Grow Nondues Revenue With a Digital Platform Business

Barresi July 15, 2020 By: Barry J. Barresi

Associations can move beyond the traditional nondues revenue generators of meetings and education and instead turn to a platform business model where they generate income by bringing providers and consumers together.

Even before the COVID-19 pandemic triggered a global recession, growing nondues revenue was top of mind for association leaders. Recent webinars and virtual conferences reflect this attention. However, the common theme of these events is a narrow focus on squeezing more dollars from legacy sources of nondues revenue: meetings, education publications, and advertising.

An alternative approach is to consider digital transformation opportunities that will allow for new streams of nondues revenue. One model for doing this is to launch a digital platform business.

Platform businesses do not create value themselves. Rather, they orchestrate value creation by outsiders. For example, Uber’s platform connects riders with drivers, while the Airbnb platform connects guests with hosts. Associations can follow this model by creating the digital space to connect external service providers with consumers seeking the needed service. All the while, the hosting association is monetizing the exchange and capturing valuable data.

Because associations have influence and central positioning within professional and industry ecosystems, they have great potential as platform leaders. Let’s explore a five-step strategy that can help associations exit the comfort zone of traditional nondues revenue approaches.

Choose Your Business Innovation Ambition

The first step is deciding what your association is willing to try. If you are comfortable making incremental improvements to the services you're currently providing nondues customers, then focus on efficiency and process improvements in your current operations. If you are ready to do more—leverage existing assets and explore new markets, partners, and services—then you have the mindset to embrace the digital platform model.

Measure Your Business Innovation Readiness

Next, consider your organization's readiness for change. One informal approach is to talk to your peer leaders and measure your core capacity for business innovation against what you learn about your peer’s innovation capacity.

Another option is to use a maturity model approach that can measure the gap between your current business development capacity as compared to the best practice model. A recently completed research project from the ASAE Research Foundation (Advancing Business-Venture Innovation: A Readiness Tool for Health Associations) used Association Ventures Innovation maturity model in a business innovation readiness tool. The maturity model tool quantifies the root causes and weak links in an association’s capacity to increase nondues revenue. With a readiness diagnosis in hand, association leaders can focus on correcting the root causes of barriers to business innovation. Whether you use peer-to-peer conversations or a maturity model tool, tap internal and external resources to remedy any specific innovation weaknesses you discovered.

Discover Your Ecosystem Opportunity

Your platform must first consider its target consumer. Is it current members, a specific member segment, or another player in your ecosystem of influence? Once you choose a particular consumer segment, use “Jobs to Be Done” research—a theory of motivation that seeks to understand why consumers buy and use products—to discover their compelling needs. Once you know that, you’ll be able to pick your business partner to produce your service offering.

Build Your Digital Platform

To lower your venture risk and gain internal team buy-in, validate the core business ideas by testing functional elements of the platform. For example, a narrow focus prototype that supports A/B testing can provide feedback at each stage of platform design.

Your primary design goals are to pull providers and consumers to the platform, facilitate their interaction, and match the appropriate provider to the target consumer. Digital feedback loops are vital elements within each layer of your technology stack (see illustration below).

While your association management system provider can offer foundational support for the base data layer, you will need to buy or build additional digital features on top of your AMS. In most cases, developers with digital startup experience are most qualified to lead the technical design of a digital transaction platform. In this way, your IT team can focus on the operational stability and data security of your AMS. Access to external entrepreneurial talent brings you the agile startup skill to design the platform technology stack needed to support transactions and data capture.

Grow Your Platform Value

Take a staged approach of learning and adapting to feedback from your targeted consumer and partnering providers to continually improve the value of the platform experience. Stay laser-focused on meeting the compelling needs of your paying customers. Since word of mouth is an effective tool for promotion, never underestimate the power of feedback from both consumers and producer partners.

By becoming a platform entrepreneur, your association can embrace the shared economy model that is fueling tremendous growth in digital companies. Activate this five-step strategy to launch your association’s journey to create new value, advance your mission, and grow nondues revenue.

Barry J. Barresi

Barry J. Barresi, OD, Ph.D., is a clinician executive and CEO and founder of Association Ventures in Roswell, Georgia.