Fuel Smart Growth With a Market Assessment

Fuel Smart Associations Now July/August 2014 By: Jay Younger, FASAE, Patrick Glaser, and Shelley Sanner, CAE

In crafting your organization's growth strategy, don't go with your gut. You need hard facts about your audiences and your competition. Get them by conducting a disciplined market assessment.

When it comes to growth, the old saying is true: Smarter is always better. So why are so many association membership goals still driven by catchy slogans (20,015 members in 2015!) or gut feelings (90 percent retention by 2020)?

To fuel smart growth, associations must first understand the dynamics and characteristics of their markets, particularly as new sources of competition threaten traditional avenues of engagement. Gaining the critical insights required for an informed growth strategy can be accomplished through a two-pronged approach. First is quantifying the size and scope of the market, an exercise called field measurement. The second is measuring the characteristics of the buyers within those markets, which can be done through market research.

The market assessment process requires discipline, patience, and a willingness to look at facts rather than rely on assumptions. It's a powerful approach that reveals opportunities your association might otherwise never have seen.

Field Measurement

Calculating the baseline of an association's current market share can help combat catchy but unfounded membership goals and help staff and volunteers embrace a more rational approach to setting growth targets. There are a few primary factors and strategies to consider.

Case Study: Measuring the Radiology Field

Perhaps no sector is currently more prominent in the U.S. economy than healthcare, and demand for healthcare labor force statistics has grown enormously. For associations in the healthcare arena, the challenge is not finding reliable information as much as determining the optimal source.

In a recent market assessment project, the American College of Radiology set out to get a concrete measurement of a field that had proven challenging to quantify. The planning stage was particularly important to sufficiently define ACR's measurement goals. The organization may have been interested in identifying the broadest audience possible: the number of medical professionals that practice radiology in at least some capacity. Instead, ACR determined that the appropriate measurement target would be board-certified radiologists in the U.S.

Several sources were reviewed during the project, including the Bureau of Labor Statistics, the American Medical Association, medical specialty licensing boards, state medical licensing boards, and articles published in academic journals and in other places. Not surprisingly, the multiple sources of information produced different, yet reasonably close counts of the total number of radiologists practicing in the U.S.

Measure the core market. While many associations fixate on traditional membership indicators like retention rate and lifetime member value, understanding the core market is an essential but frequently overlooked step in assessing your organization's performance and potential. Why is it important?

Let's say your association has 36,000 individual members and a 95 percent retention rate, while your competitor, Association X, has 20,000 members and a 90 percent retention rate. On the surface, your association appears to be outperforming Association X by a healthy margin. But there's more to this picture when you look beyond the traditional membership indicators and measure penetration within the market.

So how do you go about measuring the field?

To measure the core market, you can tap a number of available resources. Governments at all levels and in all locations provide labor force and similar statistics. Business media outlets publish industry market research reports. A variety of nonprofit organizations maintain databases of information and statistics on a seemingly unlimited number of areas, such as education and finance. Using these resources, you can set a baseline for your core market and validate that number through multiple sources.

Now back to the example: With a better understanding of your core market, you calculate that your association has 30 percent penetration in a market of 120,000 professionals. Association X's market size is 40,000 and its penetration is 50 percent. Why do these two numbers look so different if you're both serving essentially the same industry? The answer lies in the subtleties of your membership model, and the fact that your association recently expanded its membership criteria to create categories for affiliated individuals to join. Suddenly, performance looks completely different.

Evaluate "adjacent" markets. Measuring the size of adjacent fields may suggest new opportunities for expansion. For example, many healthcare associations are beginning to recognize the importance of the practice administrator, a professional who often takes primary responsibility for managing all aspects of practice operations and directly supports the physicians and healthcare team. It's often the practice administrator who processes association membership renewa ls and supports the physicians' continuing education.

This role has gained influence as practices expand and the healthcare team relies more heavily on administration to run everyday operations. As a result, many healthcare associations are exploring the idea of introducing a special membership category and dedicated benefits to serve the needs of this adjacent, yet strategically vital, audience.

