How High is “Up?”

A question was raised recently regarding the percentage of one’s members that should be attending an association’s annual conference.  The question was submitted by a meeting planner whose event attracted less than 15% of his members, and he wanted to know how his experience compared to others.  Here’s how I responded. . .

The percentages vary so dramatically from association to association that it’s impossible to establish any benchmarks.  There are simply too many factors at play.  So, unless you’re comparing your event to one that is very similar in focus and content, there’s little insight to be gained.  

Just the fact that you’re going through this exercise is great.  Everyone in your position should be asking if their event is living up to its potential.  And that is the operative word, “potential.”  The challenge is in determining what is possible.  You mentioned that about 14% of your members currently attend your event.  If the potential (i.e., the most you’ll likely ever get no matter what you do) is 20%, you’d have to conclude that you’re doing quite well.  In this scenario, attempting to grow by one percentage point over each of the next five years would be a challenging yet reasonable goal. However, if it were determined that the true potential for your event was, say, 50% member attendance, that’s an entirely different matter.

Chances are the potential for your event falls somewhere between those two extremes. But the strategies for realizing that potential will vary dramatically depending on the size of the gap that needs to be filled.  Without a deeper understanding of your event and your membership, I’m afraid I can’t offer specific advice.  But I hope what I have provided will at least give you a place to start.

Do you know the true cost of serving your members?

An association CEO mentioned recently that his Board had asked him what they were paying on a per-member basis to deliver services to their membership.  He told them he’d get back to them with the answer.  In the meantime, having never done such an analysis before, he reached out for advice.  It got me thinking. . . he is probably among the majority when it comes to not knowing precisely the true cost of delivering services to one’s members.  

Although my years on staff at a number of associations never included C-level responsibilities, I do have considerable experience as a small business owner.  And what I consider a universal truth is this: it is not possible to effectively run any business (including an association) without knowing the numbers inside-out.

Now, what you do with that information is another matter altogether.  In a traditional for-profit business, the price of goods or services you provide to your customers is based on some form of “cost plus” formula that ensures a reasonable profit margin. In the case of associations, it is very common (more likely the norm) for the total cost of the services delivered to one’s members to exceed the dues charged.  This is why non-dues revenue is so critical.

Frankly, the amount of deficit (i.e., the cost to serve a member vs. the dues paid) an organization is willing to accept is one only they can determine.  But it all starts with knowing the numbers (and as you go through the process of calculating your costs, in addition to all the obvious, quantifiable benefits you deliver to your members, be sure to look for all the less obvious things like the cost of acquiring and retaining members – things that are often overlooked).

Merging Two Conferences Into One

An association organizer was concerned that her staff was stretched to the breaking point trying to manage two annual events and was contemplated merging the two into one.  She was interested in understanding the process for managing this change.  Obviously, with so many factors at play, not to mention the potential for unintended consequences, I suggested that a better starting point should be to focus on the “why” rather than the “how.”

We counsel our clients to start by defining the specific goals and objectives that motivate them to consider a change.  Freeing up staffing resources to focus on other important initiatives, which was this person’s primary motivation, may well have been reason enough.  However, I cautioned the importance of fully understanding the potential financial implications.  If the merger of events resulted in an overall reduction in revenue, would that be an acceptable price to pay for what you consider a “greater good?” 

All too often we make decisions based on what we think (or worse yet, hope) will be the result.  What it really comes down to is working through a series of “what if” scenarios, weighing the pros and cons of each and, ultimately, making informed decisions.  In other words, limiting the potential for any “surprises.”  This is definitely not a time for trial and error!

Negotiating for Success

An association meeting planner who’s contract with a third-party exhibit management company was coming up for renewal asked me recently for advice on negotiating the new contract.  The question prompted an interesting discussion.

How you approach any negotiation of this kind should really be driven by your goals and objectives, and how you measure “success.”  If the management company is responsible for sales and not just logistics management, and assuming non-dues revenue is as critically important to your organization as it is to most others, a key measure of success would be you’re bottom-line revenue (i.e., how much you have left after deducting all the fees paid to this company).

When negotiating contracts, there’s a natural tendency to focus on fees.  When it comes to sales, adding (or increasing) incentives might actually be more effective than negotiating a lower fee.  

Of course, there’s no blanket approach to contract negotiations since each situation is unique.  However, I think it is safe to say that you will want to place an emphasis on performance.  Any company you contract with should serve as a true partner, focused first and foremost on achieving your goals and objectives, understanding that their “rewards” come as a result of succeeding on your behalf.