Sunday, May 19, 2013

Do Whatever Rings the Cash Register: Associations & NonDues

Back in March, Laura Petrecca of the USA TODAY wrote a story headlined Ad agencies go from jingles to entrepreneurship.  

Advertisers are creative, right? So what's to stop them from thinking outside the box enough to create their own product lines?

When I started my association management company, a company approached me about producing some product literature. I called Charles Rumbarger, CAE, who was my mentor in starting the AMC and asked him if I should do the project. “Steve,” he said, “Do whatever rings the cash register.”

I followed his advice then and for the next 19 years that I owned my AMC.  Which is one reason I'm a consultant, speaker and blogger.

As we grew, I sometimes wondered whether – given the talent on my staff – we should be doing a lot more than managing associations. But, I ran out of time.

I thought of Chuck’s advice again in April when Barry J. Barresi, OD, Ph.D. is the Chief Executive Officer of the 36,000 member American Optometric Association highlighted non-dues revenue in a meeting of the St. Louis Institute for Association Leadership (STIAL).

Associations continue to “debate and discuss” non-dues revenue and the role associations should take in providing “for profit” oriented products and services to members and non-members.

The St. Louis Institute for Association Leadership (STIAL) featured non-dues revenue at its April meeting. 

Dr. Barry J. Barresi, OD, the Chief Executive Officer of the 36,000 member American Optometric Association, spoke and offered the AOA’s move to a for-profit subsidiary. Barry also serves as of AOAExcel, Inc., the wholly owned subsidiary of AOA, a health services and health information technology company.

When arrived at AOA, dues represented 65% of its revenue. In checking with ASAE, he discovered that AOA was too dependent on dues revenue as compared to its peers.

Dr. Barresi said AOA’s process of developing strategies and implementing an aggressive non-dues revenue plan involve three core elements:
Politics, people & profits

Needed to get board open to and comfortable with taking risks. Most non-dues require comfort with three kinds of risk:

Financial risk

  • Operational risk (upset someone)
  • Reputation risk (impacts brand)
NOTE:  You may want to read Is Fear of Risk Killing Association Innovation that Katie Bascuas posted to Associations Now.
Manage the board's expectations ... give it enough time to succeed

Finding a champion: either on board or a former board member (past president). The champion helped CEO get board ready for moving to a subsidiary

Dr. Barresi found three types of people were important to the process and decisionmaking:

  • board member and outside consultant
  • existing staff
  • nay-sayers: (focus on needs of member ... need to serve business interests of members)
His goal is to guide members through the doors to success ... need to create programs to help them

While generating income and profits are key element of non-dues revenue, Dr. Barresi highly recommends focusing on member engagement and mission over profits. He says you should not emphasize the profits but rather, talk about results in terms of member engagement; the value they are getting.
AOA focuses on KPIs (leading indicators): engagements with members.
Converted relationship with affinity groups. Don't want just royalty ... want to be the marketing arm of your programs/services
He mentioned attending a meeting where John H. Noseworthy, M.D., President & CEO of Mayo Clinic talked about taking risk, running experiments and sharing Mayo's culture of innovation as focused on three key elements: "think big; start small; go fast"

  • Big: Reflect on what you want to do
  • Small: Pilot projects
  • Speed: Get to market quickly: implementation of key programs 
Knowing What Services/Programs to Offer
Dr. Barresi said AOA does not create programs or services already offered by other vendors. He said they look for areas that are a vacuum, then build and deliver it. He suggested that associations need to be aggressive in this area or someone else may fill that void.

No comments:

Post a Comment