How one association put its data to work to determine the true cost of serving its members—and whether its dues structure matched up.
Before 2012, the price of membership at the American Society of Interior Designers was mostly based on, as Troy Adkins put it, “gut feeling.” And membership accounts for about 90 percent of ASID’s revenue, so that’s a lot riding on your gut. In the midst a difficult economy, probably enough to make you queasy.
So, ASID set out to determine what the price of its membership should be if it wanted to remain sustainable. Adkins, vice president of member and industry development, and colleague Rick Peluso, chief financial officer, led the charge, an organization-wide effort to figure out exactly how much it costs to serve an ASID member, a number it simply didn’t have before. At the end of the process, they found that their dues weren’t far off from the right number.
A lot of the discounts were used as loss leaders, but they didn’t lead anywhere.
“We did a recalculation based on what that cost was, plus the margin we wanted to make, and found that it was only about a $15 increase over [the previous dues price],” Adkins says. “So, our blindfolded dart game actually got us in the neighborhood of where we needed to be, but it wasn’t quite enough when you multiply that out over all of our members.”
The cost-per-member analysis added costs from programming, member development, member service, chapter support, and overhead, which required gathering data from multiple ASID departments. “We had it, but it was very scattered throughout the building or throughout the office. Everybody had pieces,” Peluso says.
With the cost estimated, they then applied a cost-plus model and determined an adequate margin, about 35 percent, that would “ensure profitability but, at the same time, give us additional funds to develop ad hoc programs as the opportunity arose during the year,” Adkins says. The margin was based on ASID’s historical development costs for other programs, and it should remain the consistent margin it will apply to dues in the future, he says.
The analysis also revealed that ASID had a lot of discounts in place that weren’t effective. “A lot of the discounts were used as loss leaders, but they didn’t lead anywhere,” Adkins says. For instance, educators were offered a steep discount in hopes they would recruit student members, but that never panned out. Student membership was actually down since that discount began.
“What all that discounting really led to is a very complex and confusing price structure for the members,” Peluso says. “Everybody was paying something different, people were taking multiple discounts on their dues, and that is not healthy for us.”
Much of the discounting was “cleaned up,” and the educator discount was replaced with a reward structure: for every student member an educator recruits, ASID offers a voucher that can be used in ASID’s online store or applied to the following year’s dues.
The entire review process lasted about six months and was a mostly internal process. The ASID board of directors was apprised of the need for a dues-structure review and approved an approach that analyzed member behavior but didn’t collect their direct input, Adkins says. ASID was confident that it offered the right benefits, but it wanted to align costs with what members demonstrated they were willing to pay.
In the end, dues for ASID’s core “Professional” member increased from $450 to $465, beginning January 1, 2013. The increase was met with little resistance or negative feedback, and ASID’s retention rate is actually up this year over last, as the economy slowly improves.
Now, ASID can be confident that its pricing model meets its needs, and the data-based analysis will become a consistent approach for both future dues increases as well as vetting new products and services.
“We were shifting the mindset at the same time, organizationally, to a metrics-driven decision-making process,” Adkins says. “So no more gut feelings.”
Has your association reviewed its dues structure recently? Do you actively track the cost to serve your members? Please share in the comments.