The Future Is …

Four little predictions (which, like most predictions, are actually more about what is happening now). Agree or disagree?

The future is …

Digital Commodity and Physical Luxury

  • Be digital because you have no choice, not because there’s necessarily opportunity there.
  • Make and sell beautiful things if you want both meaning and money.

In-Person Socializing and Virtual Business

  • Live near your friends and loved ones, and spend a lot of time with them.
  • Live far from your co-workers, and spend as little time with them as possible.

Meaningful Work for Fortunate People

  • Don’t try to find meaning in work, find work in meaning.
  • Unless you’re not part of a privileged class. Then just try to find work.

The Second Episode of the First Series of “Black Mirror”

  • Haven’t seen it? Watch it. It’s called “Fifteen Million Merits.”
  • Much of it seems not just possible, but probable. And not in a long-way-away kind of probable, but an I-hope-I-don’t-live-long-enough-but-probably-will kind of probable.

 

Are You Trying to Sell Membership When You Should Be Raising Funds?

What do your members get in exchange for joining your association?

It’s not a trick question. You’re just reading a blog post. You don’t have to sell yourself (or me) anything. So be honest:

  • Do they gain access to something that is not available anywhere else?
  • Is it something that provides a genuine return on investment (ROI)?

By ROI, I mean only something that saves the member a significant amount of time, or puts money in the member’s pocket at a rate higher than the dues you charge.

Now, if you’re honest answer to those questions is, “Well, not really,” then you’re not really selling membership. You’re raising funds.

And that’s okay. Really. Stay with me for a moment, and don’t get defensive. (Now we’re being honest here, remember, so you know that access to your e-newsletter and a discount on your conference registration is not a genuine ROI, right?)

If your association provides advocacy support that benefits your entire sector …

if your association develops standards that benefit your entire sector and their constituents …

if your association provides research and gathers data that anyone can access (either free or via purchase) …

if your association offers education that anyone can buy into …

and if it does all those things, but does not also offer members exclusive access to something that provides a genuine ROI …

then people who are “joining” your organization may be merely expressing support for your organization’s goals.

In that case, quit treating your supporters like members and start treating them like donors.

You see, members pay for benefits.

But donors support causes.

Why is this such an important distinction? When you recognize that you are more of a fundraising organization than a membership organization, things change. Just a few examples:

1.) Marketing to potential donors is very different from marketing to potential members. For example, you’re not going to sell many potential donors by talking about “networking.” (Actually, that’s not a selling point for most potential members, either.)

2) Retention becomes all about making people feel good about the cause they have supported, not mailing out an invoice and offering a discount for early payment.

3) In any community of donors, there are some donors who care more than others, and have more means than others.

  • Don’t focus all of your energy on expanding the number of members in your organization.
  • Don’t force everyone into simple membership levels or tiers.
  • Do spend some of your resources to identify the truly passionate among your constituents, and develop ways to increase their involvement (ie, raise more funds from those with both the means and the desire to support your goals). That can offer much better ROI for your organization.

But, if you don’t offer an actual, genuine ROI for your membership, then quit marketing as if you do. Play to the strengths you have, and sell what you actually have to sell.

What People Are Missing in the Association/Newspaper Comparison

There have been several posts recently comparing associations to newspapers. Maddie Grant reprinted a listserve comment and got a lot of comments on her post and at other blogs. The general gist of the original post is that newspapers are an industry in gut-wrenching turmoil, and so are associations. Somehow the whole thing turned into a discussion of “micropricing” — continued here on the Acronym blog.

First of all — not all associations are in gut-wrenching turmoil.

Second of all — I think micropricing as it was defined in the original listserve comment and most of the subsequent posts/comments (taking stuff you already do and give away, and start charging for it) is not necessarily a good strategy for an association. Most associations have markets too small to make such a strategy worth the effort.

Far, far better to create valuable things (products, programs, services) and charge a hell of a lot for them. Your most valuable asset is your tight market and your knowledge of what it needs; you should not be “micro” pricing anything.

Third of all — there is a real lesson I think associations should derive from newspapers.

Newspapers are failing because they think they are in the newspaper business. They built big infrastructure (printing presses and global personnel) and are being drowned by it. They are desperately trying to prop up their core business through things like, yes, micropricing; witness the NYT and others announcing that they are implementing paywalls.

Will this save newspapers? Does anyone really think it will?

I’ve talked ad nauseam, in too many posts to link to, that associations should never fall into the trap of thinking that they are in the business of doing whatever it is they happen to do now — but we do it anyway. We publish a magazine, so we build up an infrastructure to publish a magazine; we put on a tradeshow, so we build up an infrastructure to put on trade shows; we are a “community” so we build up an infrastructure to support and grow community; we offer certification, so we build up an infrastructure to certify people; etc., etc.

