Find Your Association’s Perfect Mix of Revenue Options
This guest blog post is by David Freeman, Account Director for Naylor Association Solutions.
In today’s trade association environment, it is more important than ever to research the nuances of your organization’s revenue streams to find the optimal mix of non-dues revenue (NDR) generating products for your specific organization. Associations need to analyze historical data to predict how existing NDR streams will converge with membership dues to help or hinder their organization’s goals in 2021 and beyond. The realities of 2020 and the economic uncertainty of 2021 have caused many associations to take a deeper dive into their revenue, both dues-based and non-dues-based.
According to data compiled by ASAE, in the 1950s, associations relied on membership dues for 95% of their overall revenue. In today’s world, that number is closer to 45%.
ASAE’s data also shows that non-dues revenue has grown drastically in importance. The three primary non-dues revenue moneymakers are commonly listed as:
• Events and fundraisers
• Advertising and sponsorships
• Fee-based member services
As an association executive, analyzing this data against other organizations can be profoundly challenging. Nearly all associations have multiple buckets of non-dues revenue. Events and fundraisers have commonly been the highest earning source of non-dues revenue. They were hit hard in 2020, and the chances of live events happening in 2021 are still uncertain. Thus, many execs are looking for ways to protect their top line and cultivate a culture of adaptability within their organization regarding revenue generation. This challenge is compounded by the fact that the association world is hugely diverse, representing various industries, regions, and people. The same solutions for adapting to changing health and safety recommendations may not work across all associations.
As diverse as the association industry is, its segments are linked by their need to continue to grow revenue to maintain and expand operations, achieve their core missions of strengthening their respective industries, and help their members grow professionally. Now is a great time to increase your understanding of what your association’s optimal revenue mix is and what opportunities exist to maximize your non-dues revenue streams.
Start with an analysis of your existing budget. Divide your NDR and dues-based revenue budgets into member benefits, with those benefits which are included with the cost of membership labeled as dues-based revenue, and those which are not as NDR. This way you will know where your organization’s money comes from before diving into ideas about adjusting ratios. Your team might find that their revenue ratios are right where they’d like them to be and that no additional work is needed.
Make sure to take a five-year look back at your revenue streams and compare them to your projections to identify gaps, strengths, weaknesses, and opportunities. You should have identified multiple opportunities to create new revenue streams and enhance existing ones. Use those ideas to bolster growth in critical areas and to minimize revenue shrinkage.
Also, make certain to look for insights in your existing membership. Create a member survey and host focus groups to understand how many members’ benefits are used and by how many members. This will allow you to get feedback that can enhance existing benefits or create new ones that generate enough end-user value to be monetized.
During the research phase, you have identified those benefits that are monetized as dues-based revenue and those which are not. An example of a common benefit for association members is access to regular member contact information. An example of a benefit that is not included with the cost of membership could be an exhibit booth at a trade show or event, or a subscription to an association publication.
If you want to increase your association’s paid benefits, look for ways to add items that complement or enhance the benefits that members receive through their membership dues packages. One example of layering an a la carte, paid benefit on top of a baseline is offering an enhanced listing within a product and service search engine (online buyers’ guide) or printed membership directory for a fee, in addition to a free, basic primary listing within the publication.
In the long term, making membership more attractive by increasing your member benefits will help to grow your member headcount. This will also expand your opportunities for non-dues revenue.
Now it is time to consult your network of association industry peers and your organization’s vendor community. Your vendors have a unique opportunity to consult multiple association clients across various industries and track the growth of NDR sales efforts. They can offer invaluable insights and consultation. Many focus on delivering NDR through event, advertising, and sponsorship sales, and have a ton of direct experience that they can share.
There is also a litany of invaluable publications like the annual Association Adviser Association Communications Benchmarking Report that lays out the strengths, weaknesses, threats, and opportunities that organizations are finding regarding their communications. Another great resource is the Association Operating Ratio Report that is produced annually by ASEA and provides the revenue, expense, and balance-sheet data you need to evaluate and plan your organization’s financial activities, identify areas for improvement, support board presentations, and make recommendations on the allocation of resources.
Harnessing the expertise of your peer network, consulting your vendors, and using valuable resources like ASAE’s Association Operating Report and Association Adviser’s Association Communications Benchmarking report will provide a robust understanding of what is happening in the marketplace. You will be able to compare what other associations report doing to boost their revenue, both dues and non-dues, to your offerings to find new opportunities that speak to your association’s audiences.
Revenue Ratios Continually Evolve
In conclusion, the landscape of dues-based and non-dues-based revenue is continually evolving. Changes in what associations can reasonably charge for and what members expect to be included in their membership dues demand associations maintain bright, adaptable, forward-leaning leadership to help navigate uncharted waters.
Doing internal research and surveys to better understand your current offerings, your members’ perceptions of those offerings, and how they are using the benefits will push your organization in the right direction. This exercise will help you compile a list of existing benefits and potential new benefits to monetize.
It is also necessary to compare the methods similar groups use to capitalize on main non-dues revenue generators and how you can apply those ideas to your organization. Please make sure to help your team to understand why it is essential to create a culture of adaptability in your mission to drive revenue.
Lastly, lean on your peers and third-party vendors’ expertise who can deploy their resources and offer expert consultation to help you achieve your organization’s goal, create the perfect mix of benefits and options for your audience, and solidify your vision for revenue generation.