When $1B Meant Something

A retired friend likes to say he ran “a $1B arm of a company, when $1B meant something.”  His words resonate more and more as I look at trade association rate cards which seem to have been developed in a different era.
For example, one trade association with members well known in Silicon Valley, has a cap on their dues for all companies with over $300M in annual sales, which was probably a lot of money when that association was formed.  Google’s 2016 annual revenue was almost $90B – well beyond the dues cap for the association.  At this point, Google is paying the same dues as a company that is 300 times smaller and the association has no way to currently ask for more.
Another association has 5 levels of dues under $500M and only a couple over that level (extending to a $99B cap).  It appears they are now micro-segmented on the low end and lumping all of the large companies in together.  This occurred when new categories were simply plopped on top of an old dues schedule.
It’s not just sales dollars.  Ask yourself if there has been a disruptor in the market.  Many trade associations do not have categories for members who have created new products and services in their markets.
If your dues haven’t had a real review since 1990, you may have missed out on potential income from new ventures by your members including use of the internet, gene modification, new high-tech processes, mobile data, or so many, many more things.
A new dues schedule isn’t hard to put in place, but requires effort and patience.  Associations generally need to assure where all of their members will land in the new schedule to assure there isn’t a mutiny.  It takes both qualitative and quantitative information to design new curves that find everyone a place, but it can be done.  Next, the new formats need to be brought to the Board and to the membership to make certain all are comfortable with the changes.  Don’t overlook the time and patience the latter step takes.

Finally, if you are reviewing dues, it’s time to review the value proposition.  If they are paying the same dues they paid in 1990, are they getting the same amount of value?  Are they getting more? Are they getting less?  If members are asking for deals on their dues, they probably are not feeling they are receiving the value they desire.
Some of the problem may lie in the fact that companies fall into a zone that was the high end of your dues schedule when the schedule was designed.  However, now they are actuality much smaller in purchasing power than the curve was designed for – especially if they are approaching the old cap before new categories were added on.
Your members may be at a point where their revenue was a lot of money when the curves were built, but in 2018 dollars, it doesn’t mean something.  Redesigning a dues curve is really about right-sizing for today’s value.
Moery Chief Analyst, Patty Leeman, MBA, CAE, is a seasoned senior association executive with more than 20 years of experience developing and leading strategic association initiatives. She conducts research, analysis, and assessment services projects on behalf of The Moery Company. Follow Patty on Twitter and connect with her on LinkedIn.