Background:
A professional society (“Association”) with approximately 2,400 members established an aggressive yet attainable goal for growth: increasing dues and non-dues revenue by 15 percent over a five-year period. The Association had been collecting every member revenue transaction dating back several years, yet as an organization it lacked the skills to effectively mine the information to make use of it. As such, there was no baseline (outside of total annual revenue) from which to measure progress on goal. The information that had been collected proved to be immensely helpful in the Association’s ability to show 1) an ROI for member engagement and 2) a clear direction for achieving its revenue target.
Challenge:
The Association initially set the goal to challenge itself to attract, engage, and retain the membership in such a way that it produced significant gains in the bottom line; however, there were no specific and measurable goals in place to serve as milestones in achieving the larger goal.
- What represented “growth” in dues and non-dues revenue? Is it simply the total amount of revenue produced relative to the previous fiscal year(s)? What do the dollars represent? Should there be more tangible and/or meaningful metrics?
- Should all “growth” opportunities be treated equally, or should there be priorities?
- Should there be more frequent milestones that show progress to the five-year goal? Annual? Semi-annual? Bi-annual?
To effectively address these questions (and others), the Association needed a baseline from which it could measure and monitor its efforts towards achieving the overall goal, as well as direction for how to most efficiently achieve the goal.
Solution:
While there were more specific objectives for a member engagement and needs assessment study with the Association, ultimately the Association sought direction as to which path(s) would provide the greatest growth opportunities while balancing acceptable levels of risk. LRC used behavioral data to illustrate exactly what it meant to the Association for a member to be “Strongly Engaged” (relative to “Moderately” or “Weakly Engaged”). The data would provide clear implications to investing in stronger member relationships and monitoring the revenue-based outcomes of the relationship, all in order to achieve the overall goal of growth.
What was learned:
Prior to having any formal measure of engagement, there was a belief that a small but impactful group of members generated most of the revenue for the organization: those who believed the Association’s sole purpose was to advocate for the health and success of practitioners through political and legislative efforts were the most likely to be involved and to contribute financially.
In part, the research confirmed this hypothesis: roughly one in four members who belong almost entirely to have a voice in advocacy efforts produced more than twice the average amount of revenue per member than other segments. Nevertheless, while this advocacy segment generated well above and beyond what any other segment produced, it was myopic for the Association to believe that other segments represented a marginal economic value.
More than half of the Association’s members were classified as “Strongly Engaged” based on LRC’s engagement metric. The Strongly Engaged segment (which included most of the advocacy-focused members) exhibited behaviors that were considerably more favorable than the Moderate and Weak segments, as can be seen in Figure 1:
Figure 1: Revenue by Engagement Segment
The revenue data shown in Figure 1 were all generated from information collected by the Association’s AMS. For several years, the Association had been compiling the dollar amount of every member transaction, from PAC donations to educational course registrations to meeting registrations. By aggregating the transactional information by member and by year, LRC created an average revenue amount per member per year. This was then rolled up to a segment level by appending the engagement segment classification of each respondent. The result was an economic value assigned to each member and each engagement segment. LRC could also illustrate how the economic value per member and member segment had changed year-over-year. The ebb and flow of revenue was influenced by election (general and mid-term) and legislative session years. During a high-profile legislative session (such as 2015), the research and analysis showed that Strongly Engaged members (and more specifically, the advocacy segment members) were easier to “activate” and thus produced even more revenue for the Association than other segments. Prior to the research, the ebb and flow in non-dues revenue was far less predictable.
Furthermore, going back to the earlier point, it was not just political and legislative efforts that generated the revenue for the organization, as can be seen in Figure 2.
Figure 2: Additional Noteworthy Behaviors
- Strongly Engaged members were more than twice as likely as Weakly Engaged members to have recommended membership to a non-member colleague. By bringing new members into the organization, this impacted both dues and non-dues revenue.
- Strongly Engaged members attended the Association’s Annual Meeting at a more frequent rate than other members. Meeting attendance generated a significant amount of non-dues revenue for the organization.
- Strongly Engaged members have a great deal of interest in learning more about the organization’s political and legislative efforts so that they could become more involved. While this does not contribute directly to the bottom line, more volunteer hours at the state house meant less staff time and thus lower costs for the organization.
Recommendation:
In short, the combination of survey data and AMS transactional data proved to be a tremendous asset for the organization as it entered its next strategic planning session. As a guide for the discussion, LRC developed three paths for achieving the growth target of 15 percent over a five-year period:
- Extract more non-dues revenue from the Strongly Engaged members;
- Attract new members who exhibited the characteristics of Strongly Engaged members, growing that segment of members;
- Migrate existing members from a weaker engagement segment to a stronger engagement segment.
Path #1: Feasible, but challenging. Asking a group that has already gone above and beyond in terms of their donation of “time, talent, and treasure” to give more might seem obvious but may also serve as a detriment. “Going to the well” too often may ultimately exhaust this group, leading to a longer-term decline in donations. The Association must weigh the risk and reward of the additional ask.
Path #2: More feasible, but also a more resource-intensive path and as such may involve more risk. A challenge for many association executives and boards is “growing for growth’s sake.” Some may argue that growth can never be a bad thing. On the contrary, growth that brings “bad fit” members into the organization may ultimately incur more cost than additional revenue for the organization via increased customer service and support time.
The Association must be cautious in attracting new members who have professional needs that align with that value the Association can deliver, otherwise the likelihood of churn is higher and as such the “realized economic value” is near-term only. The research showed that advocacy was not typically a reason for belonging to the Association early in one’s career; instead, the understanding of and appreciation for political and legislative efforts increased as one moved through his or her career. Therefore, it was not realistic that the organization could easily find the advocacy-focused members without first “grooming” them.
Path #3: Most feasible, in that resource (re)allocation provides the most predictability in terms of segment migration. One of the main challenges for the Association is clearly defining and effectively communicating the value of membership, especially as one moves throughout the course of his or her career. This is particularly true of the advocacy efforts.
Focusing primarily on the third path would arguably require the least amount of additional resource from an organization with an already finite amount. It would not require an aggressive new member campaign or a servicing of “bad fit” members. It would not risk alienating the “loyalists” to the organization beyond ensuring that current donation levels were sustained.
The research results confirmed what many in the organization believed, which was that there were few new opportunities for engaging the membership. Specific recommendations were made to focus in three or four areas. One such recommendation was to take advantage of the existing resources and establish a targeted communications strategy to get the right message the right person at the right time and in the right way (e-mail, social media, etc.). By improving in a few specific areas and enhancing the relevance of the communication to the membership, Figure 3 shows the potential revenue to be gained by migrating a percentage of the membership to a higher engagement segment:
Figure 3: Revenue Growth Scenarios
Again, note that the scenarios in Figure 3 do not consider growing the average revenue generated by a member in each segment, nor membership growth. Both would have a significant impact on growth goals for the organization but as described earlier, would likely be riskier for the organization.
Next Steps:
Ultimately, the Association would need to identify which scenario provided the most reward relative to the size of the investment needed to achieve that reward. It may not be one, but a hybrid of the three. Having reviewed the results with both the senior staff as well as the Association’s Board Executive Committee, leadership were on the same page to define a more specific, measurable, and achievable goal than the more nebulous “15% growth over a five-year period” statement in its most recent strategic plan. After making changes to its value proposition and communication strategy, LRC recommended re-assessing member engagement and the transactional AMS data in two years, prior to the mid-point in the five-year process. This would allow for course correction if it was needed.