Welcome to the first “Marketing Matters” column of the New Year, the column's fourth year. This year, the column will look at the effectiveness of two marketing pieces. A club generated the first piece and a response rate was measured. The second piece will take the original marketing piece and re-edit and re-work it using the eight-step principle and re-mailed to the same or similar group of prospects. The comparison will show which piece had a greater success rate.
This first case study will compare two strategies for reactivating alumni members. An alumni member is someone who was a paying club member but quit for non-moving purposes.
Traditionally, health clubs have put little or no marketing effort into alumni members. Part of the problem years ago was lack of technology that made mailing to alumni members challenging. Today, however, the problem is more attitudinal. Too many club operators discount the value of an alumni member, deciding to focus their marketing dollars on attaining new members. The reality of the situation as stated by IHRSA is that someone who has had an experience with your facility — good, bad or indifferent — is 300 percent more likely to join in the near future than someone who has never been exposed to you.
Unfortunately, club operators often take this IHRSA statistic as referring to missed guests and trial memberships but rarely apply the concept to alumni members. If readers know your club's name — even if they have had a bad experience — they will be more likely to stop and read or at least glance at your marketing materials because their brain has to stop (even for a split second) because of the recognition. This is why branding is so important.
In marketing, we want to understand the psychology of how the brain works and use it to get people to stop long enough to evaluate our offering and hopefully take action. With alumni members the recognition is there, it simply becomes a matter of taking advantage of that recognition.
For those clubs that try and reactivate alumni members, the usual course of action is to send out a post card mailing, typically during January when the majority of people have made New Year's resolutions. Often, the headline on the mailer is, “We Miss You” or “We Want You Back.” The offer might be no enrollment fee, free months or allowing the person to come back at the monthly rate they left with. All of these offers, of course, are designed to motivate the client with a “low barrier” option that makes returning easier without the up-front costs to join another facility.
Because this is the first case study of this series, I used my HEALTHY INSPIRATIONS Centers to test two reactivation campaigns. The first being the traditional post card mailing previously discussed. Because the two facilities are relatively new (1 ½ to 2 ½ years old), there were only about 400 alumni members. We opted to split the mailing list in half, sending out 200 post card mailers and leaving the other 200 names for the second strategy. Although the mailing was small, as long as the numbers were evenly distributed and whom they went to was random, a comparison in terms of percentages would reveal any difference in response rates.
With traditional direct mail, a response rate of between 0.25 percent and 1 percent is typical for a post card or letter mailing to a general list. As the quality of the list goes up, so too should the response rate. The post card mailing got three responses, which is a 1.5 percent response rate. We waited another 10 days and then sent out a second post card to the same 200 people. The offer was slightly different and the headline was different. On this post card we got one more individual to rejoin, which was another 0.5 percent, bringing the total response rate up to 2 percent. Given that the average membership value for the four returning alumni members was about $700 each, this mailing was an excellent investment, costing $168 but gaining about $2,800 in current and future membership dues.
With the other 200 remaining names, I designed a series of five letters. Each letter was one or two pages in length and had a personal and conversational tone. Each letter spoke to a specific emotional issue that an alumni member might have as it related to rejoining the club. The first letter talked about the reasons why people have difficulty sticking to an exercise program (guilt). The second letter talked about procrastination and reinforced the benefits of regular exercise (self-interest). The third letter talked about goals and some of the Surgeon General's report (fear of not being fit). The fourth letter mentioned the excellent response rate to our previous letters (embarrassment for not replying). The fifth letter encouraged the individual to find a friend to motivate them and offered an incentive to join together (encouragement, friendship).
All of the letters had some sort of incentive and as each letter went by, although the membership rate didn't get discounted, the value-added incentive changed and became more attractive, thereby lowering the barrier to rejoining. All of the envelopes were hand addressed to increase the readership and each letter was sent out in a sequence of seven to 10 days apart.
The third round of letters has been completed but because of the significant difference in response rates, I feel comfortable making an early comparison. Letter one had five responses, which is a 2.5 percent response rate. Letter two had eight responses, which is another 4 percent response rate. Letter three had six responses, which is another 3 percent response rate. This brings the total number of buying responses to 19 or a 9.5 percent response rate. Another five people called to tell us to stop sending them letters, which means the total response rate was 12 percent. In the direct mail business this is incredible. So, the question becomes, “Why the difference?”
In marketing it takes from three to seven impressions before the average person will take action. Therefore, the first theory is that because we sent out five letters but only two post cards, the medium that had the higher number of mailings would always get the better response rate. You could conclude that in order for there to be a fair comparison I would have had to send out five post cards to the first half of the study names. If that were true, the second post card mailing should have gotten as good a response rate as the second letter. It didn't — not even close.
I am an advocate of post card mailings to attract new members, but when it comes to alumni mailings I thought a letter strategy would be more effective for one primary reason: letters say more. This is an important distinction because most alumni members have “value issues,” which are major barriers to rejoining. Whatever the reason, they left because they didn't think paying for the membership was worth it — it will take more than a short post card to influence them.
I believe, as a consumer and a marketer, that the letter format is effective because it is able to talk to the reader, taking time to explain the problem and offer solutions. This is something that can't be achieved with a post card mailing. Letters allow you to speak candidly with the reader and offer them enough content and reasoning to win them back.
What is the moral to the story? Be creative, think out of the box and find ways to incorporate letter strategies into your marketing efforts. Alumni mailers are a great place to start but you could also give the letter format a try to missed guests, short-term members that didn't convert and even inactive members to try and get them back into the club, saving them from ever becoming an “alumni” member. Remember, “If you keep doing what you're doing, you'll continue to get what you've always gotten.” Marketing letters may just well be the thing you need to change the course of your direction.
Do you want to have your club be part of a Marketing Matters case study? E-mail Casey Conrad at casey.conrad@verizon.net and market yourself to the pro!