Achieving a Collaborative Business Model Membership amp Affiliation Wednesday May 17 2017 Why a New Membership Business Model Membership Individual PEs with individual needs Who need to see direct individual benefit from membership ID: 785126
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NSPE House of Delegates Working Session I:Achieving a Collaborative Business Model (Membership & Affiliation)Wednesday, May 17, 2017
Why a New Membership Business Model?
Slide2MembershipIndividual PEs with individual needsWho need to see direct (individual) benefit from membership
But also want to make a difference for their profession and the world in which they conduct their professional lives
OrganizationalMultiple entities (state, national (and sometimes) local chapters)Generating the resources needed to thrive financially and serve the membersRevenue generationOperational efficiencyIn a collaborative manner with other partners in the system
Two Dimensions of
Any
Membership Business Model
Slide3“For successful accomplishment of a professional society, unity and geographical organization are the essentials. The National Society, the state societies, and the county chapters are
closely and reciprocally integrated
, and all are regarded of equal importance
.
Membership in one involves membership in all …“This is the logical and essential form of organization for building a united and integrated engineering profession.”David Steinman (1935)
NSPE’s Founding Principle
Slide4Partially Integrated Membership
Some Disaggregation of Organizational Operations
3 State Societies
Integrated Membership
State BilledIntegrated Membership
Integrated Organizational Operations
36 State Societies
Where we are today
Disaggregated Membership
Some Disaggregation of Organizational Operations
6 State SocietiesNational bills integrated membersState bills state-only members7 State SocietiesState bills integrated & state-only members
National
StateLocal
NationalStateLocal
National
State
Local
Slide5Partially Integrated Membership
Some Disaggregation of Operations
Integrated MembershipIntegrated Operations
Challenges in the Current Model
Disaggregated MembershipSome Disaggregation of Operations
Membership
State Society unable to offer lower cost (state-only) membership
Organizational
State reliant upon quality of national billing and administration, which
in the past
was found wantingMembers bear cost of redundant operational systemsOperational inefficienciesNearly all member administration errors occur due to delay or error in coordination between state and national systemsDiminished marketing and new member/renewal integration (Diminished member experience)Abandons concept of a single membership with national and state elements
Slide6Fatally weakened marketing/value statement“We believe in a single membership, consisting of national, state and local components
…
except where we don’t””Your dues will be somewhere between $169 and $373”“And I can’t tell you what value you’ll get except from national”“I can take your order online and activate your membership immediately, except where I can’t – and will instead send you somewhere else to process this sale. And I hope you actually go through these additional steps and join”
Increased operational cost due to inefficiencies and redundancy
Impaired ability to ensure prompt, accurate, and consistent service to members due to lack of uniformity and complexity of interacting with diverse state society established operational parameters. Challenges Unique to National: Current Model
Slide7A legitimate response to poor performance in the past –
NOT an accurate perception of national today.The consequences of split billing and administration operations:The gap (delays of 45-90 days) between when a member is added or makes a payment in a state and the state society remitting funds to national, resulting in the member failing to receive services to which they are entitled or credit for payments they have made;
Errors when member-initiated record changes (such as changes in address) are made in one database and not communicated (or delayed in communication) to the other;
The inability to resolve member problems in a single phone call; (members do not know who does billing)The lack of e-commerce capabilities necessary to allow for online renewal/new memberships and instant activation of services.In addition to these inefficiencies and the potential for error inherent in managing and coordinating separately maintained billing, administration and record systems, this redundancy increases the costs that must be borne by the membership at both state and national levels. Challenges: Self-Billing States
Slide8State society board complained to national about four members who had been “improperly dropped” from national membership for non-payment.
