Each year, in collaboration with Zzeem Association Management, we conduct a benchmark survey of membership organizations in Canada. As we begin our preparations for the 2016 survey I thought I should provided readers with an overview of the 2015 results. A number of you may have seen this overview either in the form of a webinar or in the final report.
We will be keeping you updated on our launch date for the 2016 survey.
2015 Benchmark Survey of Membership Organizations
This is the fourth annual Benchmark Survey of Membership Organizations. This survey focuses on the business and sustainability of the Canadian membership organization with a particular focus on the eight elements of the High Performance Membership OrganizationTM[1]. It is the only one of its kind in Canada. The survey was conducted in 2015 using a combination of telephone interviews and online responses. The respondents were either Canadian organizations or the Canadian arms of international organizations. Results are based on 120 respondents.
Membership Organization Defined
By membership organizations we mean non profit entities who have dues-paying members and whose primary activity is providing services to those members.
This is a specialized niche within the non profit sector with its own unique characteristics. Membership organizations are typically self-sustaining and cannot rely on government assistance or donations.
Just like service companies in the for profit sector, they need to provide value to the people that they serve or they will not survive.
A membership organization is a business and must be run as one to be sustainable.
There is very little data available for the membership organization niche. The purpose of this survey is to help fill that void and to provide organizations in the sector with critical information about their peers and to give them the information they need to thrive.
The Respondents
The membership organizations surveyed include entities of all sizes. Respondents’ annual revenue ranges from less than $10,000 to more than $25 million.
Respondents include organizations that represent an industry, a trade, a profession or a special interest. This includes organizations whose members are primarily individuals, and those whose members are primarily corporate.
Respondents by Revenue and Type
Type of organization
Type of member
Survey Highlights
Looking for higher revenue?
This year we focused on identifying attributes and practices that are correlated with revenue trends. We identified 17 best practices and 5 attributes that are associated with an upward trend in revenue.
If higher revenue is important for your association, consider adopting as many of these practices as make sense for you. Organizations that have these attributes are more likely to have an upward revenue trend and those who don’t, are more likely to have a downward revenue trend.
The top best practices are noted in the diagram below.
In comparison to those with an upward revenue trend, organizations with a downward trend are less likely to have a strategic plan and their board members are judged to be less efficient and less productive.
As well, those with a downward revenue trend are less likely to have a strategy that is documented to attract and retain members. This lack of a strategy is carried over into accomplishing sponsorship goals.
The following graphic summarizes characteristics of those organizations with declining revenues.
Best Practices for Increasing Revenue
Member Services
1. Have an issues management program.
2. Publish knowledge products
3. Have online registration and payment available for all services and events
Member Attraction and Retention
4. Have a member marketing plan
5. Have a budget for member recruitment
6. Ensure all staff and directors know your member value proposition and can articulate it
Sponsor Attraction and Retention
7. Have a documented strategy for sponsorship and a marketing plan
Employees
8. Do performance reviews for all staff annually. This includes the chief staff officer.
Board of Directors
9. Ensure all of your board members are engaged
10. Ensure board meetings are productive
11. Ensure board is effective in making decisions and accomplishing goals
12. Provide directors with orientation materials and live training
Other
13. Identify and track your association metrics
14. Have a current strategic plan
15. Use external consulting expertise
16. Ensure member dues are no more than 50% of total revenue
Attributes
Your association is more likely to have an upward revenue trend if you have these attributes:
1. You are an industry/professional associations rather than a trade association
2. Your association has regional networks
3. Your association has revenue of $1 to $5 million.
4. You are a provincial association rather than a national association
5. Your association fee is paid by the employer/company rather than the individual
Changes from 2013 Survey
1. The 2015 survey showed a significantly higher percentage of organizations with a 3 year downward revenue trend (26% versus 12%).
2. In 2015 there was a significant increase in respondents who track member retention (50% versus 38%) and member satisfaction (43% versus 33%). However the respondents tracking other metrics (e.g. member attraction, member engagement) shows little change.
3. This survey also showed a significant increase in respondents who have sponsors as well as a significant increase in those who have a documented strategy and a marketing process to attract and retain sponsors.
4. In 2015, fewer organizations have reserves that are at least equal to one year’s operating budget.
Interesting Observations
Top challenges for 2016
The top challenges cited by respondents are, in order of magnitude: demonstrating value for money, lack of funds or staff and raising the organization’s profile.
* The challenge of demonstrating value for money has increased since last year. We note that it tends to be an issue that is mentioned more often by industry/trade organizations in comparison to professional organizations. However, this latter group finds that raising the organizations profile is a challenge that rivals demonstrating value for money.
* These challenges remain consistent whether your revenue is trending upward, downward or is flat.
* Organizations with a downward revenue trend share with other organizations the crucial challenge of demonstrating value for money. But unlike other organizations that have either upward or a flat revenue trend, the challenge of attracting new members is also in the top spot.
Member Attraction and Retention
The median member attraction rate is 12%. The mean member retention rate is 94%.
