By: Maneesha Manges on May 3rd, 2019
What is the Dollar Value of Member Engagement?
One of the frustrating things about member engagement is that it’s such a vague concept. We know engagement matters, we know we need engagement, we know that we’ll lose members if they are not engaged. And yet, it's hard to say exactly what engagement is.
Engagement is usually defined as the kind of connection that a member feels with the association. We can gauge it by looking at stats: website visits, attendance at events, completion of education modules, and so on.
But still, these figures only give us a rough guide to what’s going on in our association. Crucially, it doesn’t tell us if we’re spending money in the right places or if we need to invest our resources elsewhere.
So, is it possible to put a dollar value on engagement? Lucky for us, it is. The tricky part is measuring it accurately.
Simple way to calculate the dollar value of member engagement
First of all, we’re going to take a look at some of the tangible figures you already have access to in your accounts. These will give you a strong indication of what engagement is worth.
1. Look at all association income related to engagement
Each dollar that is directly contributed by a member is, in some way, connected to engagement. So, to begin calculating the dollar value of engagement, you need to start looking through your total income. Figures to include your calculations are things like:
- Membership dues
Membership is a direct function of engagement. Every time someone renews, it shows that they feel they are receiving good value from your programming and advocacy work.
- Event fees
Live events are an excellent indicator of engagement. Most members will pay to attend your annual conference; highly-engaged members will purchase add-ons, like tickets for guest speakers and break-out sessions.
- Education costs
If you charge for access to education modules, you might want to break that income into voluntary and non-voluntary payments. When members complete a mandatory training course or certification program, it doesn’t necessarily indicate engagement. Paying to access non-mandatory training materials however, is a definite sign of engagement.
- Voluntary contributions
Some members may choose to make a financial contribution in order to support your advocacy work or any fundraising efforts. If so, then that’s an indication of engagement and should be figured in your calculations.
Don’t include grants, endowments, return on investments or any other source of income that didn’t come directly from members.
2. Look at all associated costs related to member engagement
Why do members give you money? It’s because you provide them with valuable content and services. Providing this programming has a cost too, and you need to understand exactly what you’re spending on engagement. This can be things like:
- Production costs
Expenditure on putting your programming together. This can include things like paying speakers and experts, conducting research, costs for shooting video or building web applications.
- Hosting costs
You have to pay to host your digital services, and the more traffic you have, the more you have to pay. You also have to pay to host physical events such as conferences and seminars, so you need to look at those expenses too.
- Staff costs
Full-time staff working on engagement need to be paid. This can include the marketing team, content production teams and digital teams. You may also choose to include back-office staff who deal with queries and process payments.
- Marketing costs
You can’t achieve optimal engagement without investing in a little marketing. This can be anything from mass media advertising to personalized email campaigns. Include the cost of each campaign and also look at costs associated with running a sophisticated martech stack.
3. Calculate Return on Engagement (ROE)
Once you have a realistic dollar amount for the cost of engagement and the benefit of engagement to your association, you can calculate ROE using a simple formula:
Benefit – Cost
------------------- X 100
This gives you a result in the form of a percentage. So, say that you work out the total engagement-related income to be $25,000 and associated costs as $10,000. That would give you:
$25,000 – $10,000
------------------- X 100 = 108%
Which means that your ROE is 108 percent. To put it another way, each $1 that you spend on improving engagement results in a return of $2.08.
Improving your calculations
Of course, not all of the benefits of engagement show up as line items in your annual accounts. You will need to take a closer look at your organization and try to identify some areas that you could possibly include in your measurements. For example:
When an existing member convinces a friend or colleague to sign up, that has a significant dollar value for your association.
One way to measure the value of a referral is to look at how much it costs you to acquire new members, from the marketing spend to the admin involved in the conversion process.
When someone quits the association, it costs you. Not only do you lose revenue from that person, you also have to invest in additional marketing to try and recruit fresh members in order to keep numbers up. You may also have to refresh your programming in order to keep engagement high.
When someone renews their subscription, however, you don’t have to invest as much in these areas, and the relevant savings can be counted as a benefit.
Some of your content may come directly from members, whether they work on training materials, write articles or speak at events. These are all engagement-related contributions, so you can include them in your calculations.
To put a dollar value on these contributions, take a look at how much it would have cost you to hire someone to create that particular content.
Highly-engaged members will roll up their sleeves and get involved in the running of the organization. This can mean volunteering at events, getting involved in advocacy campaigns, or joining committees – contributing their valuable time, essentially.
There are several ways to put a value on these contributions. You can look at how much their time is worth (i.e. their salary), or you can look at the income generated by their contribution (i.e. the value of tickets sold to an event at which they spoke). The most important thing is to be consistent in how you measure contributions of this nature.
Using ROE to drive strategy
Return on Engagement is a nice metric to have available on your reports, but what can you actually do with this figure when you have it? What does a 78 percent ROE mean, or -30 percent, or whatever figure you arrive at? Here are a few benefits of calculating ROE.
Focus your member engagement strategy
When you look at all the figures that contribute to ROE, you’ll start to get a sense of where you’re getting things right and where you’re wasting resources.
For example, if most of your engagement-related income comes from live events but most of your expenditure goes on digital services, then it shows that your strategy is mismatched. It may be the case that you should move resources to live events, or maybe it’s that your digital offering needs a total overhaul. Either way, the ROE analysis will point you in the right direction.
Improve the member experience
By looking at the dollar value of member interactions, you’ll find you get a new perspective on what matters to your members. After all, these are busy professionals, most of whom have excellent financial sense. If they are giving you money – either directly in cash or indirectly in the form of time – then they must be extremely enthusiastic about what you are providing.
Looking at ROE will help you identify more of the areas that get members excited. This then feeds back into your overall strategy, allowing you to focus more resources on developing those areas and providing the best possible service.
Justify marketing costs to the board
Stakeholder buy-in is one of the big challenges in association management. Often, the decision makers may be reluctant to invest in new technology or try out a new approach to recruitment and retention.
ROE makes a very clear and powerful case for taking bold steps. If you can show that there’s an ROE of 50 percent, then you can show that a $100,000 investment will yield a return of $150,000.
No matter which sector you work in, it’s always easier to convince people when you can present hard numbers. ROE takes some of your nebulous data and turns it into something measurable.
Unify association management departments
As with any for-profit company, association management teams can end up in silos, with each team working on its own projects. For example, the marketing team and the membership team may not talk to each other every day, while another team may do all of the programming by themselves.
Calculating ROE is a collaborative effort. You cannot measure ROE without data from every department – it’s simply impossible. Whoever is working on this calculation will need to reach out across silos, speak to everyone, share data with them, and get their perspective on the real dollar value of member engagement.
Make sure that you share your findings with everyone involved in the project. Let everyone see how their efforts directly contribute to engagement and to the success of the association.
Member engagement is always going to be a little vague because ultimately, it’s about emotion – how do your members feel about the association? Do they feel like they get value?
To truly understand engagement, you will need qualitative feedback like surveys and member interviews. However, looking at quantitative financial data will give you a great overview of whether you’re getting things right or whether you need to rethink your strategy.
About Maneesha Manges
Maneesha Manges is a seasoned digital marketing professional with 20 years of experience working in multiple markets and global companies. Her prior experience includes consulting roles in digital marketing strategy, data analysis, field marketing and social media. Maneesha holds a Master of Business Administration degree in High-Tech Marketing from American University’s Kogod School of Business and a Bachelor of Arts degree in Economics from Concordia University in Montreal.