It took 6-months of continuous pressure from national before the state society recognized that they had failed to notify national of the renewals for these members
Through a glitch in the state’s billing software, a state society went for several months billing and collecting and spending national dues for state society operationsBy the time they recognized the error, they were in debt to such an extent that services to membership had to be severely curtailed.National extended an 18-month, interest free repayment plan to the state
State society with a single large (300+) discounted bulk membership offering. In each of the past two years, state has billed a deeper discount than agreed to. The difference ($9 to $23 per member) has simply been deducted from national’s share, without national’s consent.
Stuff Happens (2016-2017)
Slide9A membership offering that is clear enough to explain on the screen of your mobile phone and buy with one click.
What a 21
st Century Membership Society Needs to Succeed in the Marketplace
Slide10NSPE (national and state) has never been more vital, active and effective in advancing its mission: Championing the PE license (even as threats to licensure increase)Guiding and advancing professional ethics
Supporting members professional advancement
Uniting and engaging the PE CommunityBut the current business model is failing The Great Paradox
Slide11NSPE successfully lobbies for Federal requirements to use PEs in Department of Interior, EPA, OSHA, other agency rulemakings.NSPE and state partners successfully turn back threats to professional licensure in 22 states
NSPE and state partners effectively deal with proposals to eliminate QBS in 11 states
NSPE successfully turns back proposals to include discipline-specific licensure in NCEES model law and regulationsNSPE and state partners successfully defeat proposals for discipline-specific licensure in 6 states
NSPE promotes the role of the PE in development of autonomous vehicles
… and the list could go on.NSPE (national and state) has never been more vital, active and effective in advancing its mission
Slide12Slow but steady decline in membership numbers at the national and state levelsNumber of dues-paying, three-tier members in June 2010: 30,320
Number of dues-paying, three-tier members in June 2016: 22,010 (
-27%)Cumbersome marketing processes makes effective mass market and social media-driven membership drives unworkable. State and national organizational entities shrinking
Growing number of state societies (large state and small state)
Eliminating professional staff support for volunteersExploring strategies for possible dissolutionIf national did not have net revenue from its certification operations (NICET) and building, it would be in danger of becoming financially inviable. The Facts
Slide13Responding to the Challenge
Slide14Engagement of McKinley AdvisorsShort-term stimulus: Tactical marketing campaignsCraft a long-term and sustainable business model for NSPE (national and state) membership
Research and benchmarking
Quantitative surveyQualitative surveysScan and Assessment of typicalNational/State Operational ModelsDues ModelsBeginning in October 2015
Slide15Integrated Affiliate Model Single membership with national state and sometimes local components
Examples: AIA, NAR, ADA
FederationMembers join state society; state societies join national; primary role of national is federal advocacy and support of state societiesExamples: AHCA, NCEES, NCARB AutonomousState and national share common mission, collaborate, but are not structurally, financially or operationally linked.No membership reciprocity
Examples: AICPA, ABA, AMA, ASHA, AOTA, APTA, APA
ConsolidatedSingle, parent corporation with geographical units or divisionsExamples: American Red Cross, American Diabetes Association, Alzheimer’s AssociationOrganizational Models Considered
Slide16Integrated Affiliate Model Single membership with national state and sometimes local components
Examples: AIA, NAR, ADA
FederationMembers join state society; state societies join national; primary role of national is federal advocacy and support of state societiesExamples: AHCA, NCEES, NCARB Autonomous
State and national share common mission, collaborate, but are not structurally, financially or operationally linked.
No membership reciprocityExamples: AICPA, ABA, AMA, ASHA, AOTA, APTA, APA)ConsolidatedSingle, parent corporation with geographical units or divisionsExamples: American Red Cross, American Diabetes Association, Alzheimer’s AssociationOrganizational Models Deemed Feasible for NSPE
Slide17Integrated Affiliate ModelLeast disruptive to most (39) state societiesConsidered vital to some state societies
Autonomous
Least disruptive to other (13) state societiesConsidered vital to some state societiesCaveat: “Level of disruption” is a relative term: both
models require fundamental changes in current operational, financial and business nature of state and national societies
No One Model Emerged with Unanimous Backing
Slide18Integrated Affiliation: Membership in one means membership in all; success or failure of any one component directly impacts all components.
