When Julianne Hanes-Jordan was brought on as director of marketing at AAA Western New York, she was discouraged by the results of the company’s direct mail campaigns. AAA was conducting member acquisition mailings that she felt were not acquiring enough members – not to mention that the members who did join were churning after the first year.
“There are people who won’t join us at the highest level but become wonderful members for 50 years,” said Jordan, adding that AAA was trying to bring on customers it thought would be valuable based on their interest in the most expensive level of membership. “But we were shooting at pretty rudimentary targets with our campaigns,” she explained.
Jordan hired marketing agency Catalyst to salvage the organization’s efforts. The goal was to find members who would become long-term prospects who would use the company’s various services in addition to its roadside assistance packages.
Catalyst examined AAA members’ lifecycles and determined that members churned within the first three to four years. The agency modeled its campaigns to attract the members who made it past the four-year mark. Using predictive modeling based on a three-to-four-year lifecycle, Catalyst was able to quantify exactly what each prospect would be worth.
The agency also began a membership win-back program to recruit lapsed members. In addition to membership packages, Catalyst sent $10 gift cards to lapsed members who decided to rejoin the organization.
AAA learned several valuable lessons during the predictive modeling process, including that responsiveness and profitability were not necessarily related. Customers who were the easiest to acquire turned out to be the most expensive to service, and former members were more valuable customers than non-members.
With these lessons intact, AAA offered a free associate membership to prospects it deemed high-value, and it co-marketed its plus and premium memberships to entice prospects to join at the level they found most comfortable.
“We weren’t too sure whether it made a huge difference to offer a free associate membership or not,” said Jordan. “We tested this offer before we rolled it out. Members who came in from a free associate offer, there were more of them than those who responded to an offer and paid for an associate membership. I was fairly surprised by this.”
Former customer reactivation produced a 300% lift over consumers who were never members. The free associate membership offer produced 50% more memberships than the control offer. Co-marketing all three membership levels increased plus and premium memberships by more than 750%, while average per-member net revenue is projected to increase by 30%.
Jordan said direct mail continues to be AAA’s most successful member activation medium, and she doesn’t believe her organization will veer away from it.
“From an acquisition perspective, digital channels and email don’t touch the results that direct brings in,” she explained. “Even though direct is more expensive, as an acquisition channel it works because there’s a lot of noise in your email inbox.”