In the commercial sector, the concept of “customer life-time value” (CLV) is regularly used. It’s value as a concept is in enabling businesses to forecast revenue by calculating how much a customer is “worth” over the duration of their “relationship” with the business.
There are two factors in this calculation: the amount of profit received per month and the monthly retention rate.
The CLV tool is even more important for businesses that focus on repeat transactions or subscriptions – for example, a software company like Adobe, or a subscription-membership business like a gym.
By boosting either or both numbers, you increase the financial returns for the business.
Now, the obvious parallel for unions is membership revenue, and revenue per member, per month or per year. Overlaying your union’s retention rate can give you a “member life-time value” (MLV).
Once you start looking at the MLV numbers, the importance of boosting your member retention rate is obvious. A long-term member, from a financial perspective, has far greater value than spending to sign up a new member.
(Obviously, there are other important strategic considerations for signing up new members, not just financial. For example, growing and recruiting to build workplace power requires not just retaining existing members but signing up new ones. So I’m definitely not suggesting that recruitment activity cease.)
Understanding the concept of member life-time value, and then working to grow it, is not that well known in the union movement. But as I noted earlier, it is well known with other membership based organisations, especially commercial subscription-based businesses.
I strongly believe that it is a concept that should be embraced, especially for senior union leaders with responsibility for organising and growth, and finances.
A focus on MLV also shows the important necessity for unions to invest in member services, member experience and building member loyalty. (Topics that I’ve written about here
.) (And by member services
, I don’t suggest that unions should prioritise “servicing” over, say, organising. A crucial “service” provided by unions is the experience of collective union action - winning in the workplace - read more about what I mean by “union experience” here
For example, when you start to focus on MLV, it helps clarify what drives retention and the causes of resignations/outs/offs.
In addition to having an overall MLV for your union, you can also develop a score for different organising units within your union (e.g. different industries, major employers, geographies), as well as a score for each member.
The focus on this score may sound financially driven, but in fact it will assist in improving your union’s focus on member engagement and positive member experiences (and participation) of their union.
For example, it can help you make decisions about investments in new programs – for example, the micro-credentialing programs many unions are establishing, or the value of services like Union Shopper. Or it can help you prioritise financial resourcing decisions – like: “is it better to invest in more delegate training or more growth organisers?”
The MLV calculation can also help you evaluate the benefits of specific investments in member retention programs.
A small percentage increase in retention can have a big impact on your union’s finances.