Ch-Ch-Ch-Changes (In Revenue)
The era of associations relying on member dues to support revenue is all but gone. The challenge for associations today is to attract younger generations while boosting non-dues revenue, and here’s how.
Change is inevitable. My family jokes you can only buy something once before the packaging gets revamped and you can’t find it at the store. Their point is that in an era of customization and instant gratification, the draw of the tried and true can't always be relied on to catch consumer interest. Our NextThought team is attending the 2016 ASAE Annual Meeting & Exposition in a few weeks, and we’ve been considering what changes are fast approaching associations.
The ASAE website states, “Few associations can operate on membership dues alone, which is why fundraising and non-dues revenue are critical pieces of an association’s financial picture.” The latest ASAE Operating Ratio Report backs this claim, stating, “Because reliance on membership dues has decreased, associations are continually looking to develop non-dues revenue streams." Association Mavens interviewed Seth Kahan of Association Transformation, who said, "A loyal member can also be somebody who has just held on and paid their dues in a traditional format, whereas the best member could be someone who actually infuses the organization with new value." Kahan makes an important point: rather than focusing energy on high membership numbers with low engagement, it’s more valuable to have fewer individuals who are invested in your success and to find other ways to serve up additional revenue.
Sarah Sladek did a great interview that encompasses this struggle between old business models and new. She said, “I often tell associations to think about their association like a buffet. For a really long time your association has been serving pizza and everyone came to your restaurant, loved your pizza, because you made the best pizza ever. Then one day someone walks into your restaurant and they say, “I don’t really like pizza. Do you have anything else?” Does that mean you get rid of the pizza? No, it means you need to start thinking about other menu options to keep those new customers, and diversifying your menu.”
So how do associations diversify their menu? This conundrum mirrors our shift from older technology into new. When computers first arrived, they existed primarily to store content and could only connect people who were already physically in the same space. Content was stagnant because simple creation and distribution were not available. Today, computers are not only wired to connect to the Internet, but they use WIFI to make the connection. WIFI affords us flexibility to interact with content and to connect with other users in whatever spaces feel comfortable. This environment of flexibility, connection, and community is what Millennials are accustomed to in education and their personal lives.
The next move for associations is surprisingly simple: build web-accessible professional development content with a community of practice, and younger generations are likely to be interested in your other services and offerings.
Association Adviser reported that 34% of association leaders would like to improve in the continuing education space. To those leaders: don’t feel you have to throw everything you have away and start all over again. We didn’t throw out all previous computer technology when the Internet became available, but we evolved into the opportunities of new technological territory. Likewise, associations can see the coming changes as opportunities to evolve, building on their existing models to expand in ways previously unrecognized.
There will never be a singular answer. Strategies for creating non-dues revenue will continue to change. But in the words of Sarah Sladek, “There are associations out there that have embraced the change and seen the change as an opportunity to reinvent themselves. Unfortunately, I think those are few and far between. I’d like to see more associations get past this idea that change is a bad idea, that change is scary.”
Wise associations will embrace Sladek’s advice and see change as an opportunity rather than a roadblock to success.
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