Does more than 50% of your revenue come from membership dues? If so, you may be joining the numerous associations that are now addressing taking a real good look at their business models this year by resetting their membership dues and modernizing their membership categories.
Here are top level observations, based on dozens of projects that we have completed with our association clients, and steps that you can take to modernize your dues models and value propositions.
First things first, get your mindset right. What will help you focus on creating the optimum model for your organization? It’s not just a dues review, it’s a business analysis. The way you tug or pull on your dues model, or a membership category, may affect the overall engagement that your members have with your association. There are three key areas that we’ve used in our reviews to come up with the optimum business models, things that the board of directors and the executive staff are willing to navigate to come up with a new system. I really believe that this modernization and adaptation of updated business models is very important.
I have seen organizations change their dues models every five to ten years when they can get away with it and they want to pass the resolution before everybody breaks for the golf tournament. What I’m talking about here is a more thoughtful process.
Begin the process with a quantitative review of your membership data. It will look like this: renewal rates by membership category, review of non-renewal data, and a look at the impact of mergers and acquisitions on your organization. Secondly, look at the distribution of dues by member company so you can see how many small members you have compared to the largest organizations and how they affect, and the percentage of, the overall membership revenue that comes into your organization. Then take a look at non-dues revenue participation to see the total business involvement in your association. This is really important with your associates, or your allied members. While they may not be paying a lot of dues, they may be investing a lot of money into your sponsorship program and, as a result, they’re putting more money into the organization than the core members. Then look at other programs and participation. What percentage of people are showing up to meetings and events? How many people are participating in committees? You’re going to get a real good idea of your membership engagement. Don’t forget to do the same thing with allied members. What I’m starting to see is a real opportunity to adjust the membership model for them and deliver more value and get better participation.
The second step is to interview members in different membership categories in a series of face-to-face interviews. The qualitative aspect of this is extremely important. This gives you the opportunity to find out what they value the most from being part of your association, not what you’ve got in the membership brochure or the membership section of your website. What do they tell you that they value the most? Do they have specific stories about the value you provide them? When you look at the major parts of your value proposition, are there things that these members don’t use or they don’t even mention? What other associations do these companies, or individuals, participate in? What value do they receive from those organizations? What do they get out of it? In some cases, they may be joining your organization for advocacy and they may join another association for business development purposes. Learn a little bit about that, and how, you fit in their ecosystem. Find out how they decide which groups to be part of. Is it by individual executive? Maybe it’s by product line? Or, is it more of a holistic, companywide strategy? Ask them if they think the value is fair. Are they getting a good deal for their membership investment?
The third step is to conduct a review of other associations. These are associations that your members may also be a part of and associations that you may be competing with in some way, shape, or form. How do their dues calculations work? What are the top three items in their value proposition? Are you competing with them in those areas? Are they taking on some issues while you’re focused on other things? Is it a blue ocean or is it a competitive environment? And, if the due rate cards are available, take a few of your members and plug them into their dues model and see the revenue models that they’ve got in place.
Conducting a quantitative, qualitative, and a competitive review will provide you with opportunities to address various items, including issues that may come up that need to be addressed. For example, you might find that your top end rate cap needs to be removed because the larger members companies are hitting the maximum and they have been doing so for a very long time while as their businesses continue to grow. Hey, they might be growing due to your effectiveness by opening up their market opportunities and advocating for and representing them on Capitol Hill.
Figure out how members view your association and if they think they are getting a fair deal, or not. If you members don’t feel like they’re getting a lot of value, or they think that they’re paying more than their fair share, you need to reevaluate. It’s easy to do the math and come up with a revised dues model. What’s more difficult is to see if members of your association are actually buying into that. Do they think it’s fair? In some cases, these large members may be paying maximum due rate but they don’t think they’re getting that much value from you. It’s better to know that before you walk into a board meeting to introduce a revised membership structure.
Find out how your association fits into the decision-making process of that company and how they view your organization compared to others.
Associates are often paying low dues but maybe contributing significantly into your non-dues revenue. Creating new tiers with marketing opportunities within their membership category may reveal themselves through this analysis. I’ve found that new industry entrants may not have a category, or segments, that they fit into. It may or may not be worth recruiting them at an intense level and that information may reveal itself in this analysis. They may not bring in any revenue or engage with your organization. You need to rethink whether the juice is worth the squeeze in terms of going after them.
Modernize, adapt, stay relevant in your industry, and adapt the business model in a way that makes you increasingly valuable to your members. Develop a dues model that is modernized and reflective of the business realities of today.
Need help getting started? Reach out to Mike Thomas. He would be happy to help you get started on your journey in modernizing your dues.