The Essential Role of Non-Dues Revenue for Associations With Sean Soth

Full Transcript

Bill Sheehan (00:00):

On this episode of Learning by Association, every association says yes, non dues revenue is a critical initiative for us. We’re going to do it. And oftentimes the intention is there. It’s the implementation of seeing it through.

Sean Soth (00:19):

There’s so many different shades of association sustainability and potential. And the good news, everyone, is associations have this incredible point of access in the way we build community and the way we convene and educate and all the right things that make it a valuable tool for what the commercial side of business is trying to catch up to.

Bill Sheehan (00:50):

Welcome to Learning by Association, a podcast brought to you by D2L where we delve into the every evolving world of associations and the challenges they face in navigating the currents of change. I’m Bill Sheehan and I’m thrilled to be your host. Join me and our guests as we explore the role learning plays in driving associations forward and how it can impact every part of your organization from recruiting to engagement and renewals to staff development, business strategy and more. So let’s dive in.

(01:19):

Hey Sean, how are you today?

Sean Soth (01:21):

Doing great. Hey, Bill.

Bill Sheehan (01:23):

Hey, thanks for being with us.

Sean Soth (01:24):

Happy to be here.

Bill Sheehan (01:25):

I really appreciate this. You have such a unique background in a lot of the topics we discuss here on Learning by Associations and one of the ones I’ve been dying to chat with you about is really about the importance of non dues revenue and really starting to help associations see charting the course beyond membership. Like the essential role of non dues revenue and the association’s success now and in the future. I just think with so many associations right now facing … Just this evolving member expectations are changing. There’s a lot of economic pressures and diversifying revenue streams I think has never been more critical.

(02:06):

And I do want to touch on some things that your organization does. Some of the report you have done is very critical. I see a lot of talk about that in the industry. But right now I think non dues revenue is probably the most significant concern with associations now, even more so say than membership acquisition, membership renewal is up there. So it’s not an option anymore for associations, but a necessity for them to sustain growth and delivering these wonderful services to associations. And I really can’t think of a better person in the entire industry than Sean. So Sean, I would love to give an introduction, but I don’t think I would do it justice. You have one of the most unique experiences and careers within the association space. If you could, just give us a little bit of on your career within the association space because it’s unique.

Sean Soth (03:04):

Thanks, Bill. Well, probably like most of us in the association world, it wasn’t a career path. I had always thought that business development would be my backup job. Your folks tell you when you get to school, make sure you have a backup behind the passion idea that you might have. I took a job with a company called Network Media Partners. At the time, I think we were actually Network Publications and all we sold were ads. And most of our clients were associations. We eventually transitioned to events and I really had a great education of what associations needed, how their portfolios were run. And we had an awesome team. All of us working hard back in the day where you would all face each other in a bunch of cubicles and make sure you made it happen boiler room style.

(04:04):

13 years ago, I had this opportunity to go out on my own and start Hi-Fidelity Group and basically we’re a boutique sales as service agency that provides full sales and marketing support for essentially non dues revenue, but with a strategic edge. Our first client was the Society for Clinical Research Sites. And I was able to start that with a great friend of mine, Christine Pierre. And Bill, one of the impetuses to PAR and the whole prioritization of non dues revenue really came from our story with SCRS. Not to get too long in the tooth here, but when COVID happened, we were around 95% revenue from events. And we had a day where most of our team had to be let go. And the chairman at the time shared, “Listen, if you can keep things moving, keep it moving, but we are essentially rolling down to just keeping the lights on.” That wasn’t acceptable for where we were as a human race. Our members are incredible. They are the front lines of clinical research. So the folks that actually would be administering the vaccine.

(05:43):

We had the good fortune of the incredible community of folks that we work with at SCRS stayed with us through COVID. It forced us innovate and come up with new non dues value first to provide the market to keep everything moving. And we just thought if we can make that kind of an impact … And we’re through it all and doing great. Really proud to be part of an amazing team at the Society for Clinical Research Sites. But even more amazing is our membership. But a big part of that is the collaboration between suppliers and members. Actually it is the glue. We got through COVID and we just thought, could we share that kind of impact? Could other associations have it? And that’s been the impetus, if you will, the fuel for the professionals for association revenue. That idea.

Bill Sheehan (06:44):

Yep. Two things. I think that shows the necessity, right? I think what COVID really did is really expose the need for non dues revenue to continue the operations of the organization, including keeping staff, paying rent, keeping the lights on. It really forced that issue. And I think it demonstrated that associations can be very creative with the support of their board to move in a different direction than they’re normally moving in. So I think that the one thing that COVID did is not only expose the critical nature of non dues revenue, but also associations can operate like corporations. Remember we always joke about the 501 is tax status, not a business model. So a non-profit is you are allowed to make profit as long as you put the money back into the organization. And I think that COVID demonstrated … I think there’s been associations prior to that that we’re very successful. But most of non dues revenue was coming from trade shows. Bringing buyers and sellers together.