“10 years ago the State Societies Executive Council met with the NSPE staff in a facilitated discussion about how the national state partnership could be improved. The recommendation from this group was
to have NSPE redirect its focus from NSPE-centric or state-centric to a “
member-centric organization
… [the model] is being offered as yet another step in the continuum of advancing that mandate to focus all resources, at all levels, on member needs.” (State Executive, April 17, 2017)Autonomous: We are all in this together, and want everyone to do well, but each component needs to stand or fall on its own. “If NSPE goes away, who cares. That doesn't matter to me. What matters to me is that
xxSPE
survives."
(State Executive, April 18, 2017)
Two Conflicting Paradigms
Slide19State society Sets conditions of state membershipMarkets, administers and bills state memberships National
Markets, administers national memberships within state
Non-integrated
Single membership, administered by national
Existing state-only members grandfatheredSingle dues price point for all membersDivision of dues between national and state based state self assessmentNational support to state society operations (scaled to need) Streamlined join, onboarding and renewal process for membersConsistent member experienceImproved conditions for membership marketing, retention and acquisitionIncreased and increasingly sophisticated marketing effortsIntegratedTwo Partnership Options
Slide20The NSPE national board is firmly committed in its belief that:The integrated model is consistent with the principles upon which the federation was established in 1935.
The NSPE national board fully respects the rights and autonomy of state societies to chose the form of partnership they feel best serves their members and the community of PEs.
It is the firm and unequivocal commitment of the NSPE national board to work effectively with all partner, state societies, regardless of the form of affiliation they choose.
The Position of the Board
Slide21Allows states to choose form of affiliationNo single option emerged that served the needs and preferences of all
state societies
Creates member consistency at $299 price pointWhy Two Partnership Options?
Slide22Division of dues based on division of operational responsibilitiesSimple, consistent national marketing and promotionEnhanced level support to state societies who want and need it
Grandfathers
existing state-only membersContinues flexibility of states to offer non-PE membershipsIntegrated Partnership Option
Slide23Value to State SocietiesLessen administrative tasksReduce cost of state society operations
Lower risks
Improve efficiencies Benefit from economy of scaleIncreased communications of value deliveredQualitatively (more over all offerings) Quantitatively (more frequent)
Primary Business Objectives
Slide24Value to NSPE (State societies and national, collectively)Provide similar good customer experience across all statesImprove efficiencies
Produce better outcomes
Ease of portability of membership between state societiesIncrease member retentionPrimary Business Objectives
Slide25At $299 dues price point, 67% of current members will see a reduction in total dues for three-tier membership
Based on current dues split assumptions and placing state societies in the service level tier that reflects the best available data on current levels of operations:
Aggregate dues revenue to State Society will increase between $702,809 to $741,962Aggregate dues revenue to national dues increase between $92,436 and $159,171 Range variation based upon attrition assumptionsEstimates assume no new member acquisition
or membership growth
Financial Analysis (Integrated Option)
Slide26Continued cooperation between national and state, however:All administrative, financial, and operational activities will be separated. The state society electing this path will be fully responsible, for its own marketing, billing and administration of state memberships, and for all service operations within that state.
In states electing this path national will be fully responsible, for marketing, billing and administration of national memberships, within that state.
Non-Integrated Partnership Option
Slide27National remains committed to:Promoting inter-Society liaison and collaborationPromoting the value of membership at all levels
Respecting all partners’ autonomy to do business under terms they set for their membership offerings in the state
Even for States Who Elect the Non-Integrated Form Of Partnership
Slide28Based on intensive dialogue within states, regions and national:Three days of intensive dialogue to Listen and understand Regional Director feedback
Provide response and clarification
Specifics to be shared today with everyone at one timeAvoid the “game of telephone”Online “Frequently Asked Questions” (FAQ)Since April 6
th
…
Slide29For states concerned that the new $299 price point represents a substantial increase in current three-tiered dues:Offer states the options:If new dues are an increase of $50 or more over current three tier dues
Phase in over two years
Proportional national/state dues split during transition For existing members upon renewal onlyState may also elect option to not avail themselves of the phase-in.