If you want to continually succeed, you should start assuming that everything you are doing right now is going to go away. Instead associations create infrastructure to support whatever it is they’re doing right now, infrastructure that must be fed and sustained, and then they complain about “silos” and watch economic dips and technological changes blow holes in their budgets while they try to cover those holes with Band-Aids and hope.

No, micropricing what you do is not the right lesson to learn from newspapers.

The lesson that newspapers have to teach us is happening right here in the association mecca of Washington, DC. It goes like this:

The poor Washington Post can’t catch a break. As a “national newspaper” it’s failed; it just can’t compete with the NYT or WSJ. As a source of exclusive political coverage, it’s been permanently scooped by the more nimble Politico, which is also getting ready to introduce a sister site for local news coverage. The Post has been the subject of scrutiny, criticism and derision for a while now.

One of the jokes you often hear about the Post is, “The Washington Post is a testing company that happens to own a newspaper.”

But it’s not a joke; it’s true. The Post’s acquisition of Kaplan way back in the ’80s turned out to be the smartest thing it ever did. Today Kaplan is the Post’s fastest growing division and its largest producer of revenue. In fact, more than half of the Post Company’s revenue comes from Kaplan.

So while the Washington Post newspaper fights against lagging market share and declining revenues, its Kaplan arm is going strong.

This doesn’t sound like a joke to me.

I’m not saying it’s going to happen, but if the Washington Post decided to stop publishing media and embrace a future as a testing and educational services company … would you consider it to be a failure?

Because I wouldn’t.

If you would, then maybe you have a similar difficulty divorcing your association from the things that it does. And that mindset is what’s leading some associations into gut-wrenching turmoil.

To sum up:

Newspapers are not in the newspaper business, and neither are you.

You are also not in the association business, because frankly, there isn’t any such thing.

Thoughts on Non-Profit vs. For-Profit Tax Status

Matt Baehr posted a small piece to his blog asking, “What if Associations Were For-Profit entities? What would change in your organization? Would your organization change at all? … I would be willing to bet that associations that run themselves more like a for-profit are doing better than those that don’t.”

The for-profit vs. non-profit question comes up occasionally among association executives. In comments to Matt’s post, Peggy Hoffman mentions Bruce Butterfield’s incubations, which often get pointed to as an example of innovation in this particular area. While taking nothing away from Butterfield’s Forbes Group (with which I am not personally familiar), I think this may be further proof of insularity among association professionals. Because there are already tons — as in hundreds, if not thousands — of for-profit associations, which almost never get pointed toward in this discussion. They just don’t necessarily call themselves associations (though some do) and almost none of them are involved in “the association community.”

For example there are hundreds of subscription-based or “membership” websites, offering specialized services such as content, training (both online and off-), “networking”, directories, and other benefits to their members. They operate in a large number of specializations, both B2B and B2C. Anne Holland (no relation), the feisty and brilliant creator of MarketingSherpa, recently created a “Subscription Site Benchmarking Report” offering a huge amount of data on these sorts of sites; I have a copy and will be posting a longer review here as soon as I have a chance to wade through all the numbers, since this data has great value to associations that operate in competitive environments (which is, I think, all of us).

According to Anne’s data, some of these for-profit sites are hugely profitable (as in seven-figure profits), many are six-figure profitable, and a large number are making just a little money. Since they tend to be very small operations, with low overhead, they don’t really need to make a lot of money. But the most successful ones move far beyond pure Internet play; they offer face-to-face events, magazines, trade shows … Sound familiar?

Subscription sites are not the only for-profit associations that are already out there. Many industries have, for lack of a better term, for-profit “best practice” groups that charge high annual fees in exchange for in-depth operational materials, coaching, in-person training, magazines and newsletters, conferences, online discussions and networking, etc. There are several of these in the broader construction industry in which I operate.

In providing services for an industry or profession, there are any number of approaches an organization (or an entrepreneur) can take. But let’s not lose sight of the value that a non-profit association model still has. Associations with a non-profit mission have, by necessity, a broader view of the sector they are serving. Because of its mission, associations can get involved in things — like advocacy, standards development, long-term sector-building — that have, really, no business model. (Anne and I discussed the differences between associations and for-profit membership sites in an interview she posted on her blog.)

Yes, sometimes taking this broad view means some associations take too long to make a decision, and clinging to the concept of consensus can sometimes cause associations to grind to a halt or water down their policy positions. But I think operational challenges like that can be addressed, if they are recognized and dealt with structurally.

In fact, the whole reason for an association to “think” like a for-profit and create high-margin products and services (like those I discussed in my last post), is to generate cash to help support the mission activities that an association undertakes but which aren’t easily “charged” for. The money doesn’t go to shareholders, it goes to the organization, which can then use it to (hopefully) “think (and act) big” in terms of the sector it serves.

Now, if your association doesn’t actually do any “mission” activities — if all you offer are things like training, content, magazines, tradeshows, etc. — then maybe it’s time to rethink your tax status. In that case, your non-profit governance baggage and lack of entrepreneurial-type rewards for staff is probably putting you at a disadvantage compared to other competitors.

