Performance Metrics for Associations – Are You Driving Blind?

We’re way behind but we’re getting better.
Our sector is way behind the for-profit world, but we’re getting better. We know from our annual survey of Canadian membership associations, that the vast majority of Canadian associations do not track and manage the basic metrics of their business. Until recently, even the concept of managing a membership organization as a business was a foreign concept. However, this is starting to change.
Most Canadian associations are now on board with the fact that they are running a business, and that they must operate as a business to be sustainable. Some Canadian associations are starting to track the most basic performance metrics such as the new member attraction rate and the member retention rate. But we have some distance to go. One of the biggest impediments is weak membership database software (or worse, Excel spreadsheets!) that do not record the data that is needed to calculate the performance metrics.
Why does it matter?
Metrics tell us where we are now. Tracking them over time tells us where we are headed. Are we moving forward? Are we on a sustainable path? Without this information we are driving blind.
The basics – what must we track?
We need to track metrics in four areas:

1. Sustainability
2. Strategic objectives
3. Member value
4. Financial status

Sustainability; the key metrics

1. New member attraction rate. This tells you how well you’re doing in terms of bringing new members on board. This should be at least 10%. If it’s not, you need to have a retention rate of more than 90% just to keep membership at the current level.
2. Current member retention rate. This tells you how well you’re doing in terms of holding on to your existing members. This should be at least 90%. If it’s not, you need to have a new member attraction rate of more than 10% just to keep membership at the current level.
3. Member satisfaction rate. Anecdotal evidence suggests that this needs to be at least 85% to keep the membership organization sustainable. You need a regular member survey to assess this. To keep it simple, consider asking this one question as part of the renewal process.

Strategic objectives; the key metrics
Our annual survey of Canadian membership associations tells us that almost all associations have a documented strategic plan. This has improved dramatically over the past 5 years and that’s great. Now we need to ensure we track our progress. This is the metric we need to track.

1. Milestones status

Your strategic plan should show multi-year (3-5 year) objectives with milestones, and dates, that your association must hit in order to be on track to achieve your strategic objectives. At every board meeting, or at least quarterly, report on where you are in meeting these milestones.
Member value; the key metrics

1. Member Engagement in association programs. You’re investing precious resources to deliver member value. This includes events, professional development initiatives, knowledge products, member-only discount offerings and other member services. How many members are engaged in taking advantage of these services? This is what you need to track.
   • Set targets for member engagement in each program and track them year-over-year.
2. Government/stakeholder relations. For many associations, this service is the heart of the member value proposition. Track your impact. What have you accomplished against the base case of what would have happened if you were not doing anything? Your impact is not only whether or not you’ve achieved you GR/SR objectives, but what has/has not happened as a result of your efforts. You may not have accomplished your objectives (yet), but you have at least ensured that the dial has not moved backward. What value has been achieved? Even if decision-makers have not chosen to heed your counsel, your members are aware of what they need to do to prepare themselves for coming events. This is what you need to track.
   • % of members on GR/SR committees. How engaged are your members in the volunteer work your staff needs to support your GR/SR program?
   • Open rate on GR/SR information bulletins. Do your members care? Are they listening?
   • Meeting requests/call-ins. How often do decision-makers contact your association for input?
   • Influence/progress against base case. What would have happened if your association was not engaged with decision-makers?

Financial reporting; the key metrics

1. Balance Sheet. How many months of operating expenses are covered by your net surplus? Report on this separately by both liquid and illiquid assets. Your net surplus should cover at least 12 months of operating expenses.
2. Income statement. For each monthly statement, show where you are against budget and against last year at the same time.

Next Steps

1. Figure out how to collect the data you need to report and track these metrics.
2. Establish a regular reporting format and schedule to keep your management team and board informed.

Want more information and the details of how to calculate your performance metrics? Check out our webinar on this topic.