Revenue the Long-Term Executive Neglects

By: Andrew S. Lang

Sometimes new revenue is right under your nose.

I recently met with an association that reminded me how often revenue opportunities can be missed. In this case the problem appeared to have come from a fairly classic cause: A CEO who was in place for decades in a niche that hadn't changed significantly during that time.

Unfortunately, the pace of change picked up and the recession hit, and the association's new CEO needed to find net income. The association had opportunities aplenty because it simply hadn't considered what it hadn't been doing.

Here are some of the opportunities that arose from our meeting that can be used widely across associations. In fact, many associations have already implemented them. One note of caution: Raising additional revenue is often fraught with politics. But in these sometimes challenging days, leaders will often accept some commercialization rather than having to approve a dues increase.

Conferences. Our meeting began with a discussion of some obvious opportunities regarding the association's annual conference. It hadn't been charging premiums for exhibit space on aisle corners or for locations directly adjacent to the main entrance. These opportunities are well known to most associations but not to this one. (For those of you who still "give" these locations to your best or oldest sponsors and advertisers, I would say consider charging the premium, but let the best of those companies have right of first refusal.)

We also discussed the association's free preconference workshops. Many associations charge a premium for these: Why not it?

Sponsorships. Next we moved on to getting more and larger sponsorships. One of the problems this association had was that it had no promotional materials clarifying the marketplace the association could provide. In addition to the lack of attractive material, it had no data on the attendees at the annual meeting or on the number of folks reached by its communications, and it had nothing on the purchasing power of either of these groups.

With this need clarified, we went on to discuss what could be sold that it wasn't selling. Most obvious were sponsorship opportunities for its books, major research, and the like. From there, it was an easy step to the electronic newsletter. The association had planned on selling advertising for it, but it was and is my opinion that a substantial sponsorship could bring in more revenue more easily by allowing one company the opportunity to "cut through the clutter." As we talked of sponsorships, it became apparent the association wasn't reaching as many potential sponsors and advertisers as it could. I pointed out that while there were many exhibitors, few of these crossed over into other areas. For those of you who study the ills of associations, that's a clear sign of a serious silo mentality.

Governance and membership. We covered considerable territory in addition to those main issues, but there are a few other topics I think are particularly shareable. First was the creation of an advisory board. Leaders are reluctant to spend more time than they have to with vendors, but if the price is high enough and the exposure is reasonably contained, these structures can bring in very good money with very little associated cost.

Membership at this association was shrinking due to revenue cutbacks in its members' field. I proposed an e-membership as an excellent tool to keep in touch with members who have lost their jobs. If the association regularly shared some high-quality, recently developed information with those members, it should net a profit while reminding these members that the association has good stuff to offer. I reminded the association that, to make this work, everything else an e-member wanted to purchase needs to be sold at nonmember prices.

Pricing. And this led us to the last topic, which was pricing in general. Smart pricing in associations is a rarity in the vast majority of cases. In situations where membership is in decline, it is rarer still. In these situations, the tendency is simply to put the brakes on all price increases. But this association still had plenty of healthy members paying prices that hadn't changed notably in some time, and it was creating valuable new products. The likelihood that the new CEO had real opportunities for pricing increases was simply overwhelming.

This meeting brought into focus a particular circumstance that created a variety of opportunities for additional revenue. Given the diverse nature of our world, there are hundreds of circumstances that exist with opportunities galore. I can assure you that by stepping back and focusing systematically on what your association has not been doing, you will be well rewarded.

Andrew S. Lang, CPA, is with LangCPA Consulting LLC in Potomac, Maryland. Email: [email protected]

Andrew S. Lang