But for those of us who work for associations because we like making a bigger difference for the sectors we serve, I think the non-profit status still makes sense. (And for-profit groups recognize the value of non-profit operations; I know of at least two in the construction industry that have formed c(3) foundations to raise money for educational support.) But I believe we must be conscious of the structure we choose (or “structures” for those who have more than one corporation) and its impact on how we operate. As opposed to just “being” a certain way because that’s what we have always been.

What If Associations Weren't Afraid to Generate Serious Cash?

ASAE’s Acronym blog is promoting what it calls “Big Ideas” month, though it really isn’t — it’s more like “What If?” month.

So here’s my what-if question: What if associations weren’t so damn afraid to generate serious cash?

Because you can, you know. Did you know that?

Never mind your archaic governance structure, your internal politics, your consultants who think every little thing you do should be strategized or categorized, your bizarre “I don’t care about money, I care about mission!” attitude (as if fulfillment of any mission is possible without big, fat, green dollar bills) …

No, if you’re worried about making this year’s budget or next week’s payroll (those being the sorts of things that those of us who actually run associations worry about) — you really have no choice but to set all those things aside and think, “How can I bring in some serious cash in the door, quick?” The good thing is, for a typical association, it’s not as hard as some people make it out to be. Heck, this morning at 11:35am I was struck by an idea, and at 11:40am an email was sent out to an opt-in list that had brought in 10k by the end of the day.

Maybe 10k in one afternoon isnt a whole lot of money to you, but it is to me, and in any event, things like that have a way of adding up.

Thing is, as an association you have access to a cash-generating apparatus that would make for-profit companies salivate, if you’ve been doing at least some things right. They include:

  • Access to an opt-in list of people who are interested in particular things (preferably, not just members)
  • A database that gives you information about more specific things these people are interested in
  • Access to experts in the field you serve
  • “Goodwill” of your organization’s brand and name recognition within the marketplace you serve

Those are some fairly powerful and potent things. Basically they add up to this:

You have the ability to create things that have tremendous value to people you have access to who are willing to buy things from you.

(I look forward to @joerominiecki‘s critique of the grammar in that sentence.)

For example, you could:

  • Conduct surveys of members on important operational data points, analyze the results, give the participants the results for free and sell them to everyone else at a premium
  • Find good trainers in your field, use Camtasia or something similar to create training CD/DVD packages on topics important to your field, offer them a royalty and sell resulting packages at a premium
  • If you already sell products of some kind, look at extensions — such as training packages further explaining them (see bullet point above),  “lite” versions, “advanced” versions, “specialty” versions — and sell at a premium
  • Trade assn? Get 10 “legends” in your industry, record interviews with them speaking with a good moderator wherein they reveal their best tips/techniques/secrets, get ’em transcribed and hire an editor to package them into a book, or just produce a CD with the audio, or both — and sell at a premium
  • Publish a magazine? Pull content that still matters about a particular topic, revise reedit reconfigure, sell as downloadable or print content for people interested in that particular topic, at a premium
  • Offer a subscription program for on-demand webinars, combining new workshops with repurposed speakers from F2F events, at a premium
  • Mouthy bloggers in your industry or profession? Ask the best ones to write a book on their specialty, pay them royalties, and sell book at a premium

Those are just a few ideas off the top of my head — because the industries or professions that associations represent are so different from each other, it’s impossible for me to suggest more specific ideas for you. But I can tell you that I’ve done most of the things listed above, to pretty good success.

But let me be clear: You should not be looking for one idea amongst the bullet points above or others that you generate. You should have a culture wherein lots of little ideas get discovered, explored, and tried. None of these ideas (or your ideas) will be some sort of homerun — in fact, I think it’s a big mistake to look for homeruns at all. You’ve got a long nine innings ahead and each and every play counts.

You’ll notice that each of my bullet point ideas above are described as being sold “at a premium.” This is because I think an alarming number of associations underprice their products and services. It’s the margin you make on products like these that ENABLE you to focus on the mission, the reason for your association’s existence — your members’ success. Spending a lot of time and energy on products with low (or no) margins will DEFEAT your mission. Offering successful products that meet a market need while producing high margins are what FREE your association to focus on the REAL “big ideas” that matter for your constituency.

I know that there are some who want to dismiss any sort of focus on little products like those I describe. Some of them say you should focus on your strategic plan; others on some sort of “social revolution” or whatnot. None of them offer any solid explanations as to how you would realistically pay for either, and I suggest you closely evaluate the actual track records and qualifications of those who make suggestions like that.

The fact is, if you want to do something, anything BIG, the easiest way to fund it (and yes, it must be funded) is through a steady stream of little things that are of tremendous value to people you have access to who are willing to buy things from you.

It’s not nearly as hard as you think.