1. NARFE 2013 Strategic Plan Membership Marketing Presented November 14, 2012 NARFE NEB Meeting

2. Overview 2012 In November of 2011 we presented a membership marketing plan to address:  A 30-year decline in NARFE membership  The significant and growing loss of aging members  A long term cultural shift away from membership organizations and toward a technology-based lifestyle  The decline in response to OPM mailings – the sole vehicle for acquisition of new members

3. Overview 2012 2012 was the first full year of budgeted, aggressive plans to address long-term membership decline with goals to:  Slow, halt, and find the path to reverse NARFE’s membership decline  Introduce membership marketing best practices and principles  Actively pursue AFEs  Crisis manage our resources  Educate and develop an internal culture of innovative, consistent strategic marketing

4. Overview 2012 A Clarification  MGI is a strategic consultant and implementation resource  We have not outsourced membership marketing  MGI is paid a $3,000 monthly fee for highly experienced strategic input and a dedicated senior manager. The volume of membership initiatives could not be implemented without this additional resource.  The remainder of the membership marketing budget is dedicated to plan related expenses, i.e. developing, printing, and posting direct mail, purchasing online advertising, telemarketing hours, etc.

5. Overview Today’s Agenda  Review of Membership History / Current Dynamic  2012 Critical Learning  2013 Strategic Imperatives  2013 Strategic Plan

6. OPM List History - Over 30 years since membership high = vulnerability Early 1980-1982 – Full access to OPM file 1983–1993 – No access to OPM file 1993 – began twice yearly OPM access Currently - OPM back log in full retirement benefits impacts response Environmental History - Over 30 years since membership high = outside of NARFE control Aging membership base Cultural shift away from membership organizations Technology-based lifestyle change NARFE Membership History - Review Since the NARFE membership high in 1982, reliance on the OPM list for acquisition, the aging of a retired membership base and both cultural and environmental shifts have accounted for steep decline.

7. Current File Dynamic Review – Aging Membership NARFE Membership faces a growing rate of decline given the aging membership base Current Annual Reported and Unreported Deaths are estimated at 15,000 per year. Given the age of the membership file, this projected natural decline will increase exponentially. Assuming there is a 50% increase in annual deaths each year; NARFE may see a natural decline in membership of over 70,000 members over the next three years.

8. Current File Dynamic Review - Retention NARFE is currently retaining over 90% of membership  This year over year retention (renewals plus reinstates) rate does not account for either reported or unreported deaths. Deaths result in a smaller “renewable” file, so that the “real” retention rate is higher. Only 22% of all associations are retaining members at a rate above 90%

9. Current File Dynamic Review - Acquisition With a highly successful retention rate of over 90%, acquisition is the Critical Focus. Membership Attrition (Loss)10% Average New Member Acquisition (Gain)6.5% Average Net Membership Loss3.5% Only large scale, profitable acquisition efforts will turn the tide.

10. 2012 Objective 2012 Was a “Workhorse” Year: Recognizing the need for an aggressive approach to membership decline, 2012 included heavy investment in the testing of direct marketing efforts, new to NARFE, but standard within non-profit associations.  Acquisition Mailings to lapsed members, prospects, and outside lists  Testing of offers, mail packages, and price  Member-Get-a-Member mailing  Online lead generation and cultivation  Telemarketing to lapsed members The objective was to halt the membership decline while finding paths to large scale membership growth.

11. 2012 What Have We Learned 2012 Produced Critical Learning: Test results provide roll-out programs, inform new test plans, and identify strategic imperatives for 2013.  A lower direct mail price offer to the OPM list did not increase response. A $40/$72 vs. $35/$59 test of the Spring 2012 OPM mailing resulted in a slight decrease in response. Results suggest a lack of price sensitivity. (Caveat: The “odd” price point, lack of savings promotion, and lower perceived value may have contributed to the lower response rate.)

12. 2012 What Have We Learned  Critical Learning continued:  Member-Get-a-Member did not work. A 13,800 piece was sent to two panels of members most likely to have active federal employees or newly retired friends and colleagues. 1. Members who have been retired for no more than five years 2. Those who have joined within the past two years The test failed utterly, with only 26 new joins to date.

13. 2012 What Have We Learned  Critical Learning continued:  Two direct mail packages (or creatives) were tested. A newly designed “Standard” package was tested against a “Faux Membership Card” package. There were no overall responses differences between the two. The Faux Card is more expensive to produce. The Standard package is currently our control.