(07:53):

And I think what happened in COVID, and I think you’re demonstrating this, and I want to talk a little bit more about PAR that professional for associations revenue here in just a second. But I think what COVID really did is put … We were all in the same boat at the same time with the same problems.

Sean Soth (08:10):

We were.

Bill Sheehan (08:11):

That never really happened in the association world in its history. We’ve had economic downturns, but that may have not affected say the nursing industry and those type of things. But COVID really affected the whole entire ecosystem of associations, both suppliers and staff and members. And for the first time, we needed to lean on each other. And I think what happened is the suppliers who had the wherewithal to support these types of things said, “We always wanted you to be successful as an organization. Now we need you to be successful or we’re all going to go out of business.”

(08:47):

And so I think they put their hats together, their thinking caps on, and they really got in alignment with saying, let’s really ensure that this organization that represents the industry to protect, promote, and advance whatever that industry is, stays in business and can get us through this. And I was exposed early on to PAR and that philosophy that you guys have created there to me is one of the most unique events I’ve been to in that the engagement and participation from both the association staff and vendors is phenomenal. It’s not a sales pitch, it’s a learning experience there. I’d like for you to talk a little bit about that because I know the folks that where … You’re the brain child and got it started. But the folks who really got that started, I really think you guys saw the future. And to me it’s the new business model for the associations on putting on events. Tell me a little bit about that PAR.

Sean Soth (09:45):

Sure. So just before COVID, I kept running into … In our role, we get to meet a handful of folks that lead business development efforts for their associations. And I’d go to shows, I’d go to other meetups, just like other association executives, I want to meet my peers. I want to learn more about what they’re dealing with from a challenge perspective, but also what are the opportunities, how are they winning in the market? And I just could never find that. In fact, it’s even hard to find now, if you were to go on LinkedIn and say, I need this proficiency. I’m looking for folks like this. I reached out to a handful of organizations that I really admire. Organizations like IFT, Institute of Food Technologists and PMMI, the packaging folks, and Massachusetts Medical Society. I could go on. MCI does a great job.

(10:49):

And I said, “Guys, what are you hearing? What’s out in the market? And would you be interested in maybe getting together and having just a forum, a meetup so we can share ideas and notes?” And the original model was just to have a conference and that was going to be RevUP. But in reality, just like every association, sure, we need to convene, but we need to elevate too. And what we started with, PAR is a member community. It’s a community of associations all who have different roles. But our two profiles are really the chief executive team And the revenue producers and anyone that is involved with that revenue producing. The sustainability of the work.

(11:40):

It’s not just about non dues. It’s also about non dues in the stratosphere of strategy. I would say that what we’ve learned is that our C-level folks really are trying to find ways to be efficient and effective. And our producer folks are trying to find ways to collaborate internally. Up their value externally. All of the pieces that go into what we now known as modern business development, which is changing quite a bit. So we’ll start out as just like the idea to have a day-long session together turned into a member organization and now we are roughly 400 members from 140 organizations roundabouts and keep growing. And we’ve grown slowly because we want to make sure that we’re doing the right things, we’re meeting the members where they are, and maybe even collaborating on what we all need together in the future. And what’s fun Bill is that we get to learn along the way. So it’s been pretty awesome.

Bill Sheehan (12:54):

Yeah, I’ll tell you something. And I’ve been there to a few of your events and have always been lack of a better term, rejuvenated when I leave. And the reason I think that is … And you and I have both been in the association … We’ve been association staff. We’ve run and worked in associations. And I can promise you every association says yes, non dues revenue is a critical initiative for us. We’re going to do it. And oftentimes the intention is there. It’s the implementation of seeing it through. And one of the things that I see at PAR is the conversation among other associations. I feel like this is … I’m not selling PAR, I’m just saying I have received so much intelligence there. Is that the association executives, not only during breakout sessions, but when there’s other social events, they’re all sitting down talking about how do you sustain the non dues revenue? How do you begin to create a new revenue stream? And then how do you support that?

(14:04):

And if you’ve never worked in an association, it’s very hard to explain that your day changes minute by minute. I always say you have a million bosses because you have members and plus the bosses internally. But the thing about non dues revenue is in general, it seems like a fairly straightforward initiative. We’re going to charge for something. They charge for membership, they charge for events, but we’re going to create products and services that we think are going to be viewed as trusted and accurate because it’s created by subject matter experts. And then we’re going to put this package together and then we’re going to sell it to our members. Now in theory that says, let’s do that.

