Choosing the Right Membership Model

Choosing the Right Membership Model
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Attracting and recruiting members in a challenging time

Whether your association has experienced a significant shift in membership or not, it’s undeniable that selling the value of membership during economic instability is more challenging than ever before. Free information, resources and even virtual event registration have become accessible to anyone with an internet connection. But with this challenge comes an opportunity to adapt. The best way to do that is by choosing the right membership model — a significant revenue source.

Membership models — or how membership and membership dues are structured within your association — are critical to attracting and recruiting members. They determine:

  • Who pays for what.
  • How much they pay.
  • How much value is attached to different dues levels.

People are craving community. They want to join your association. But if your membership model structure doesn’t align with the value they seek, potential members will lose interest.

Based on our experience partnering with associations on membership model analysis and restructuring, we rounded up key considerations to make when choosing the right model.

Two Models and Three Factors

Whether you’re part of a trade association, a professional association or a hybrid, there are two types of membership models to consider: value-based and ability-to-pay.

Before evaluating which model works best for you, it’s important to address the needs of your organization:

  • Who do you want to serve?
  • How do you want to serve them?

The answers to these questions might feel intuitive, but they are worth reconsidering — especially in a time when virtual accessibility has led to an influx of new contacts.

For example, do you serve organizations, individuals or both? Each audience poses unique revenue challenges. Flexibility is an attractive membership feature but limits your ability to predict revenue. On the other hand, stability provides consistent revenue, but limits your ability to create an appealing membership ROI.

Is your audience more likely to respond to tailored service offerings, or are the more traditional, “one price, full access” models a better fit? Making these choices helps identify three key factors in determining which membership model is right for your association:

Market desire, feasibility, risk

 

Determining Your Membership Model

Once you have a better understanding of your audience, their needs, and how you can meet them, you’re ready to choose which membership model type will be the best fit.

Value-Based Membership

A value-based membership model allows members to bundle services and benefits or choose them a-la-carte depending on where they find the most value. This model offers different levels of flexibility to your members making it more in line with other non-association services your audiences already interact with.

However, value-based membership creates significant unpredictability in revenue due to the different service levels and different associated dues. As members experiment with different services — or simply opt for the lowest-level memberships — your bottom line can fluctuate. And, if your association uses membership to fund necessary programs (advocacy, for example), it can be risky to transition into an unpredictable model.

We’ve seen organizations have great success with value-based membership, such as professional associations, some trade associations and others. Even those members that prefer a single-cost option — which is easier to get approved by their company — can bundle services that produce a more explicit ROI.

Ability-to-Pay Membership

The more familiar ability-to-pay memberships are single-cost, all-access plans that offer the breadth of your services to anyone who joins. Long considered the industry standard, this model creates predictable revenue streams for your association. However, they are less attractive to members seeking flexibility. Since ability-to-pay memberships can’t be directly tied to a ROI, less engaged groups and individuals have a more difficult time justifying the cost.

Further, while these memberships appear to be a safer bet for associations, they do require their own set of considerations:

  • How do you determine your membership dues?
  • Should you provide a flat fee, or offer a sliding scale dependent on where your members are in their careers?
  • Do you leverage a formula structure that ties every dollar of revenue to a dollar increase in dues?
  • Do you settle for a less complex, less precise fee structure?

The ability-to-pay membership model tends to work best for organizations seeking more predictable revenue. This way, they can factor necessary advocacy costs into the dues structure, even at the lowest-paying level.

Value-Based/Ability-To-Pay Hybrid

Lastly, organizations can combine an ability-to-pay structure with a value-based component. This allows member flexibility in price point and benefits access while maintaining a more predictable revenue stream for your organization.

This is achieved by offering members an option to upgrade from a “base” membership to a “premium” that offers more benefits for a higher price. Both “base” and “premium” memberships are priced depending on the member’s ability to pay.

In Summary

It takes careful consideration and analysis to determine and implement the most effective membership model. Both options offer a host of advantages and disadvantages. The choice comes down to who your association serves and what level of revenue risk your association can manage.

Want guidance on implementing and market testing a new model? Contact us to simplify the process and take your membership revenue to another level.