14. Faux Card Package

15. Standard Package

16. 2012 What Have We Learned  Critical Learning continued:  Telemarketing efforts to lapsed members, dating back as far as 2009, have been successful with conversion rates (reinstates as a percentage of contacts made) as high as 43%. Contacts per hour dropped considerably in June. Calls were suspended until September. Resumed telemarketing results were lackluster, likely on account of two factors: 1. Political robo-calls resulted in fewer individuals willing to pick up the phone 2. Highly succesful, (and less expensive) direct mail efforts to our lapsed members took the cream off the top. Telemarketing has again been suspended and will be tested for unique segments.

17. 2012 What Have We Learned  Critical Learning continued:  Online Lead Generation (building a prospect list by offering free white papers online) has been generating hundreds of new prospects per week. Cost per lead continues to be driven down with particular success on Facebook, and Google and Bing. Additional ads and new white papers will be developed and rotated to freshen the effort. The newly enhanced email conversion series will continue to be monitored to maximize results.

18. 2012 What Have We Learned  Critical Learning continued:  eNARFE vs. local chapter direct mail offers increased response across lapsed, prospects and outside lists. Prospect and lapsed member response rates increased by 70%. Outside list response increased by 11%. Results tell us that eNARFE is clearly a far stronger offer for both building and retaining membership. The more familiar with NARFE (lapsed and prospects) the more attractive the eNARFE offer.

19. 2012 What Have We Learned  Critical Learning continued:  Most critically, outside list tests revealed: 1. Highly targeted federal employees lists are limited and too expensive to produce breakeven or better results to our standard offers. 2. Large compiled lists, always less responsive than targeted lists, seriously under perform to our standard offers. Large scale new member acquisition, critical to success, will be dependent on: The success of new, response driven offers Dramatically building our NARFE prospect list

20. 2012 What Have We Learned  Critical Learning continued:  Upon reflection of the 2012 plan and its ongoing implementation, we offer the following assessments:  The 2012 plan was too lengthy and has left us scrambling to complete the important but less impactful items.  Membership must stay focused on great execution of new roll out programs and the testing of large scale strategies.  The NARFE membership staff, all NARFE support staff and our MGI consultants are working hard and smart. With most membership materials and processes in need of upgrade, we must continue to prioritize, keeping our eye on the prize of large scale, new membership growth.

21. 2012 What Are We Still Testing  The final 2012 acquisition mailing will include two important tests: 1. Six Month Free Trial Offer A free trial will significantly increase response while decreasing renewal. A successful offer is dependent on a unique conversion series (from free to paid member) which is developed and being readied. This along with the newly designed magazine and website will distinguish this from past free offer tests. 2. Free Q&A Book Download Premium Offer NARFE content is uniquely relevant to our prospective members. This high value premium, with over 200 questions and answers, will increase response.

22. 2013 What Are the Strategic Imperatives The 2013 Strategic Plan must address the following:  Prospecting  Given the limited availability and poor performance of outside lists, we must build a large prospect list. Advertising, event attendance, and federation/chapter level efforts must focus on large scale prospecting. An association-wide prospecting education initiative must be included in the plan.  Prioritization  The critical must supersede the important  Streamlining  With the overwhelming increase in membership initiatives, we must continue to work with all departments to create efficiencies and best practices.

23. 2013 Strategic Marketing Plan  Acquisition  Six, seventy five thousand piece direct mailings to prospects, lapsed members and outside lists. To include creative, offer, and list testing. (Note: A frequency plan for lapsed members will be created but we can anticipate that the large list of older lapsed members will fatigue, i.e. response will diminish.)  Telemarketing Tests to defined segments. (Lapsed members who had reinstated via telemarketing and a final conversion effort free offer members are planned to-date.)  Direct response email testing to both prospects and outside lists.  OPM creative and offer testing.

24. 2013 Strategic Marketing Plan  Prospecting  Harder working / higher value advertising dollars Ongoing, online lead generation with four new display ads and four new white papers for rotation. Three month print advertising test with lead generation offer. Three month outdoor advertising test in three top markets with lead generation offer. Bi-monthly Causey WTOP and Fed News Radio advertising with new lead generation offer.

25. 2013 Strategic Marketing Plan  Prospecting continued Expanded HQ event attendance with specific prospecting goals. Continuous monitoring and fine tuning of email conversion (lead to member) series.

26. 2013 Strategic Marketing Plan  Field Support Quarterly Federation Presidents conference call to introduce new initiatives, and share best practices. New R&R Journal format to include section for updates and education about new initiatives at headquarters. New federation level prospecting competition and awards. New marketing package for event attendance. Develop model for partnership with pre-retirement seminar providers.