Money

By Steven M. Worth, President at Plexus Consulting Group, LLC

Vital Statistics
The desire to focus on “doing good” is a motivating factor that draws many people into association work—and that is clearly a strength; but association executives would do well also to realize that there is nothing crass in using money as a way to measure effectiveness— namely:

• Know that flat or declining revenues may be a sign that something is fundamentally wrong with your program, product or service. This is a warning bell--an indication that a thorough audit is needed of your marketplace, including: a customer satisfaction survey; benchmarking against the competition (if you do not know who your competition is, then that is another problem!); and a trend analysis of the needs of your target market(s).

• Understand that profitability is a measure of efficacy. If your revenues are rising but so are your losses, then either your programs are being mismanaged or your pricing is wrong. In such a situation market success in the form of increased sales can actually destroy your organization if it is not efficiently structured. 

• Know that customers expect to get what they pay for. People the world over are prepared to pay for quality and inherently question the value of anything they are offered for free or at low cost. This is particularly true the more things are critical to us. What person needing heart surgery will feel entirely comfortable going into an operating room knowing their surgeon was the least expensive that could be found? Focus on quality and price your product or service accordingly—this is what your customers expect. 

An association’s role may not be “just to make money,” but money does serve as a good tool by which to measure quality, effectiveness and efficacy. Such thinking has always been part of for-profit management; and if nonprofits are to hold their own in this increasingly competitive environment they will do well to adopt it! Do you agree?