Survey respondents told us what is having a negative effect on membership recruitment and retention. Key factors include:
• Economic pressure in Western Canada
• Shrinking member base due to a variety of factors e.g. declining student enrollment, consolidation within the industry, company closures, retirement.
• Others recognize that they are simply not providing member value
Survey respondents also told us they are using a variety of methods to increase membership. Here are some of the highlights:
• Development and implementation of special interest groups (SIGs): This technique segments the membership into smaller groups where the participants have a wider range of common interests. When executed effectively, SIGs can build member engagement. For associations with a diverse membership, SIGs can also provide an effective defense against losing members to more specialized membership organizations.
• Focusing on programming and enhancing member value.
• A new membership structure that entices more individual membership from within a company.
• A focus on emerging professionals and students.
• Improvements to the lapsed member contact program.
• An emphasis on member engagement.
Membership Fees
1. Lower fees are not correlated with an upward revenue trend. In fact, the opposite may be true; we found that 40% of respondents with a downward revenue trend have membership fees below $300 per annum. This is particularly interesting because in our consulting work we often hear association decision-makers claim that any increase in membership fees will reduce the membership numbers. Anecdotally we have not found this to be true, but it is a widely held belief. In our analysis we are not seeing a correlation between membership fees and trends in membership.
2. Associations should consider having varying fee levels; we found that organizations who charge the same fee to everyone were more likely to have a downward revenue trend. For those who do have varying fee levels it may be appropriate to segment the member value proposition for each fee level.
3. The majority of respondents increase member fees “as needed” and this is much more prevalent amongst those organizations with a downward revenue trend. A best practice is to increase fees a small amount each year.[2]
Tracking Metrics
There is a clear indication that organizations that track their metrics are more likely to be more successful in attracting and retaining members, and also in attracting and retaining volunteers, and using them effectively.
• This year we see some increases in the percentage of organizations that are tracking key metrics. Fifty percent of respondents track their member retention rate. This is up from 38% last year. Forty-three percent of respondents are now tracking member satisfaction. Still only 23% track their attraction rate and 20% track member engagement.
• With greater attention being given to certain metrics, organizations are feeling more confident this year in their ability to attract and retain volunteers. However, we are not yet seeing increases in their confidence to attract and retain existing members. And when it comes to engagement, we are, in fact, seeing a slight decrease in confidence.
Other
1. Organizations with a downward revenue trend are more likely to have made structural changes in the past year, and those who have an upward revenue trend or more likely to have structural changes planned for 2016.
Strategic Planning and Implementation
• Strategic Plan: 19% of all respondents do not have a strategic plan. This is more often the case for respondents with a downward revenue trend (30%).
Board Efficiency and Productivity
• Efficiency: Over half (56%) of all respondents consider their board to be Highly or Very Efficient in making decisions and accomplishing goals. For respondents with a downward revenue trend, a much lower percentage (35%) get the same score.
• Productivity: 62% of all respondents consider their board meetings to be Highly/Very Productive whereas only 40% of respondents with a downward revenue trend get the same score.
Membership Strategy and Marketing
There is a relationship between the revenue trend and having a strategy and a marketing plan to attract, engage and retain members, and being able to articulate the MVP (member value proposition).
• Membership Strategy: Approximately 70% of all respondents have a strategy to accomplish this. For those respondents with a downward revenue trend, a slightly lower percentage (65%) have a membership strategy.
• Membership Marketing Plan: Approximately one-third (37%) of all respondents have no member marketing plan. For those respondents with a downward revenue trend, a much higher percentage (50%) have no member marketing plan.
• MVP: Only 23% of all respondents are Highly Confident that all of their board members can clearly articulate their MVP. For those respondents with a downward revenue trend, a much lower percentage (5%) are Highly Confident.
• Ability to Attract New Members: 21% of all respondents ranked their ability to attract new members as Very Good or Excellent. Only 10% of respondents with a downward revenue trend ranked themselves at this level.
• Ability to Retain Members: 48% of all respondents ranked their ability to retain members as Very Good or Excellent. Only 30% of the respondents with a downward revenue trend ranked themselves at this level
• Ability to Engage Members: 25% of all respondents ranked their ability to engage members as excellent/very good. This level dropped to 20% amongst those with a downward revenue trend.
Looking Forward
The 2015 Benchmark Survey results continue a trend that we have seen since we started this survey in 2011. Each year there is increasing pressure on membership organizations to deliver higher standards of service, value and performance.
Membership organizations are now held to the same standards of professionalism as for profit service providers. The 2015 Benchmark Survey results tell us that we need:
1. A clear, compelling value proposition that the entire leadership can repeat consistently
2. A high value, highly regarded suite of services
3. A well-documented plan; including a well-articulated recruitment system with adequate
resources; for both members and sponsors
4. Clear accountability and an annual performance review for the chief executive
5. Metrics/KPIs that are tracked and monitored consistently
6. A highly effective board of director