Redefining Key Performance Indicators for Association Business Success
In association management, revenue and business operations are becoming more important than ever as not-for-profit leaders increasingly turn to for-profit models for financial sustainability.
Associations traditionally existed mostly on membership dues, which have shrunk over the decades from about 90% of most associations’ revenue in the mid 20th century to only about a third today, according to ASAE, the Center for Association Leadership. Event registration fees and exhibits have long been a source for revenue, but even that isn’t always enough at a time when sponsors and donors keep greater watch on their return on investment.
Still, it is not uncommon for association staff and stakeholders to push back on initiatives such as selling sponsorships and advertising, or hiring a chief revenue officer, according to association leaders who attended a recent panel discussion on association revenue streams co-hosted by Yes& and Professionals for Association Revenue.
“Sometimes ‘revenue’ is a bad word in associations. But our No. 1 thing is to serve our members. It’s OK that we’re making money; it’s about what we do with that money.” -- Panelist Amanda Miller, vice president for enterprise solutions at the Association for Talent Development.
Associations sometimes find they must go through cultural and organizational shifts to make a significant increase in revenue. Participants had several suggestions for best practices:
- Build a culture of acceptance for revenue growth by using business language and speaking in terms of sustainability and value to members;
- Build processes for tracking sales cycles (which fewer than 10% of associations do, according to a 2022 study);
- Fill any organizational gaps that can affect revenue growth, such as those in data or finance;
- Break down silos, which impede the flow of data, and champion being a team player;
- Encourage all staff to be brand ambassadors;
- Support board members and key staff in building business acumen and an understanding of revenue needs; and
- Use current data to tell the organization’s story and encourage all staff members to be brand ambassadors.
To measure progress, develop key performance indicators that measure the association’s impact, stakeholder engagements and member feedback, the leaders said.
In the evolution to become more revenue-focused, panel moderator Robb Lee, Yes& SVP of integrated strategy, said an association’s annual report or strategic plan is a good place to start. “The challenge is to get alignment among departments around the strategic plan. Anyone should be able to look at the plan and see how their role fits in the organization.”