Responsive Changes in the Works
Slide30For states that currently self-billA team effort is underway to assess the cost and technical requirements to create:
A single, standardized form of database integration between national and participating state societies;
Allowing states that currently self-bill to continue billing for an extended transitional period,As long as this can be accomplished without sacrificing the ease-to-the-member of the join process: Single click membership purchase/renewal; Instant update of the membership record, accessible to both national and the state society;Instant member access to membership services and benefits (e.g.; purchase of member-only products; conference registration;
Instant website access (national and state);
Instant communities access; Instant commencement of membership onboarding communications; etc.) Responsive Changes in the Works
Slide31For states currently offering bulk member services packages:For most current Enterprise Members, the change in dues under the new model is equal to or greater than the 10% Enterprise Dues discount currently in place.
Single billing of multiple memberships to employers who desire it will continue.
Some states offer packages of service (e.g.; to state departments of transportation) outside of the standard Enterprise Membership offer.State government agencies are typically prohibited from paying for “membership” Instead, member service bundles (e.g.; continuing education) are marketed and sold in bulk to the agency.
Terms and conditions to explicitly allow for a continuation of such offerings will be developed.
For Territorial Societies:Special terms for territorial partners (Puerto Rico and Guam) who are small (30 members or less) and less fully integrated into federated operations are under consideration.Responsive Changes in the Works
Slide32For state societies who are concerned with their current placement in service/capacity tiers.There will be regular re-evaluation on tier placement. If a state feels the current placement does not accurately reflect current levels of activity, bilateral (involving both state/national leadership) will seek to resolve differences through negotiation.
Study Group II has been tasked with:
Creating an Operating Procedure for resolution of any unresolved dispute over placement in a tier.Creating a list of specific accountabilities that national and each state must meet in order to qualify for each tier. Responsive Changes in the Works
Slide33The Current Iteration of a PlanCarefully crafted Based on extensive stakeholder input and data collectionRigorously analyzed
Certainly
not final, perfect, or immune to modificationsIntensive efforts to improve and perfect the plan will continue until we achieve something that works.Bottom Line:
Slide34The model is complex and builds on multiple independent variables that combine to generate predicted financial results
A small change
anywhere in the model has a significant impact on the financial analysisFor each component of the partnership (national plus 53 state/territorial societies)For the total system (“The NSPE Eco-System”)The challenge is to strike a balance of individual and collective interests that works in the best interest of all our integral partsThis requires continued effort on the part of all
Pursued in good faith
With open minds, andIn a spirit open to compromiseImportant Caveat
Slide35April through July 2017: Continued dialogue to modify and perfect the model (including a Study Group II on implementation)
Monthly regional conference calls (April through June)
Monthly House of Delegate conference calls/webinars (May through July)July 22, 2017: House of Delegates vote on whether to proceed with the two partnership optionsIf approved
July through December 2017:
State Society election of preferred form of partnership affiliation If, based on state elections, model is assessed to be financially viableJuly 1, 2018: New terms take effect for all renewing and new members What Happens Next
Slide36If further work on the model fails to generate a sustainable, final plan that can be supported by a critical mass of members and member societies:
The current, failing business model remains in place
We go back to the drawing board in search of solutionWhat If the Vote in July is No?
Slide37Comprehensive FAQ online
State-specific analysis provided to state leaders (volunteer and staff) on April 6
th Executive Summary”Value Proposition - NSPE Services” – outlining the national service offerings included in each service tier
Additional documentation is being compiled and archived on a dedicated in the NSPE Leadership
Toolbox https://www.nspe.org/membership/leadership-toolbox/nspe-proposed-membership-business-modelFor Additional Detail on the Current State of the Model