The Association Cycle

Associations, more than any other type of organization I’ve seen, are defined by their annual cycle.

Volunteers and board members turn over every year. Many organizations have a new president or chairman every year. Annual meetings happen, well, annually! Membership renewal is typically on an annual basis. Awards are given out each year. Periodicals come out periodically.

This cyclical nature is a tremendous strength that also brings some challenges.

The strength is that associations have significant momentum stored up in the flywheel of their annual cycle. This energy creates significant barriers to competitive challenges and provides a sustainable source of income. People have been predicting the end of associations since I started working with them almost 20 years ago. Still here! Still valuable!

That annual cycle momentum has a lot to do with association staying power.

The challenge is that the default action of any association is to repeat the process over again, often precisely like it was the year before. Do nothing and you do the same. Status quo is the much easier path for associations, more than other types of organizations. This can result in a gradual decline since the world around us is constantly changing and failure to adapt will erode performance over time.

Implementing association strategy successfully requires being fully cognizant of the organization’s annual cycle and using it as a primary implementation method. Annual cycles should be modified each year to create outcomes that contribute to your strategic goals. This can involve pruning or adding items to your cycle but more often it requires modifying what you already do to create different results.

Own the cycle or it will own you.

New York Times and Paid Content

The New York Times has announced a new paid content model for their online content. The announcement is here:

A Letter to Our Readers About Digital Subscriptions – NYTimes.com.

The upshot is that occasional website visitors will not have to pay for anything but people who read many articles online with the Times will be asked to pay after using up a monthly free quota of content.

There has been a lot of hue and cry about this, just like there was when they tried to charge for their opinion content way back in 2005 or 06. Here is my take:

Any company like the NYT can be successful with a paid content model. The problem with this change is that they are removing content from their most loyal readers online. They are not offering anything new to their best prospects, they are removing what draws them in the first place It is also rather complicated which will suppress sales a bit.

Why not offer new value to your most voracious online readers and charge for that? The Wall Street Journal does just that with the top end of their online subscription options, providing new in depth content in focused areas. I might pay for an online subscription that provided access to more photos for each article (or the NYT’s photo archive, which is massive), podcast interviews with reporters on the ground where the news is happening, etc. Use what you have to create new offerings that you’ve never provided before but can scale in the online world.

Getting people to pay for something they already had for free is simply a tough row to hoe when there was no expectation set of that free access being temporary.

Old Members Are The Future!

Deirdre Reid wrote a post this week about dealing with a dearth of young leaders in associations. I’m going to take a good crack at the idea we have to increase the percentage of young people in our organizations and I wanted to give Deirdre credit for kicking off this idea when I read her post.

By 2050 over 25% of the population in the U.S. will be 60 years or older according to government projections. 1 in 4! That’s compared to about 18% today. Given overall population growth, that represents more than 50 million new people 60 years or older in 2050 compared to now.

Old people are the future.

A lot of associations complain about how old their membership is. Given the way demographics are going, we better get used to it!

I also wonder how many of the 50 and 60 year old members of today were active leaders of their association 30 years ago. I’d wager a beer that it’s a very low percentage for many organizations. Our personal activities are driven by the professional and life stages in which we are immersed. Perhaps we are being too hard on ourselves about not having a lot of youth involved in the organization. Perhaps they just truly don’t care or we aren’t in the business of providing the value they are looking for at this point in their lives. Or there simply aren’t enough of them!

It is always worthwhile to take a step back and give our assumptions a few solid kicks and see which of them fall over and which stand up to scrutiny. Maybe you should be trying to get more ‘old’ members engaged rather than tilting at the young member windmill.

Example of Providing Options Beyond Basic Online Subscription

I made a short screencast of the Wall Street Journal’s website today, WSJ.com, looking at the subscription pricing model the publisher has in place. There is a great lesson here for associations about offering premium options that give new value to those who purchase it without inherently devaluing the base subscription.

Micro Payments, Micro Profit?

The only way to make significant revenue with micro payments is to get an awful lot of them.

Any questions? :)

OK, I’ll say a bit more about my rationale for that position.

I work with a lot of membership organizations and the idea of micro payments is often very appealing to their leaders. They provide a very low price point on some products which they can point to when members complain about overall prices of products. It’s also quite trendy, with high profile examples like Kiva.com leading the way with that business model for micro-lending.

Let’s take a look at the math for a hypothetical association. Let’s say they are a scientific society with 20,000 members who pay $399 a year to join. We’ll use them as our pre-qualified base of prospects for a micro-payment product.

Evernote, the very popular note taking application that works on almost anything with a chip and a screen, recently shared some stats. Shortly after they started up, about 1% of their free users converted to paying customers.

If we take a mirco-priced product at $1.00 and 1% of our hypothetical base makes the purchase, then you end up with this:

(20,000 * 1%) * $1.00 = $200.00

Compare that revenue to what they get in membership dues:

20,000 * $399.00 = $7,980,000.00

The organization will literally waste more in jammed paper in their printers than they would make on this single micro-priced product. This is before taking into account the costs of producing the product and implementing micro payments, online access, etc.

