Association XYZ. In this one, for simplicity’s sake, there are two segments – Loyalists, and Shoppers. In Year Zero, 9Loyalists, and 1 Shopper. 

In Year One, the Shopper leaves to go look elsewhere. Now, let’s imagine they’re replaced by another Shopper. 

In Year Two, the Shopper again is the one who leaves, replaced again by a Shopper. 

In Year Three, again it’s the Shopper who leaves. 

And here’s what the changes in the membership over the three-year timespan will look like:

In this case, new members are only 10% of the total, even though both organizations have had to bring in the same number of new members over this period and had the same attrition rate of 10% per year.  

To be sure, these are highly simplified examples. But what I would argue they illustrate is that to understand attrition, you also need an understanding of segmentation, and the loyalty of different segments, because they will lead you to different conclusions and different actions. 

People are not equally likely to leave the organization. People have different levels of commitment to the industry, to the profession, to professional life at all. People move out of the province or country, chuck it all to buy a winery in the South of France (or Prince Edward County), get a different job that’s relevant to the association, or sell their business to a consolidator. And some leave because of the association itself – political differences, service issues, lack of membership value that speaks to them and their aspirations. 

Some do nothing of the sort, and simply stay put. 

The questions you need to answer include what factors make someone more likely to leave? To stay? What type of member is most likely to indicate high loyalty to the organization on their member needs assessment survey? What type of member signals an intention to leave the industry entirely within 5 years? What parameters matter: age, duration of membership, seniority in the field, geography (provincial? urban/rural? in the same city as a local office?), level of education, involvement with the organization, attendance at the conference in the past 3 years? 

It’s also relevant to compare your membership attrition rates with rates in the industry altogether. A certain percentage of people enters and leaves a field in a given year. Do your rates match that? Are they higher, or lower? What do you want them to be? 

Without a good idea of what makes your members tick, and how they are different from each other, it’s very difficult to interpret data on attrition. It’s important to keep an eye on it, but also to remember that not all attrition is created equal. 

Meredith Low provided this guest post.  She is a management consultant, focusing on helping organizations and companies understand how, when, and where to grow in the context of fast-changing environments. Her work with associations includes leading strategic and tactical planning, performing assessments to position conferences and meetings for growth and durability, and assessing the needs of members and other stakeholders.

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