Market Segmentation for the Alumni Association

We need to develop a new marketing strategy which enables us to maximize membership retention. Please give an example of how an ARI market segmentation project can help us accomplish this objective.

The Alumni Association contacted ARI because many of their younger members were not renewing their annual memberships. This is a serious problem for any organization and the Alumni Association needed help from a professional consultant with proactive solutions. ARI interviewed key staff to obtain a better understanding of the situation and used this information to develop the following research objective: Identify significant satisfaction differences between current and lost members on key issues and use this information as the basis for a customized segmentation strategy which leads to maximized membership retention.

Since the research objective required satisfaction ratings from current and former Alumni Association members, a survey was selected as the obvious method for collecting this information. An online survey was recommended because it eliminated the costs associated with conventional survey methods, such as printing, postage and data entry. In addition to these advantages, online surveys offer better response rates compared to questionnaires sent through the mail.

For the next phase of the project, ARI obtained membership records from the Alumni Association. This information was used to determine the composition of current and lost members by the college associated with their academic major. As this data was being filtered, ARI developed a survey to measure satisfaction differences between current and lost members for seven key areas of interest. After gaining approval from the Alumni Association, the questionnaire was pretested with a small group of representative respondents. Subsequent revisions were performed as needed until a final design was accepted by the client.

For this project the relevant populations were defined as current and lost members so ARI assisted the Alumni Association in drafting a survey invitation on their letterhead. Participants were offered an incentive to participate with the assurance that their identity would not be disclosed to the Alumni Association. Survey participation for any project is essential for the marketing research profession, therefore a participant's anonymity and privacy must be protected. The survey invitation directed participants to the ARI website and offered them contact information in case they had any questions or concerns.

Sample size has a significant impact on the cost of any project, therefore ARI used a proven statistical formula to calculate the correct sample size based on estimated variance, the Alumni Association's desired accuracy and the level of confidence needed for an estimate of the true population value. Variance and accuracy are estimated with a percentage and the level of confidence is a value used to estimate the distribution characteristics of the sample. These values enable us to scientifically determine the correct sample size for a survey. For this project the correct sample size was calculated to be 384 total participants with an accuracy level of ± 5%.

The selection method is a very important component of the research project because the selection technique, not the size of the sample, determines a sample's representativeness. In other words, all current and lost members should have an equal probability of being selected into the sample, therefore a random sampling procedure was used to draw the survey participants from the Alumni Association's computerized database. This sampling technique ensures an unbiased estimate of the true population value. In spite of the best incentives, many people simply refuse to participate in surveys. This situation is always an issue so the total sample size was proportionally increased to 1,200 because of the anticipated nonresponse.

The survey invitations were mailed to 600 current members and 600 lost members which were selected at random from the Alumni Association's database. An average response rate of 33% for the current members yielded 200 completed surveys within 10 days. Lost members returned 184 completed surveys within the same time period. Data analysis was performed with advanced statistical software to obtain the information needed for the project's research objective. In other words how can we identify significant satisfaction differences between current and lost members on the key services offered by the Alumni Association? For this example, a F test was performed to measure satisfaction differences between current and lost members. The results of the project are shown below.

RESULTS: 

 

Survey Item

Current
Members
(N=200)

Lost
Members
(N=184)

Z
value

F
value

Sig.

Statistical
Significance

Duration of Membership
In The Alumni Association (in years)

10.91

4.52

 

23.95

0.000

 

College of Academic Major

           

 • Engineering

21%

30%

-2.03

   

Yes

 • Agriculture

18%

13%

1.36

   

No

 • Education

19%

12%

1.91

   

No

 • Arts & Sciences

19%

29%

-2.30

   

Yes

 • Business Administration

23%

16%

1.74

   

No

             

Fraternity Membership

16%

18%

-0.52

   

No

Sorority Membership

12%

17%

-1.39

   

No

             

Satisfaction* with…

Average Score

       

   Alumni magazine

5.40

3.94

 

31.58

0.000

Yes

   Outreach functions

4.76

2.90

 

0.17

0.680

No

   Alumni credit card

2.98

3.80

 

2.62

0.106

No

   Group health insurance

2.60

3.38

 

10.96

0.001

Yes

   Exclusive travel packages

5.50

3.08

 

17.43

0.000

Yes

   Discounts offered on merchandise

4.24

4.22

 

0.00

0.948

No

   Social functions before football games

5.47

3.03

 

11.63

0.001

Yes

             

Notes:

           

* Based on a seven-point scale where:

           

1=very dissatisfied and 7=very satisfied

           

CONCLUSIONS:

Graduates from the College of Engineering and the College of Arts & Sciences represent 59% of the Alumni Association’s lost members within the past 12 months.  The survey also indicates    significant attrition differences between current and lost members represented by these colleges.  In other words, lost members are more likely to be represented by graduates from the College of Engineering or the College of Arts & Sciences.  Attrition based on fraternity or sorority affiliation accounts for 35% of the lost members.  The percentage of lost members is higher for fraternities however differences between current and lost members for women affiliated with sororities are more pronounced.

There are also significant differences between current members and lost members with respect to their satisfaction with the services offered by the Alumni Association.  The survey indicates that current members have a more favorable opinion of the alumni magazine, exclusive travel packages and social functions hosted by the Alumni Association before football games.  Satisfaction comparisons between current and lost members on these variables are statistically significant.  Ironically the average satisfaction rating for members on the health insurance variable was 2.6.  Lost members gave the same variable an average rating of 3.38.  There are no differences between members and lost members pertaining to their satisfaction rating for discounts offered on university merchandise.    

RECOMMENDATIONS:

 

  • Modify the content of the alumni magazine so that it features more stories which are relevant to new members.
  • Conduct a focus group to determine the specific reasons attributed to dissatisfaction for those members who own a health insurance policy issued through the Alumni Association.
  • Develop customized travel packages for new members only.
  • Encourage new member participation at your social functions by offering a drawing for free football tickets or some other incentive that’s directly related to the University.
  • Interview lost members from the College of Engineering & the College of Arts & Sciences to determine what issues influenced their decision not to renew their membership in the Alumni Association.
  • Recruit current members from the College of Engineering and the College of Arts & Sciences to mentor new members from the same departments.

 

What you have just read is a brief example of applied marketing research.  ARI will never reveal the identity of a client or the actual results of a project under any circumstances without a client’s consent.  This example was developed to help potential clients fathom applications of marketing research which might be useful to their profession. 

 




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