Monday, February 15, 2010

What if Associations Weren’t Afraid to Make Money? Part 1

What if Associations Weren’t Afraid to Make Money?
How associations can create markets to generate serious cash.

My advice is:
Don’t create products, create markets. Then, create the products.
If your annual product planning cycle isn’t looking forward, building on a 10 year plan, then you are just reacting, and you are doomed to mediocrity, or worse.

This is in response to the thought provoking post What If Associations Weren’t Afraid to Generate Serious Cash? by Kevin Holland on his Association Inc. blog. I think comments are closed now, but then, I’m about a month behind.  :<)

Kevin offers some ideas on products that an association can create with limited time, money, and resources. They are all pretty good and worth exploring for some short term cash.

Forget short term for a bit and let’s look long.

I’d like to talk a bit about something that isn’t widely understood by many associations, That is, how associations can create markets and own them. The fact is, associations are uniquely positioned to create markets. Their structure, their wealth of member trust; give associations power to create, regulate, and supply markets. Some associations understand this idea and use it to good advantage. The concept is also not lost on for-profit competitiors. It is, however, more difficult for them.  But some commercial enterprises are encroaching with their own certifications, assuming the role of the professional association. Associations cede this territory at their own risk. You know who your competition is and it’s a safe bet they aren’t all nonprofits.

If you are any good, you have for-profit competition.

Advice for associations ready to take the long view: create a market with the intention of providing products and services to support it.

There are two primary opportunities for creating markets that are unique to associations.
  • Certification
  • Standards and nomenclatures

I’m going to split this post into two parts. In part one of this post I’ll deal with certification products and opportunities.

Part I
Professional certification, through an association, to a body of knowledge established by the association is a huge revenue opportunity. Certifications are often referred to as the “golden handcuffs”. Certification binds with money, if not blood.

 As an example, I recently earned my CAE designation through ASAE. There were upfront costs for me in preparation and certification, paid to ASAE. There will be credential maintenance costs now that I hold the credential. These costs include membership dues and continuing education credits. I expect that I will continue to be a member of ASAE and will purchase products that qualify for continuing education units (CEUs) to maintain my certification status for as long as I work in the association space. Let’s conservatively put the value of my future purchases at $3K over the next 5 years. That’s a 200% increase over my annual dues revenue for the same period. Plus, I’m retained as a member. My return-on-investment is, as yet, undetermined.

Some products that are related to certification:
  • Pre-certification
    • Membership
    • Books
    • Courses
    • Testing fees
  • Post-certification- anything with CEUs attached.
    • Membership- as a requirement for credential maintenance.
    • Books
    • Courses
    • Assessments (verification of continuing education)
    • Distance learning and seminars
    • Meetings
    • Velvet rope channels
    • 3rd party CEU approvals (you must charge for this!)
    • Other CE maintenance opportunities.
The primary challenges for the association establishing a certification are to create visibility and value of the certification within the marketplace. Does the credential get you more money in the marketplace? Is the credential required for employment consideration and reference in employment postings? It can take time to establish your credentialing within the employer community. When employers recognize that your credential means quality and start listing it in job postings, your program is "golden".

 Creating a certification program is not done in a day. You need to establish a body of knowledge based upon a job analysis for the position. You’ll need buy in from members. You will need member participation in establishing the credential, defining the body of knowledge, and creating accurate assessments of competency. Many members will welcome the opportunity to be credentialed. Some will resist, seeing it as another hurdle for them after they have already proven themselves. Consider how barriers can be lowered, or existing members can be grandfathered during a specific window.

If the barriers to entry are too high, your credential may fail. Beware of protectionist instincts that restrict your credential to an existing association membership. Your credential should facilitate your association’s long term growth.

 To enhance the credibility of your certification, you will want 3rd party accreditation for your certification scheme. The two primary accreditors for professional certification are National Commission for Certifying Agencies (NCCA) and ANSI.

 Attaining these 3rd party accreditations is not that hard if you can do what you think you should do. There are costs involved. These accreditations will set your program over and above the credentials offered by your for-profit competitors.

 Part II on the way:
Non-dues revenue through standards and nomenclatures.

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