Many associations are reevaluating their business models and focusing on optimizing their membership dues structures. Specifically, the associations that have 50% or more of their revenue coming in from membership dues.
The Moery Company has helped dozens of associations re-build their business models starting with the restructuring of membership dues. Here’s what we’ve learned and how you can start the process at your association for better membership and non-dues revenues.
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Hello and welcome to JP Moery’s Association Hustle Podcast, president of The Moery Company, JP’s mission is to arm today’s associations with insight and strategy to thrive in a progressively complex and competitive business landscape. 21st century associations must move forward with a little bit of hustle and revenue development at the core. Here’s JP.
Hi folks, today’s episode is all about membership dues re-setting and membership category modernizations. Many associations now are addressing their business model. When 50%, or more, of the revenue comes from membership dues, looking at your membership dues structure and member categories is a logical place to start. I’ve got several observations, based on the now dozens of these projects that we’ve done, and recommended steps that you can take to do the same.
First, I want to address the mindset needed to come up with the optimum, or the best, model for your organization. It isn’t just a dues review, it’s really 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 the institution in your organization. There are three key areas that we’ve used in our reviews to come up with the optimum business models. Things that board of directors and executive staffs are willing to navigate and come up with a new system. I really believe that this modernization and adaptation of these business models is very important. I have seen, in the past, 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.
Start with a quantitative review of your membership data. It will look like this: renewal rates by membership category, dive into your non-renewals, and review 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 what kind of percentage they take up, of the overall membership revenue that comes into your organization. Then 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, for example, 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 are. Then look at other programs, or participation. What’s the percentage of people showing up to meetings and events? How many folks are participating in committees? You’re going to get a real good idea of what the membership engagement is. 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. So, that’s the quantitative review.
Second, interview members in different membership categories in face-to-face interviews. The qualitative aspect of this is extremely important. I’ll tell you why. What do they value the most from the organization? Not what you’ve got in the membership brochure or the membership section of your website. What do they tell you they value the most? What are their specific stories about that value? 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 do you value from those organizations? What do you get out of it? In some cases, they may be joining your organization for advocacy and they may join another group for business development purposes. Learn a little bit about that and how you fit in their ecosystem and how do they decide which groups to be a part of. Is it by individual executive? Maybe 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 thing, and the thing that I always like to do, is review other associations. These are associations that your members may also be a part of, folks that you might be competing with in some way, shape or form. How do their dues calculations work? What are the top three items in in their value proposition? Are you competing with them in those areas? Are they taking 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.
When you do these three things: quantitative, qualitative, and a competitive review, you’re going to get opportunities to address a couple of different things or issues may come up. For example, you might find your top end rate cap needs to be taken off because the big companies are all hitting the maximum and they have been doing so for a very long time while their businesses are growing. They might be growing due to your effectiveness in the marketplace in terms of opening markets and advocating for them and representing them on Capitol Hill.
Second, figure out how members view your association and whether they think they are getting a fair deal or not. I’ve said this before: it’s easy to do the math. If these folks 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. I’ve said this before, it’s easy in a way to do the math and come up with a revised dues model. What’s more difficult is to see if your 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.
Third, find out how your association fits into the decision-making process of that company and how they view your organization compared to others.
Fourth, associates are often paying low dues, but maybe spending significantly into your non-dues revenue. Creating new tiers with marketing opportunities within their membership may show themselves through this kind of analysis. And then finally, I’ve found 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 show through 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.
Hey, folks, thanks for listening today. Best of luck to you. Bye bye.
We hope you enjoyed this edition of JP Moery’s Association Hustle Podcast. We’d love to connect with you. Check out our blog at moerycompany.com and subscribe to our weekly newsletter. You can also connect with JP on LinkedIn and Twitter at @JPMoery, as well as The Moery’s Company’s Instagram and Facebook page. To purchase a copy of JP’s book, Association Hustle: Top Strategies for Association Growth, go to JPMoery.com.