Taking a closer look at how and why associations’ priorities shift during economic ups and downs.
By Alex Yewdell
With economic uncertainty looming as we move toward to 2020, we’re at an important moment in time to think critically about how the larger economic conditions can have a major impact on associations. Now we are not economists at Blue House Sales Group but, with over 20 years of experience in the association world, we have seen our fair share of economic ups and downs. We know how essential it is for our team to keep a finger on the pulse of the association industry as we help our clients grow their non-dues revenue. Utilizing reporting from McKinley Advisors as they surveyed association professionals, we compared studies from 2009 through 2010 and 2018, looking closely at net membership variation and top priorities to gauge the direct influence the economy has on associations.
The Great Recession, as the 2007 economic crash has come to be known, was the result of a mortgage-driven credit crisis. At the start of 2009, the US economy was still in a deep recession. While the second half of that year is believed to mark the end of the downturn, the economy continued to face uncertainty. As such, and even though the association market has changed dramatically over the last 12 years, this time period offers valuable insights on the influence the economy has on associations.
In 2009, 82% of surveyed association professionals anticipated that the economy would negatively impact their activities. A year later in 2010, this number dropped to 67% of respondents. This positive trend was also reflected in a 10% jump in association professionals expecting the economy to have a positive impact on their activities. In both the 2009 and 2010 studies, 35% of participating associations indicated that they were facing budget cuts. However, in 2010 it appeared that the overall trend toward cutting budgets was on the decline. This is not to say that associations were out of the water in 2010. In fact, in 2010 46% reported that their membership retention decreased—roughly two times the average from 2011-2018. Given the reduction in meeting attendance that many associations faced in 2009, it is no surprise that association executives were increasingly concerned with the importance of increasing meeting attendance; 30% considered it a top priority in 2010, as opposed to 26% in 2009.
One metric from this survey that stood out to us was Net Membership—the percentage of associations reporting higher membership rates compared to those reporting lower membership rates. From 2010 to 2018, steady growth in membership rates were widely reported with 2015 (+21%) and 2017 (+18%) providing key growth years. Plain and simple, negative economic conditions have a detrimental impact on association membership, meeting attendance and overall association activity—while positive economic conditions tend to lead to growth in these areas. All of which is to be expected. The most interesting take-away from this research was how associations goals and priorities shifted during this time.
In 2009 through 2010, two out of the top three association priorities were improving member retention and new member acquisition. Responses indicated that approximately 50% cited “improving member retention” as a top-three concern, with 44% of respondents indicating that “new member acquisition” was among the three most important priorities for 2010 (up from 41% in 2009).
Fast forward to 2018, when the U.S. economy grew at a rate of 3.1 percent—the fastest pace for any calendar year since 2005. Respondents predominantly noted that membership retention rates were more likely to indicate an increase than a decrease and priorities shifted. With a recovering and surging economy, associations top priorities shifted toward generating non-dues revenue, developing new methods for member engagement and increasing meeting attendance.
In uncertain economic conditions, associations are often focused on membership, both retention and new member acquisition. As economic conditions improve, there is a shift toward development and growth, as emphasis is placed on improving non-dues revenue and expanding member engagement. While this is how associations have weathered economic shifts in the past, that doesn’t mean it is the only way. In fact, as we face another potential downturn, is it time to rethink this approach?
A fundamental understanding of these trends is important to our work. At Blue House Sales Group, we are proactive about anticipating challenges and looking for potential solutions before they hit. Improving and maintaining non-dues revenue for associations is what makes us unique as an organization. To stay relevant and offer value to our clients, we make it a practice to regularly ask: what can we do differently? Is this the correct approach and is there anything associations can do to limit the impact of economic swings?
The answers to these questions are rarely clear-cut. The economy will have impacts on associations that are frankly out of your or our control. But maybe, there is an alternative approach. Membership is the key to every successful association and it makes sense that this becomes prioritized during economic uncertainty. With that said, we might argue that a continuous emphasis placed on membership engagement through the development and enhancement of resources, along with the strengthening of the non-dues revenue pipeline, may be the best course of action. Simply put, if you can make your association and its resources a necessity to both your members and the industry providers (your advertisers and sponsors), you can position yourself for sustainable success.
- Economic Impact On Associations Reports: 2009, 2010, 2018 (McKinley Advisors)
- A U.S. Economy Snap Shot, Part 1 (Forbes)
- 2018—A Banner Year For The U.S. Economy (WhiteHouse.gov)