Dues Restructuring

During a presentation at ASAE's annual meeting in Hawaii this summer, I was struck by the number of association executives currently analyzing their membership dues structure. In a room of 100, nearly three-quarters indicated that they're currently revisiting their dues models. This begs the question, "Why is there so much interest in this topic?"

Dues Restructuring

PART 1

During a presentation at ASAE’s annual meeting in Hawaii this summer, I was struck by the number of association executives currently analyzing their membership dues structure. In a room of 100, nearly three-quarters indicated that they’re currently revisiting their dues models. This begs the question, “Why is there so much interest in this topic?”

Several of our clients and colleagues cite the need for short-term revenue as a reason for examining their dues model. Certainly, the challenging economic climate has forced many associations to ponder “how can we increase income NOW?” Some think that a new structure, as opposed to a dues increase or special funding request to cover short term operating losses would provide the quintessential silver bullet.

However, if an association is truly looking to create long-term value for members and customers, a deeper level of knowledge is necessary, as are the proper motives. Significant changes to the ways in which dues are assessed can have dramatic consequences on income, and a quest for short term revenue usually winds up backfiring. In short, increasing short-term cash flow is usually NOT a good reason to change your dues structure. So, what are some “good” reasons? Several come to mind:

  • to make it EASIER for prospects to join
  • to RESPOND to market forces to ACQUIRE members in new audiences
  • to enable BETTER member service
  • to CORRECT unprofitable equations

A well conceived dues structure allows key association audiences to easily access its most valuable programs, products and services. Of course, there are as many different approaches to this as there are associations. Many try to eliminate barriers to entry by keeping dues low, and then position products and services to generate additional sales (a la carte). Others are experimenting with combining dues with other programs and services such as meeting registrations and publications and charging a much higher dues amount (bundling).

PART 2

Successful association marketers begin many conversations about membership growth by talking about audiences. Sometimes, these audiences include prospects from non-core areas – prospects that may require a new wrinkle in your existing dues structure

Indeed, many associations find that these new audiences do not have a natural “seat at the table” in their existing dues structure. For example, think about the impact that the increased use of travel nurses by health care providers could have on nursing associations. Travel nurses, a growing segment of the workforce, likely have different needs and expectations from a nursing association than nurses based in one health care facility. Do the current dues structures of state nursing associations make it easy for these travel nurses to join and receive benefits of membership? If not, how would they go about making a change?

Two approaches have become quite popular in association management: “bundled” memberships, in which the association piggybacks membership dues with other programs, and “a la carte” memberships, where the cost of dues is kept low in the hope that member purchases of goods and services will fuel new streams of income.

Which approach is right for your association? Our findings suggest that for organizations considering either a bundled or “a la carte” approach, some general guidelines can help:

Consider “a la carte” membership structures if your association:

  • Is capable of handling numerous transactions
  • Has a history of rapid product development and “prototyping”
  • Serves diverse audiences
  • Has a high-traffic, e-commerce enabled web site.

Consider “bundled” membership structures if your association:

  • Produces specific, targeted content to various markets
  • Offers “must have” products (i.e. journals)
  • Already offers tiered dues levels
  • Provides a wide range of resources for multiple contacts
  • Provides various learning methods (face-to-face, distance learning, etc.).

Finally, don’t forget the dramatic impact of implementing a dues structure change on the people, systems, and processes in your organization. Frequently, associations fail to consider the impact of these changes, and member service winds up taking a hit (at least temporarily) as the association struggles to develop new policies and procedures that will work with the new structure. Here’s the bottom line – try to think which dues structure plays to your operational strengths, and develop sound implementation and communication plans for any changes you make.

PART 3

Although one of our clients likes to joke that “dues restructuring never ends,” part 3 of this article includes practical tips that will help you get through your dues restructuring project with confidence. We close by outlining some important questions to pose before, during and after your project. In other words, be sure to ask yourself if your dues structure:

Supports the strategic goals of the organization.
Does the proposed dues structure help the association advance its mission and pursue its vision?

Has been developed in close relationship to other efforts.
Are new potential programs, products and services accounted for in the structure?

Enables access for key growth markets.
Does the structure provide easy opportunity for underserved markets to join the association?

Can become financially sustainable over time.
If changes to the structure are necessary, is the association willing to risk a short-term loss of revenue to make the adjustments that will be necessary to improve fiscal health for the long haul?

Provides distinct value for each specific category.
Are the association’s programs, products and services correctly allocated given the dues that each type of member pays?

Leverages current and future functional strengths.
Does the structure encourage members to take part in what the association does best?

Meets or exceeds value expectations.
Will members say that the value they receive from the association exceeds the cost of their dues?

Provides room for growth.
If dues are based on annual revenue or salaries, does the scale allow for the increases that will naturally take place over time?

Is easy to understand for current & potential members.
Are confusing membership calculations or unnecessary data requirements making it harder for prospects to join?

Incorporates “exceptions” into existing categories.
Are there opportunities to streamline the structure to reduce complexity?

Of course, each association will need to add some other questions based on their unique situation. If you find yourself struggling with them, please feel free to give us a call. Good luck!