A recession is coming, many of us economists have argued. A majority of economists predict one within the next year, and I expect recession to begin in late 2023 or early 2024. Associations and independent trade shows will be hit hard, just as they are beginning to feel relief from the pandemic. Fortunately, good association management can ease some of the pain.
Many businesses cut expenses in economic downturns, and association membership dues can be on the cost-savings list. Two aspects of the due process make association management difficult. First, renewals are typically annual. So the association does not know that a member won’t renew for up to a year. This problem worsens if all renewals happen at the same time. When renewals are staggered, association management can see trends develop over time.
The second challenge is that some association managers are not in touch with the members most likely to not renew. Frequently businesses will be closely connected with one association and also members of other associations that are somewhat peripheral. I once ran into a business owner at a meeting of a state asphalt paving association where I was speaking, and also at a concrete paving association. He explained that asphalt paving was their main business, but they also did a little concrete work. In his case, the asphalt association was central to his business and he would remain a member even in a recession. But the concrete association dues could be eliminated in difficult times.
Who does the typical association manager hang out with? The board of directors, of course, as well as some committee members. And these are business leaders strongly committed to the association. The manager sees people who will reliably renew their memberships. But managers may not talk to members from those businesses that have a minor interest in the association.
This is a fixable problem, of course. The manager can spend some time on the phone with those members who attend irregularly and never volunteer for committees or projects. The point of the conversations should be to understand the member’s business, its challenges and opportunities. The result should be a good understanding of the member’s renewal likelihood. The manager who goes into sales mode, however, may not learn the truth. Listening is the key. And nothing helps renewal as much as a genuine interest in the member’s business.
Trade shows face similar problems. Many of them occur once a year, or even every other year, so the manager doesn’t learn about a company dropping a show for quite a while. Again, some companies will absolutely buy booths for one trade show, but consider other shows to be of secondary value.
The trade show manager does best by staying in touch with exhibitors well before commitment deadlines.
The manager with foreknowledge of non-renewals will be able to set budgets that avoid nasty surprises. The staff and the board of directors may consider offerings that align with the needs of members in a recessionary environment. That might mean fewer meetings, or more virtual meetings. And content of the meetings should probably change. The motivational speaker arguing for “invest in your people” could fall flat before an audience that has laid off thousands of employees. Programs that help members get through the recession, or even thrive from the disruption of a recession, could help maintain association revenue.
Many associations have merged with other associations in the past decade. The upcoming recession may trigger another wave of mergers. That’s not necessarily bad, but the members of the associations are best served by smooth transitions, not chaotic change triggered by failing finances. And association staff members are also helped by smooth adjustment to the new economic realities.
The recession will be hard on many associations, but good management can ease the pain.