Sunday, June 2, 2013

Are associations stuck?

Guest Blog by Tom Shay

"Toto, I have a feeling we're not in Kansas anymore."

And Dorothy was right.

We’re not able to operate associations as we did 20 years ago.

Unfortunately, as I visit with association executives, I am finding some that think the old ways are going to regain their popularity, or usefulness, or that they can nurse the old ways along until they retire and someone else will have to deal with the association.

In recent visits with association executive directors, the conversations with two stick in my mind.

The first association executive director ...

... said they were unable to rally the membership on an issue that the executive director felt should have had the membership in an uproar. The issue dealt with eliminating a sales tax and how having this tax would have the membership at a disadvantage.

The executive director expected members to engage their customers because it would affect the final price a customer would pay for the products from the association member. This is a large national association. Yet, the executive director said only 12 members responded to the association’s call for participation in speaking to legislators.

This same executive director told me his association expected to build membership with several offerings. The first was going to be a bank card rate that would be exceptional. Surely, the executive director said, members would get excited about that.

This does not make sense! If members did not get excited because of an elimination of a sales tax, why would anyone expect members to get excited at what would at most be a fraction of a percent savings in expenses?

In addition to the bank card, this executive director’s association was going to offer insurance program that would be at what was expected to be a substantial savings. Of course, the insurance company’s representatives would need to convince the association member to look at the offering.

SCD Daily’s footnote: The local paper here in Fort Myers recently featured a local association and quoted the association executive excitedly sharing that members joining (as part of the national) would get a $500 discount when they buy a GMC truck. This may be one of those “deals” that Tom is highlighting! 

The second association executive director ...

... said their format for association revenue focused on companies that had products and services for members. For commissions of up to 50%, the association would give their database to the company and allow them to sell. The example this executive director gave was cell phone service.

There was a time (perhaps when Toto and Dorothy were in Kansas) that associations had a working model that produced the necessary income for the association to exist. The association could process bank card transactions for a member, sell insurance, printed business forms or even calendars to give to customers.

This model began to fall apart, not because of anything the association did, but because others saw it as a way to make money as well as getting that member to become more dependent on that other company – most frequently a vendor of products or services to that association member.

Many associations did nothing even though the business world changed around especially for their members.

The old model – where associations helped the member to save money -- work for many years. As my father would say; however, “You can’t save your way to profitability.”

In Kansas, and most everywhere else, there was a time that saving on expenses was all that a business needed; revenue came naturally. Today, association members need a lot more. In the world of small business, the massive changes challenge owners. Many are ill-equipped to deal with the changes.

They do not know how to compete against the Internet, and large corporations that not only have the advantage of economics of scale, but a very different business model that is difficult to compete against.

As has been said in plays, movies and television shows, you should not bring a knife to a gunfight. The knife worked well for many years for the members of the association and for the association. If the member and the association are going to continue, they have to learn what it takes to compete in the current marketplace.

The association has to become relevant to the members. The association cannot continue to save money for a member. The association has to find solutions to the problems of the member. I could say that the association needs to listen to their members for what they want. However, the example of the sales tax shows that it is difficult to get the attention of the member. Instead, the association has to find the solution to what the member needs.

The association has to know and understand the problem their members are facing. The association has to find the ‘gun’ that their members need.

As association members, we’re not in Kansas anymore and we don’t need any more calendars.

Tom Shay is a lifelong small business owner and manager. The fourth generation to be involved in the family business, as a native of Fort Smith, Arkansas, Tom started his first job working in his grandfather's general store. He has authored eleven books on small business management, co-authored a book on retailer/vendor relations and written a college textbook on small business financial management. During the past 18 years, Tom has written over 400 management articles that have appeared in over 70 national and international trade magazines.

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