(14:48):

I think where associations are falling short is … They have a lot of responsibilities throughout the day, and to really step aside and say, I’m just going to focus solely on business development to generate non dues revenue. That goes away because COVID reduced not only finances, but resources, staff resources. So now associations are being asked to do more with less, but the member expectation hasn’t changed. And I think the one thing that I loved about PAR is that they’re all going through the same thing. It might be a different industry.

(15:24):

But if you were to give some advice to an association that says, we got a pretty good show. It’s doing some revenues-

Sean Soth (15:33):

Yeah.

Bill Sheehan (15:35):

From a strategic side of things, what would you say to an association that says, here’s a good way to … And you’ve had some experience, I’ve talked to you, you’ve done some pretty cool things. What are some of the tidbits you might give an association to say, when you’re thinking about generating non dues revenue, here’s what you need to think about. What would be some of that advice that you would give an association?

Sean Soth (16:01):

Well, one of the things that I think, there’s kind of like these two camps in the people that I meet. And right, wrong or indifferent there’s associations who are successfully meeting forecasts that doesn’t necessarily mean that they are successful at revenue production. What if they were the best market option in their given industry? What if that allowed them to have incredible impactful breakthroughs for their mission? That is strategy. That is thinking through how we could approach the market differently and uniquely. And we are fortunate to have many folks in that camp. They’re not looking like, “Hey, I need to increase my bottom line tomorrow.” It’s just how do we make this better?

(16:57):

Then there’s another camp where unfortunately the bottom’s falling out and they’re really in a challenge. And it could be for any number of reasons. So those folks are looking at how, what do I do? What are the things versus the how and the why we should do things. So we have this unique mix. And like you said, everyone’s structured a little differently, which is why business development as a proficiency or competency has been really hard to nail down for most associations. We’ve met some incredible teams, no question there are … They do exist, everyone. They do exist. And there are also incredible folks in maybe underperforming internal scenarios. Maybe they’re great at what they do, but the team around them, not necessarily the sales team, could be the executive, could be the board, could be operations, or even finance is challenging. I’ll get back to your question on what I would recommend, but I just wanted to set the stage that there’s so many different shades of association sustainability and potential. And the good news, everyone is associations have this incredible point of access in the way we build community and the way we convene and educate and all the right things that make it a valuable tool for what the commercial side of business is trying to catch up to.

(18:39):

And many of you are probably dealing with commercial competitors. I feel like there’s something to be said there, but I want to get back to your question on what we would recommend. Well, the first is just understanding the value you are providing to the market. See a lot of associations If you were to put all your products across the line and just rank what’s the highest value for your members, what’s the highest value for your solution, provider, supplier, community, your exhibitors, your advertisers, your investors? And then what’s the feasibility of delivering that at a higher value, a higher cost? What must be true in order to improve it? Start asking those questions. In our work, we’ve been introduced to the strategic thinking of Roger Martin. He is a Canadian strategist. A brilliant guy. He’s helped incredible brands, and he positions strategy in this framework of what do we need to win?

(19:58):

What must be true for us to win? Now just ask that question like in D2Ls case, our education component. What must be true for this to win? Well win what? We’re not really competing, we’re just delivering it. Nope. We want it to be the best in the market. Let’s just start there. So one thing we’ve learned, Bill, is strategy is missing for business development. And what we hope to do is connect those dots and give those opportunities of new thinking for the people that we reach. So our advice would be, do you have a strategy and start with something that’s aspirational and related to your mission. I can give you our examples with SCRSI feel. Like with the work ahead, that’s really our number one lean into. How do we do this the right way and how do we do it where we can share aspirations from the C-suite and board all the way down to the operations team.

Bill Sheehan (21:03):

Yeah. That’s a good point. And you referenced something too. I would like to hear maybe an example or two that you’re doing some stuff there to society. But you touched on something that I think is critically important. And I’ve been in the association space now for almost 30 years. The one thing that can stifle those strategic initiatives can be your board and here’s why. The board members will typically be on there for maybe two or three years, depending on the bylaws that they can serve. And sometimes they think of a nonprofit as, wait a minute, you guys can’t make money. You’re a nonprofit. You’re supposed to give everything away as part of the membership due. And the fact of the matter is, no, that’s not it. 501Cs we’re set up to protect them from certain taxes and the like so that they could do things to promote the industry.

(21:53):

But sometimes that board can say, “Wait a minute. You can’t all of a sudden start charging for something that you’ve been giving away for free. And if you guys come up with a product under the auspices of the association, well, that should be given away to the members as part of their dues.” And the fact of the matter is that’s just not true anymore. You can show them your financial statements and say, “Guys, we’re running out of money. Our membership dues have been stagnant. If we raise, we lose membership.” Members aren’t renewing because there is competition. Not only from other trade associations, but from other for-profit organizations that provide the services that associations are providing as well. So there’s a lot of that commitment.