Hell, having a single staff meeting to discuss this product already puts it in the hole!

This association would need a base market of about 2,000,000 people to make the revenue even slightly interesting with these assumptions. They still need a lot more people in that market even if you bump up the price and the conversion rate.

Other issues with micro payments include:

  • They must be frictionless to complete (think texting to donate to the Red Cross for Haiti, for example).
  • Products with micro prices are often perceived as low value by your prospective buyers.
  • You’ll often need a wide array of micro-priced products rather than just one to have the level of sales you need to create significant revenue.
  • Repackaging content from other sources into micro-priced chunks often requires selling it to an entirely different, and larger, market.

The only exceptions I might make for developing micro payments if you don’t have a large enough market include:

  • It serves a political or policy need that provides enough value beyond cash revenue;
  • People who purchase the micro-priced product are great candidates for macro priced products that you then sell to them (classic loss leader transactions).

I’m sure someone somewhere in the association world has done a successful micro payment model. (Let me know about it in the comments if you have!) But every leader and product manager must go into the decision making process with a realistic understanding of the numbers involved before committing resources to implement this model.

Funding Web Projects from Reserves

Should financial reserves be used to fund the development of a website instead of from current revenues? The answer lies largely in the strategic value of the project in question.

Financial reserves are the funds that many non-profit organizations literally hold in a reserve. Since they don’t pay out profits to owners or shareholders, bottom line revenue goes into the bank and is typically invested. These reserves may serve different purposes but they have a role in providing financial security, rainy day resources, and in some cases capital for new ventures within the organization. Funding a website project would qualify under the latter.

My grandfather, a serial entrepreneur in his day, said this: “You can borrow money to make money but you should never borrow to pay for the groceries.” Wise advice all around and it definitely applies to funding your website development and operations.

Delving into reserves to create new capacity, to expand your website infrastructure, with the expectation of significant returns over several years is often a good thing to do. Using reserves to pay for staff or one-off projects is almost always not. The decision to invest reserve capital should always have a tremendous focus on creating significant and sustained new value. It should not be used to cover spot costs or very short-term needs.

This is why web strategy is so critical in a large development project: it gives you and your organization the greatest chance of creating significant returns online when reserve funds are in play.

Sacred Zombie Cows: The Cartoon!

Last year I wrote an article about killing the sacred zobmie cows infesting our organizations. That idea has been marinating since then and I ultimately decided to ask Hugh MacLeod to create a cube grenade cartoon around the concept. These images created by Hugh are intended to spark conversations and get ideas moving.

Have You Killed Your Sacred Zombie Cow?

Please head on over to Orgpreneur.com, my new blog for those who use entrepreneurism in the pursuit of goals that matter, to see the full image and essay on “Have You Killed Your Sacred Cow Today?

Making Vague Requirements Concrete

A friend on Twitter asked what you should do when you are presented with a list of vague requirements for a new website that shows no evidence of priority, intent or coherence. The proverbiale laundry list of features with no strategic context.

I offer two solutions for you:

1: The best and most effective thing you can is to hire me to help you draw forth breakthrough results from the chaos.

2: Alternatively, do the following:

Vague requirements shows a lack of prioritization which is an indicator that the higher level goals of the organization were not considered or leveraged effectively when planning the new site.

A website must contribute value to your top-line goals in some fashion if you want it to contribute breakthrough results online. Use those top-line goals to determine what outcomes the site must achieve. If you have a bunch, prioritize them from highest to lowest value. Then use those outcomes to determine and prioritize the functionality the site must provide. It’s that simple.

The actions:

  • Determine top-level goals with senior executives.
  • Identify outcomes the site can contribute to those goals with senior executives and web staff.
  • Prioritize those outcomes.
  • Identify functionality required to serve those outcomes (and your audiences).
  • Go forth and execute with your newly honed requirements.

There is more to it than that but that gives you the broad outlines. My book, Online and On Mission: Practical Web Strategy for Breakthrough Results, is a great resource if you want to get very good at this process.

Run Your Own TV Ads via Google

This is a great video report from Slate about how you can run your own television ads via Google.

Note that the average cost of acquiring traffic was around $1 for their experiment (although it appears this did not include production costs). If the average value of each new visitor to your site is higher than that, you’re doing well. Hat tip to Matt Baehr for posting the link this week.

Snowpocalypse Operations Survey

Wes Trochlil and I are fielding a survey, The Snowpocalypse Operations Survey, to assess how the repeated snow storms over the past couple of weeks impacted your operations, in particular how you think it impacted your external facing services. Our goal is determine the impact and assess what organizations successfully did to maintain or minimize disruption to their members, customers and others.

All respondents will receive a summary of the results from us and access to a later white paper. Complete the survey here and please feel free to share with colleagues at other organizations.

The short survey should take no more than a few minutes to complete.

Thanks!