When was the last time you really took a close look at your dues (or investment) income structure? An evaluation of your membership’s giving, by investment level, can be of value if it reveals opportunities for either solidifying or enhancing the income side of your operating budget. Our organization undertook an analysis of its varying income streams about six years ago – and the results were dramatic. Based on what we learned, I’ve constructed the following hypothetical example based on a small community chamber of commerce with a typical dues structure.
Our example is a 500-member chamber of commerce:
- 500 total members on the rolls.
- 50 of them pay dues at higher than the “minimum” level of $250 per year.
- So that’s 450 members paying $250 per year – total minimum dues income of $112,500.
- Let’s suppose that of the other 50 “leadership” investors, one truly leads the way (the local University, for example) with annual payments of $50,000.
- Let’s further suppose that two other investing firms make $25,000 commitments.
- Perhaps there are two investors at $10,000, and three at $5,000.
- The balance (42 firms) pay $1,000 a year.
- Using this formula, your total income base is $289,500. With just a little non-dues revenue coming in, you are a $300,000 chamber and your “revenue per member” number is a solid $600 per year ($300,000 divided by 500 members).
Now suppose that we were able to tweak the tiers a bit and create a “premium” tier structure for the chamber, with the minimum tier at $2,500. The tiers might look like this:
- First, we identify “Supporters,” who are willing to pay $2,500 per year (assume there are 25 of these – $62,500). Those who balk at the increase from $1,000 to $2,500 might be encouraged to attain the $2,500 level over time – over three years a $1,000 investor could move to $2,500 in equal additional installments of $500. You currently have 42 firms paying $1,000 a year. Set as a goal to get just half of them to move up to $2,500.
- “Sustainers” are identified next – those firms that are willing to pay $5,000 per year (assume there are 10 of these – $50,000). You already have three firms at $5,000. Creating this $5,000 tier requires that you find a handful of additional investors from that original $1,000 group who are paying at $1,000 now and would be good candidates to move up in the investment structure. Who are the peer companies or firms of those already at $5,000? Can companies be encouraged to move from $1,000 to $5,000 over five years?
- A “Founders” tier would be populated by firms that may be willing to pay as much as $10,000 per year (assume there are five of these – $50,000). Remember, there are already two in this category paying $10,000 per year. One effective method is to “group sell” by business category. For example, if a leading law firm is at $10,000, then other law firms may be logically encouraged to move to that level as well, again – over time. Competition does wonders for a tiered dues structure. And speaking of law firms, determine which business is the law firm’s largest client, and recruit that CEO to help you make the call on the law firm.
- Next on the pyramid is the “Chairman’s Circle,” whose members may be willing to pay $25,000 per year or more (assume there are five of these that can generate $125,000). You already have two investors at $25,000 – and of course the University at $50,000.
- Now consider adding a top tier, with the University leading the way. Call it the “Builder’s Society,” and peg the contribution minimum at the level at which the University already gives ($50,000). Recruit the president of the University to help you find one or two others who will lead the way, starting first with those firms already at $25,000.
The potential represented by the hypothetical example is $550,000 – almost a doubling of your current income base, and the revenue per member is now $1,100. It could produce dramatic results with just a little thought in advance of your next campaign or Total Resource effort.
These numbers may not work exactly for your community, or they may be overly optimistic. But here’s the take-away. This is a one-hour exercise with a legal pad and a few very close advisors (I would include the University president and the CEO at the largest bank or utility, for certain). Noodling the numbers, as we say, is worthwhile because once you have defined your current position with respect to the tiers people are now giving in, it’s so much easier to think about strategies that can be employed to move members from one tier to the next.
Tiered dues require that you offer some level of increasing benefits to make it worthwhile for a company to move up from one tier to another. That requires thought, and perhaps some additional staff. But if you successfully move from $300,000 to $550,000, there’s a staff position or two in that move.
Remember that the best pitch that you can make, especially to companies considering substantial investments in a local chamber, is the simple fact that the “product” of a chamber of commerce is increased jobs and capital investment into the local economy. That’s good for all businesses, whether you are selling bank accounts, electricity or tires. And, just like a gym membership, the more it’s used, the more benefits it gives. It’s the same with chambers and associations and the dues their members pay.
Try the tiered dues exercise just for fun. You might be surprised at how much of an impact it could make on your ability to grow your community.
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