Many associations are looking beyond membership to expand their portfolios and increase their stream of non-dues revenue. And because education and events are a major source of non-dues revenue, this is certainly a topic all of us in the business of lifelong learning need to be thinking about.
Sheri Jacobs, President and CEO of Avenue M Group and author of The Art of Membership, recently released a report, Growing Non-dues Revenue: A Benchmarking Report , which takes a close look at the state of non-dues revenue based on a survey of almost 200 association executives.
In this episode of the Leading Learning podcast, Jeff talks with Sheri about the role that non-dues revenue plays for membership organizations, why they are on the rise, and ways to potentially increase them, particularly in the areas of education and learning.
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Read the Show Notes
[00:18] – Highlighted Resource of the Week – Four reports/white papers related to the association sector that have come out in the past year or so that have been discussed on this show:
- Growing Non-Dues Revenue: A Benchmarking Report – discussed in this episode
- Member Loyalty and Learning with Amanda Myers – episode 102
- Association Learning + Technology (our own report) – episode 99
- The Association Role in the New Education Paradigm with Shelly Acorn and Elizabeth Weaver Engel – Episode 44
[01:51] – A preview of what will be covered in this podcast where Jeff interviews Sheri Jacobs, president and CEO of Avenue M Group about a new report she authored, Growing Non-Dues Revenue: A Benchmarking Report.
[04:08] – Introduction to Sheri Jacobs.
[04:46] – Can you tell us a little bit about how you got involved in this whole world of membership and what your day-to day-work with membership organizations’ tends to look like? Sheri shares that her background and interests have always been in journalism, communications and storytelling and her particular focus was photojournalism. She explains how she eventually transitioned out of this and into the marketing/non-profit community, which led her to a position at an association—and naturally into membership from there.
[06:39] – As a consultant, what does your average engagement with an organization look like? Sheri explains that at Avenue M, they focus on 3 areas:
- Conducting/gathering market research
- Financial modeling
[08:16] – When you compare today’s membership organization with the types of organizations you worked for or with 20 years ago, what are some of the biggest changes? Sheri says that financial restructuring is probably the biggest change they’ve seen and she saw it about 8-9 years ago when the recession first hit. People started reevaluating where they were spending their money and there were changes in the workforce. Also, as institutions were making decisions about what they’d reimburse, they were more likely to reimburse education as opposed to membership dues. There’s also been a lot of discussion around younger professionals (millennials) and how they aren’t necessarily getting encouraged by their mentors/supervisors to join so they are more hesitant. The old membership structures that were a “one size fit all” and worked well in the past may not work well going forward.
[10:53] – For anyone who may not be clear about the definition, can you briefly explain what “non-dues revenue” is and why it is an important concept? And what have traditionally tended to be the main sources of non-dues revenue? Sheri explains that non-dues revenue is any revenue that an organization earns that comes from a program, product, or service (typically) or from sponsorship or advertising—so any revenue source that’s not directly related to membership dues. She emphasizes that non-dues revenue is probably an essential component for any organization because every association offers things they can’t charge for because it’s part of their mission. Therefore, they need to be profitable and find other sources of revenue that connect back to their mission—it’s essential that they understand pricing and how to be profitable in other areas so they can provide some of the services they’re structured to.
[13:08] – In addition to sponsorship and advertising, I imagine traditionally one of the biggest sources of non-dues revenues have been events like the annual meeting and conferences—are those the biggest areas? In addition to those, Sheri says their study revealed that in-person conference and trade shows still account for the vast majority of non-dues revenue for associations. The most common source of revenue for associations from those surveyed in the study were from job boards (87%). Mailing list rentals were also a common source of non-dues revenue.
[14:27] – Is this the first time you’ve done this particular report? Sheri says that it is and it came about because they were doing so many more projects around helping organizations restructure their membership dues. One of the key components of this was understanding what other revenue comes in and what you would bundle/not bundle with the membership. As they started looking at the entire financial model for associations, non-dues revenue kept appearing in the conversation and it ultimately led them to put together the study.
