Why NDR is Critical
When was the last time you heard an association executive say, “Wow, we take in way too much revenue. It’s getting hard to figure out how to spend it”?
Typically, associations operate with small staff and may have to limit program development because they are stretching revenue as far as it can go. For associations looking for more financial wiggle room – to act on new ideas or improve technology infrastructure – having revenue sources beyond member dues makes a huge difference.
It’s estimated across the industry that anywhere from 25-35% of total revenue for professional associations comes from member dues. That’s not much. And there’s usually little desire to raise prices for members. That means the majority of incoming funds need to come from non-dues revenue (NDR). Associations can’t leave NDR plans out of their business model if they want to survive and thrive.
A recent survey asked association professionals how effective their organization was at driving NDR. A majority, 55%, said they actively look for new ideas to diversify their revenue streams. They know that NDR is vital to their association’s ability to keep providing value to members and they understand that reliable revenue gives them the security and confidence to experiment and explore new levels of service.
Without NDR, it becomes very difficult to keep the financial ask on members low, attract quality partnerships, fuel improved events and content, maintain a staff size that avoids burnout, and tap into the association’s full potential.
Engaging Both Members and Sponsors
When done right, having a sponsorship program is a great way to generate value both for your organization and your members. Many companies have a regular part of their budget dedicated to sponsoring events and purchasing external marketing placements. To claim a portion of that budget for your association, you have to communicate the value you can offer sponsor companies:
- Access to a very specific and relevant audience of customers and prospects
- Opportunity to build better relationships for their business
- Ability to access data and insights on the target audience
- Your association as another channel in their content strategy
- Reputation and trust-building
- Good old-fashioned lead generation
- Added brand visibility
- Built-in focus group to vet current and future products and services
- The competitive advantage of being the authority in relevant associations
That said, when crafting your sponsorship offerings, you should always keep in mind what benefits your members gain from your sponsors. Yes, you want to attract NDR, but you don’t want to ostracize your members (and jeopardize dues revenue) by making them feel like you’re selling things that aren’t relevant.
The good news is, what’s good for members usually makes for better sponsorship opportunities anyway because members are more engaged with, for example, a thought-leadership article or webinar, than a banner ad.
The New Sponsorship Landscape
Just as the needs of members change over time, so do the needs of sponsors. In the wake of the pandemic, many sponsors reevaluated the effectiveness of their sponsorships – so associations have to avoid a “this is the way we’ve always done it” mentality.
Strategic advisor and association consultant Bruce Rosenthal says associations are facing some new questions. Do sponsors really need the biggest exhibit booth at a conference, or should they pursue other ways to can engage event attendees? Do they need banner ads to generate brand awareness, or are they looking to demonstrate thought leadership? How can your association support the year-round marketing sponsors are now looking for, rather than just an annual event sponsorship?
The Many Options for Selling Sponsorship
Get creative: one of the key takeaways from NDR experts at the 2022 Non-Due$-a-Palooza conference was to explore the assets you already have and view them with a new eye toward monetization. Think about the platforms and channels you use to engage your members (e.g. email, online community, events, etc.) and think about how you could build sponsorship into those to offset the cost of those platforms/channels. Some examples include:
Run ads on the logged-out homepage (visible to anyone who visits your community site) and/or within your community (targeted to members). In a platform like Higher Logic Thrive Community, there are multiple placement options (leaderboard, sidebar, footer, ads in community email digests) available where you could sell and place graphic ads.
Community Thought Leadership, Relationship Building & Reputation Management
If it’s appropriate for your community and members, let sponsors join your online community and develop direct connections with potential customers by participating in discussions and answering questions as subject matter experts. Let them discover what users are looking for, contribute to the community blog and knowledge base, and maintain a listing in the member directory. You can set the ground rules if you want to ensure they don’t make promotional posts.
Tried and true. Let sponsors leverage event fanfare to drive attention. For in-person events, consider booths, print items, signage, swag, etc. For virtual events, sponsors can be noted in slides, on the event website, and in event online communities. You might also highlight sponsors in communications to attendees – for example, in banner ads in attendee emails or in a dedicated sponsor thank you.
