This post builds on, and responds to, the recent discussions about one of the major trends steamrolling toward associations and other membership organizations in the next 5 years.
"Are current dues models out-dated?"
"Can associations feasibly offer dues-free membership?"
This topic was also the focus of a recent Association Now article by Erin Fuller of the Alliance for Women in Media and Association Chat (#ASSNCHAT) on Twitter. Depending on whom you ask, the question of moving to a donation-based, "pay what you want," or free-to-premium tiered model is either a serious opportunity to propel the organization into the future OR a fun concept with little potential for actual implementation.
Why Would an Association Eliminate Dues?
Here are the most popular reasons that associations give for looking to innovate their membership models with "no-dues" structures.
Associations see an opportunity to bring more people, especially young people, into their communities by offering engagement opportunities that don't require a financial commitment upfront.
In an age where online content and decentralized advocacy trump big ad buys and hierarchical org charts, associations understand that producing and spreading insightful, original, and helpful ideas can move their mission further than structured membership programs.
Reduce Operational Costs
Some membership organizations, especially those where membership dues make up a smaller portion of their annual revenue, see eliminating dues collection and processing as a way to reduce expenses. However, many organizations, like the Alliance for Women in Media, find that the cost saving is negligible since the staff is shifted to fulfill other roles needed in the new model, such as content creation.
Offer Flexible Value
Associations with decreasing membership are often tired of fighting to explain the value of a membership come renewal time. Eliminating dues for most members and allowing members to pay for only the programs, events, and services that they find valuable can boost an organization's value proposition by making the value it provides fit each member's unique situation.
Concerns About Eliminating Membership Dues
The following are the most frequently heard concerns that association executives have about saying goodbye to membership dues for a majority of their members.
Will members think we are rolling in money if we eliminate or significantly reduce dues? Will members perceive our organization's entire value if they "get what they pay for"?
How can we pay the bills if a large portion of our revenue disappears? How will we replace the revenue generated by membership dues?
Can't Go Back
Are we making the right decision for the right reasons? If we make this giant shift away from dues and discover than is does not work for our organization and industry, it will be difficult to reinstate or increase dues later.
How will we afford to support our chapters? Will they continue to collect dues? Will our component relationships suffer?
Ownership and Accountability
Typically, the general direction of membership organizations is set by dues-paying members. If members are not paying dues, what obligation does the organization have to meet the needs of its membership?
What If Nobody Supports Us
When we are collecting dues, we are competing with other annual operating expenses of our members. At a minimum, we have to get their wallet's attention once during the year to renew their membership. Once we achieve that, we have a financial commitment for the year.
If we stop requiring dues to be a member and solely rely on donations, events, and product sales, our marketing costs may increase because we have to continuously focus of the converting our audience into a next transaction. Also, we go from competing with large annual costs (like other memberships and educational expenses) to completing against smaller expenses like resources from local bookstores, office supplies, and a member's next cup of coffee.
Which Types of Organization is a "Freemium" Model Working For?
We see a trend in which associations are taking a serious look at instituting a "due-free" model and which don't see it as feasible. As one would expect, the line is primarily drawn based on the level of total income that membership dues makes up. Associations with 0%-25% of their annual revenue coming from membership dues are more likely to explore shifting away from collecting dues for most of their members, than those organizations that rely heavily on membership dues to fund their operations and growth initiatives.
Membership organization that have, or can develop, strong vendor programs that include advertising, events, sponsorships, and online community platforms are more likely to be able to transition smoothly to a model where most or all members don't pay dues.
Read part two in this series to learn about a strategic framework associations can follow to find the right membership model for their organizations.
Please share your thoughts in the comments below.