This Formula Tells You When Your Association Will Die (and what to do about it)

Donald Cowper 20 July 2017 0 comments

association life expectancy formulaThis is a guest post from Sarah Sladek,  the presenter of our free webinar “5 Must-Have Strategies for Membership Growth” which you can watch here.  

Let’s face it—these are difficult times for associations. We’ve just experienced the most disruptive decade in history, characterized by recession, rapidly changing technology, and substantial demographic shifts. Member values, expectations, and demands have changed. As a result, member recruitment and retention is more difficult—and more urgent—than ever before.

Failure to accept change and anticipate the future will only guarantee greater frustration, conflict, and decline.

If you need proof—be it for yourself, your staff, or your board of directors—there are ways to determine whether a change in your association is needed. There’s a formula that can measure your association’s expected lifespan. First, I’ll walk you through that, then I’ll show you how one association used their results to turn things around for the better. Here’s how:

1. First, Calculate Your Association's Loss Rate
To determine your association’s loss rate, take the number of dropped members (those who cancelled their membership this year), divide it by your total membership (the number eligible to renew) and multiply it by 100 to make it a percentage. For example, If 80 members drop out from an eligible renewal base of 1,000, the loss rate is 8 percent. 

The Formula is as follows: Number of Dropped Members ÷ Total Membership x 100 = Loss Rate.

Ex. 80 ÷ 1000 x 100 = 8%

2. Next, Calculate Your Association’s Life Expectancy
Your association’s life expectancy is the time in which your association will cease to exist if you fail to exceed your loss rate. To determine your association’s life expectancy in years, divide 100% by your Loss Rate. With an 8 percent loss rate, it would take 12.5 years to wipe out your membership. 

The Formula is as follows: 100% ÷ Loss Rate = Life Expectancy (Years). 

Ex. 100% ÷ 8% = 12.5 years. An eight percent loss rate may not seem like a serious threat, but your association can’t survive this level of sustained losses and would end up with no members in about twelve years.

But there’s even a greater threat. This formula doesn’t take into consideration the losses your association is likely to observe as the Baby Boomers retire. If your association is like most associations out there, your leadership majority and most active volunteers are Baby Boomers. As they phase out of the workforce every year for the next 15 years, your association is also going to lose a substantial number of board members, executives, volunteers, and members.

If you’re worried about Baby Boomer staff and volunteers retiring, there’s a simple formula that can predict when they’ll do just that.

Leadership Attrition
The first step is to evaluate how likely  each of your staff and most invested members (board of directors, committee leaders, long-time volunteers) are to leave the association. Give each person an attrition score of 1 to 5, with 1 denoting a person who isn’t likely to leave the association because of retirement for six years or longer, and 5 earmarking someone who will be gone within a year. Tally up how many people fall into each numerical category to help you gain a perspective of how many leaders will be retiring in the next five years. Once you know how quickly you are losing your association’s leaders, , you can put a succession plan together that ensures you are developing new leaders who can take over when needed.

association life expectancy formula chart

 

How One Association Created a Lasting Future for Itself

One association I worked with completed this exercise realized 90% of their board members were likely to retire within the next five years. This was a red flag in and of itself, but on top of this, their Life Expectancy turned out to only be 6 years. Furthermore, this association took the extra step of tracking the retirement projections among their members. This was a harsh reality, but they had the data they needed to make that leap of faith and change their destiny.

But this was just the shock the organization needed to put a plan in place for recruiting younger members, training them for leadership roles, and introducing new technology-based platforms, and programming targeted to young professionals. This association’s chances of survival have greatly increased simply by projecting their retirement rate.

Once you’ve analyzed the data, you will have a better idea of whether your association needs to change and how quickly. This just may be the proof your association needs to move forward and make a change.

After decades of success, most associations haven’t been prepared to change, but the most successful associations have been responsive to it. These are the associations that will survive. They aren’t prolonging the inevitable, ignoring the trends, blaming others, being indecisive, or taking other actions to otherwise jeopardize their associations’ futures.

Indeed, change can be a challenge, but it’s also an opportunity to take the lead, to grow, to succeed. 

As Benjamin Franklin once famously said, “When you’re finished changing, you’re finished.” Don’t fear change! Embrace it. It’s your only path to the future.

For a more in-depth look at how some of the most successful associations are growing these days, and how you can too, please watch my free webinar on “5 Must-Have Strategies for Membership Growth” hosted by Wild Apricot. 

In our webinar, I’ll show you:

  • 5 easy ways to grow membership that most organizations overlook
  • The 3 keys to attracting younger generations
  • A simple process to create lasting member engagement

I hope to see you there!

 


Sarah Sladek Headshot
Sarah Sladek is the CEO of XYZ University, the only company in North America that specializes in helping organizations engage younger generations. She has presented on the generational topic to audiences worldwide, and is the author of several books, including Knowing Y: Engage the Next Generation Now (2014), The End of Membership As We Know It (2011), and Talent Generation, which will hit shelves in the summer of 2017.

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Donald Cowper

Posted by Donald Cowper

Published Thursday, 20 July 2017 at 11:18 AM

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