This is the perfect example of accessing another organization’s robust email list in addition to operating your own for exposure at a consistent cadence. Sponsors can reserve space for ads in a variety of formats or be the presenting sponsor of benchmark features or columns that appear in every edition.
Newsletter Thought-Leadership & Sponsored Content
Beyond ad placement, sponsors can be content contributors. This positions them as a valued and trusted source of information that could only come from their access and expertise. Again, this can be delivered in a variety of formats, be it text, audio, video, graphic, or infographic.
And Anything Else You Can Think Of
Think outside of boxes. NDR can come from sponsor participation in fundraising, merchandise, job boards, the sale of premium content, ads on mobile apps, and free educational opportunities like workshops, webinars, seminars, courses, and certifications.
How to Price, Expand, and Optimize Your Association’s Sponsorship Activity
As a former association marketer and Higher Logic customer, I have first-hand experience monetizing the investment my association made in our member experience platforms. In my former role as the Assistant Director of Marketing at Public Responsibility in Medicine and Research, (PRIM&R), I helped run a sponsorship program that eventually completely covered the cost of our Higher Logic Thrive Marketing and Community products – in fact, in 2022 we brought in over $60k NDR from email and community ads alone (not including conference sponsorship).
What I found is that you can start small and work your way up. At first, we were only selling member newsletter sponsorship, but as that began consistently selling out, we expanded our offerings. When the pandemic hit, the interest in online and email sponsorship drastically increased.
I’ll admit that setting the “right” price felt a little daunting, but we researched what other email, web, and community ads cost in our space. You might be able to connect with your staff that buy ads for your organization (if that’s someone different from you – we were a small organization, so I did both) to talk about what they’re spending as a starting point. Then see how ads are performing and adjust. For us, we settled on between $1,000 and $1,500 for email ads, and $300 to $600 for web and community ads because our community was new and we were having a harder time communicating the value of community ads to vendors who weren’t familiar with our community yet.
You can always adjust pricing until you hit the sweet spot of most takers at the highest rate. If something’s not selling, try lowering the price, or offering a complimentary placement to a trusted sponsor who’s already buying other placements so that other vendors can see what that placement looks like in action. Or run your own ads (and maybe ads for your ads) in those openings – this can help you generating awareness (and performance stats, like click rates on email ad banners) so sponsors know what they’re buying.
Also, it might sound counterintuitive, but don’t be afraid to raise prices even if it means less ads sold – having fewer, but higher-paying sponsors can help you maximize revenue per placement while lightening the load on staff.
NDR Can Fund the Tools That Make Sponsorships Even More Successful
An association platform like Higher Logic Thrive not only helps you create an engaging member experience, it also offers a way to deliver value for sponsors. It’s the key to the kind of year-round exposure and interaction sponsors are looking for.
The great news for associations is that this kind of powerful technology becomes more accessible when you consider how to use it to generate NDR – many existing customers have more than paid for the cost of their platform.
Any association, whether for profit or non-profit, is better positioned with powerful communication, community, and member management tools that scale to generate additional, recurring sponsorships – incoming NDR can then fund new initiatives for members. End result: a strong, secure association that becomes indispensable for both members and sponsors.
2023: A Time to Build
Maybe you have existing sponsorships that you want to improve. Maybe you want to attract additional sponsorships. Or maybe want to try getting a sponsorship program off the ground.
In each case, getting new initiatives going and implementing improvements can take time. You have to drive awareness of any new or changed program. You might need to spend time running your own ads in the ad space you’re proposing in order to track performance and have success stories to show new sponsors. You might need to offer new opportunities to existing partners at a discounted rate (or even free).
And lastly, don’t overwhelm your association or staff. Take new sponsorship initiatives one at a time, give them the time and resources to find success, apply what is learned, and build from there. You’ll find the additional revenue more than worth it.