(22:35):

I think it’s imperative upon that C-suite to educate the board to say times have changed and so has our business model. And so when we’re developing strategies, it’s really to provide a product to our members that may cost something, but at a discount for members and not at a discount for nonmembers so that there’s benefits of membership. But now in today’s age, membership dues are really going to cover the the GNA expenses, just to pay the rent, pay salaries, and keep the lights on. Everything else has to sustain itself. And I think when you touched on that from the C-suite and the board, I thought that was so critical. And I know that your society, you guys are pretty innovative and entrepreneurial. Do you have a few examples of just how you either came up with an idea or how you grew an existing product into something else?

Sean Soth (23:28):

Yeah. I’ll share a quick story from where we were back up against the wall. I had mentioned impetus of latching on to strategy and impact. Well, when COVID happened and we lost all of our non dues potential assets in about a span of a week, some we had sold into an advance and now you’re dealing with a customer service issue too of like, okay, we got to refund these people. We’re not going to host the event. Or can we build something, innovate something that they would transition their interest into? All of that aside is planning. That’s just planning. And I hate to quote Roger Martin one more time, but I’m going to throw it out there. He says … And the more I learn about it, the more I agree. Planning, which we’re all really good at associations, that’s not strategy at all. Planning is an internal set of circumstances. They’re check boxes that we could control. Do I have the right dates for these webcast series? Do I have pricing for everything done? How many people do I need to make these numbers or increase membership? That’s a plan.

(24:52):

A strategy is basically a mutual aspiration with a set of potentially challenging choices. So we had the COVID situation, we lose all our events, we lose most of our revenue opportunities. We said our strategy right now came together. This didn’t happen overnight. It was a couple of weeks actually. We ended up being like, we need to be the number one choice to collaborate in the most difficult time our industry’s ever seen. That’s the strategy. Doesn’t involve dates, it doesn’t involve even numbers. It’s just that we wanted to be the top choice to collaborate in because just like with PAR or with any of the great associations that you guys work with, that collaboration is how we grow. And at that time, our members were working crazy shifts in order to begin to get vaccines and everything needed to pass through into the queue. It took … It was unprecedented time.

(26:05):

And so that’s the difference between … That just choice of we want to be the best place to collaborate informed everything we do. Okay. Well, so our mutual aspiration to be the best place to collaborate. How do we do that on webcasts? Well, they got to be a little different. How do we do that for the suppliers that invested with us? We’re not expecting them to go, “Hey man, thanks. You keep it.” It’s crazy, Bill. This is where organizations, even successful ones fail. During that time when we would have meetups for PAR, it felt more like therapy because it was so stressful to manage what I can only say is severe customer experience situations. And one person said that his executive had come in and said … They were talking about what to do with the meeting, which they had to cancel a month out. And he’s like, “Well, what should I do about … How do we manage the exhibitors?” And the chief executive just said, “Well, they’re exhibitors. They’re your problem.” Can you imagine if you said that about membership?

(27:16):

So we do have sometimes these moments where we’ve got to improve the way we collaborate. And so that strategy piece is really what I think is terribly important. It doesn’t have to be over thought. It doesn’t have to require loads and loads of meetings and board expectations. It just has to inform your choices together to move things ahead. And what we discovered in our research work with PAR is that 86% of associations either have an underperforming BD strategy or none at all. 86%. That’s a pretty big shift.

Bill Sheehan (28:00):

That’s a huge shift.

Sean Soth (28:03):

I think if people took that question, and you’d almost have to, well, hold on, that doesn’t seem to sound right because we do a lot of planning and the planning goes really well. But to move the needle and be that innovative place of choice for your market and industry, it’s got to be around something that the entire market, the entire organization can aspire towards, I think is a key.

Bill Sheehan (28:31):

Next time on Learning by Association.

Sean Soth (28:33):

When I meet associations who are struggling, it’s not that they don’t have all the right pieces, it’s just like we’ve never really prioritized how business development leads to sustainability.

Bill Sheehan (28:48):

We’re an attention economy. How do we capture the members’ attention and prospective members attention? Because these other competing organizations, not just other trade associations or other associations, but other corporate companies are vying for that same dollar.

(29:09):

You’ve been listening to Learning by Association, a podcast where we delve into the ever-evolving world of associations and the challenges they face in navigating the currents of change. This episode was produced by D2L, a global learning innovation company, helping organizations reshape the future of education and work. To learn more about our solutions, please visit www.d2l.com. And don’t forget to subscribe so you can stay up to date with new episodes.

Resources Discussed in the Episode

• PAR Association Business Development Landscape | Report
• How to know your life purpose in 5 minutes | Adam Leipzig | TEDxMalibu
• A Plan Is Not a Strategy | Roger Martin | Harvard Business Review
• Roger Martin