Take a world view. Globalization has had a powerful impact on professional societies and trade groups, requiring many associations to seek field information in foreign nations. For associations that have an eye on global expansion, it is highly likely that market potential and market share will vary widely from country to country. The process for obtaining non-U.S. statistics is similar to that within the U.S., but it may involve some unique considerations and planning.

Government statistics are less likely to be available in many other countries. When data are available, they may be much older than desired. Information also may be captured in a broad manner that doesn't directly meet your goals. For instance, data for specific types of scientists (say, biologists) may be available only at a "general science and engineering" level. Or the information may quantify something you're not specifically interested in (say, the amount of revenue generated by the biology field). It's important to assess the validity, timeliness, and relevance of your sources and clearly note when your confidence in a source drops.

Market Research

Once the size and scope of the market has been calculated through field measurement, market research can help you further define the options for smart growth. Which markets are most ripe for expansion given the competitive landscape? Is your organization doing what it takes to remain relevant?

Field Measurement Sources

Addressing these questions before designing the growth strategy is a central element of a well-honed approach. To answer them, you need to do your homework.

Understand the competitive landscape. Although it may sometimes seem as though your association is alone in trying to carry out its mission and serve its members, the truth is that there are probably dozens of nonprofit and for-profit organizations vying for your core audiences. The market is saturated, and it's important to understand the competitive landscape to inform strategy and decision making.

Benchmarking studies and environmental scans are important tools for gaining insight into the market landscape. In some cases, however, the competition may be unclear. Either through formal or informal research, ask your members what organizations they turn to for professional resources, and prioritize the competition. Once you have a solid grasp of your association's existing and emerging competitors, conducting an environmental scan of websites and other resources can provide data on your organization's distinction in the marketplace, the range of options available to your audiences, and new and emerging trends in the space.

Conduct primary research. Gathering data through field measurement and environmental scans helps reduce the research burden on your core audiences, but in some instances, direct feedback from a target audience offers an essential perspective.

One example is the process by which members' buying decisions are approved. Joining or renewing membership in an association, registering for a conference or educational event, purchasing a publication—all of these represent buying decisions that have a tremendous impact on the engagement and professional development of your industry (and even the success of your individual members and their employers), yet the decisions are rarely isolated to one person. Some segments of your member and prospect audiences might receive greater employer support than others. Some individuals might have sole decision-making authority, some might find that their workload is a more significant barrier to meeting attendance than lack of employer support, and some might be expected to pay 100 percent of their professional development costs out of pocket (which often leads to lower levels of satisfaction and lower overall participation levels).

Gathering data that validates or refutes assumptions about the audience helps associations move away from the "gut feeling" approach to strategy and goals. It can also provide compelling insight that engages staff and leadership across the organization in critical conversations.

These are some additional questions that your association might ask of its core audiences:

  • What are the demographics and other characteristics of those who are typically involved in the decision-making process?
  • What are the major influencers in the decision-making process (e.g., quality of the product, recommendation from a peer, location of event)?
  • How do individuals in your organization typically pay for their member dues, educational registration fees, and publication purchases?
  • What is the approximate annual investment your employer makes per individual in the area of education?

Once you've captured this data, you can segment the findings by specific audience (decision maker versus non-decision maker), age or tenure in the field, title, and other key variables. This uncovers trends that can help throughout the lifecycle of your products, from research and development to marketing.

At a time when organizations are relying increasingly on big data to shape strategy and tactics, doing the legwork to gain a better understanding of the size and makeup of your market is no longer an option but a necessity. Association leaders are faced with increasingly difficult decisions in the face of limited resources; young professionals seek meaning and engagement but struggle to find time to become involved; and nontraditional peer groups (LinkedIn, for example) are challenging associations to provide more innovative and sophisticated resources for members.

Through field measurement and market research, you and your association can be informed and prepared to take on these challenges.

[This article was originally published in the Associations Now print edition, titled "Do You Know How to Grow?."]

Jay Younger, FASAE

Jay Younger, FASAE, is managing partner and chief consultant at McKinley Advisors.

Patrick Glaser

Patrick Glaser, MA, MPA, is director of research at McKinley Advisors.

Shelley Sanner, CAE

Shelley Sanner, CAE, is managing consultant at McKinley Advisors.