[15:58] – It seems like the biggest headline from the report is that almost half of the associations that participated anticipate that a higher percentage of their budget for 2017 will be attributed to non-dues revenue. Is underlying this a concern about membership dues and what’s going to happen with them over time? Sheri points out that this is the case for some organizations but not for all. There are certainly organizations out there that are experiencing growth but others that are seeing changes in the market that are impacting membership. So some of the reasons many are looking to non-dues revenue is because membership is decreasing but in other cases membership is fine and they want to diversify their portfolios—many are looking at reach in order to achieve their mission which shouldn’t rely as heavily on membership.
[18:07] – Do you see this as an overall trend—where eventually organizations are going to be looking at membership as one product in their portfolio—and maybe eventually non-dues revenues surpass membership dues revenue for a lot of organizations? Do you see things headed in that direction or is it too soon to say? Sheri acknowledges that it probably is too soon to say but she wouldn’t be surprised if it does happen which she says isn’t a bad thing. If most organizations go back to why they were founded/their mission, they would probably realize that the word “member” is not necessarily a key component for why they exist—it’s usually about the profession or the people they serve in that profession. If they go down the path of identifying programs, products, and services that can provide real value and that are relevant to their market, they have to make investments in that which isn’t a short-term commitment. As long as it’s related to the mission of the organization, Sheri reiterates that she wouldn’t be surprised to see a trend of an increase in non-dues revenue.
[19:59] – Focusing specifically on education and learning as sources of non-dues revenue, what do you see as the biggest potential growth opportunities in these areas? Sheri talks about a number of different areas that organizations can explore (in no particular order):
- There is a lot of opportunity to bring in more sponsorship and advertising dollars from the vendors who are working in the space by thinking about designing packages/programs/opportunities for them to achieve their goals. By doing this, they’ll be more likely to invest in your programs and events, which will help to attract attendees and bring down the cost.
- There is a growing need to meet needs as they come up (people want what they want when they want it), so although in-person conferences and events are good and will always have value, Sheri sees a growing trend towards being able to provide more web-based, mobile-based, education that’s more in-demand and interactive.
[22:40] – You mention in the report that even though the adoption of them has been small, the revenue from virtual conferences is growing and also that Webinars are growing in popularity and producing revenue—I assume you’d see continuing growth in both of those areas? Sheri agrees both because of the data in the report but also anecdotally as she looks back over the past 5-6 years, many organizations were very eager to jump into that space but they may not have hit their target goals. This doesn’t mean it wasn’t a success or a good option but it may have needed time for the community to catch up and get on board with it. She expects there to be growth in virtual educational conference and trade shows. For anybody who has tried them in the past and didn’t have success, Sheri encourages you to investigate again and look at the feasibility to see if it’s something you can offer again.
[24:45] – The report showed there are non-dues revenue opportunities with podcasts—is that correct? Sheri points out that almost anything that’s connected to technology will likely have, not only revenue opportunities, but growth as well in the next 2-3 years (or even sooner). She really believes that as organizations better leverage the technology to get the education and the information out there in ways that people can learn and obtain it when they need it, there will be tremendous opportunity and likely growth.
[25:45] – For organizations seeking to grow non-dues revenues – particularly from their education and learning portfolio – what are some steps to start taking today to help ensure you’re going to get that non-dues revenue success tomorrow? Sheri suggests starting with a few key steps:
- Do some real financial modeling around the marketplace.
- Look with your vendors/partners out there that are searching for ways to connect with your audience and develop a sponsorship package that will provide them with the opportunity where they will have increased exposure to them in ways that are meaningful to them.
- Build a marketing budget to support all of this.
[28:44] – What is one of the most powerful learning experiences you’ve been involved in, as an adult, since finishing your formal education? Sheri admits there have been many different experiences but shares one related to attending a conference of one of her clients where she learned completely different information than what she normally focuses on. This ended up being transferable to her field even though it was completely different and it helped her see the value in taking a step outside of your own space to learn from others.
[31:06] – How to connect with Sheri and/or learn more:
[31:57] – Wrap Up
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[33:29] – Sign off