Jack McGrath: Hi, and welcome to another in our series Ask the Experts. My name is Jack McGrath. And today I’m going to be talking to Tom Morrison, who is the CEO of the Metal Treating Institute. Tom, in your blog you talk about how a lot of association execs believe that non-profit means you can’t think like a capitalized, for-profit business. There seems to be a sense you can be for-purpose, or you can for-profit, but you can’t be both. How do you think associations blend these two concepts and can remain competitive and innovative in the services that they provide?
Tom Morrison: You know Jack, that’s a very good point. Our association takes, and me I’ve done this for eighteen years, I take a very capitalistic approach to our non-profit and our strategic plan. I believe that associations make a big mistake by not trying to create extra revenue to have in the bank and grow their reserves. In probably a year to year-and-a-half worth of operating expenses because what that does for any association is it allows your board to make decisions, to take more risk on behalf of your members. Seven years ago, our association had eighty-five thousand dollars in the bank. They couldn’t take any risk for our members and now, because of the kind of- what I call the capitalistic view of things, we’re really looking to see how we can improve better programs, meet members’ needs better. Our per-member revenue has gone up thirty-three percent which is, to me, is the greatest barometer of member engagement. More members are spending more money with us. And what that’s done is it’s taken us to a level of reserves of almost a million dollars in just eight short years. Our board, the last four years specifically, has created- they’re taking more risk for specific programs that are really engaging our members and building that member value proposition. So, it’s great to think non-profit and we do government relations, all this stuff, but our members want benefits. They want things that impact their businesses and their careers, right to the point. And our association has really tagged the phrase, “If we do things for our members that they can’t do for themselves and if we continue to do that our members want to spend more money with us and be loyal because they can’t get that stuff anywhere else.”
McGrath: Great. So it sounds like your vision is you can create value for not only the membership but also for the association, which creates value.
Morrison: Absolutely, absolutely. You can do both.
McGrath: That makes sense. I continue to hear that membership model is changing. Decreasing membership revenue is one of the biggest challenges, not with you but, with a lot of other associations. So, what are some other non-traditional ways you believe associations can increase their non-dues revenue and help to offset if they have a decline in membership?
Morrison: You know that’s a good point because non-dues revenue is a great relief to having to raise dues because then you have an X budget and if you don’t have enough money well you’ve got to get it from one of two places: non-dues or dues. And members don’t like dues increases. So, I’ve been a big believer in you need to go into your members’ income statement and balance sheet and look at those things that they’re spending money on. A lot of our members are spending money with consultants, big dollars that they can be spending with the association to be able to help their business. So, we choose to go and look at our members’ balance sheet and the things that they’re troubled with and look at, “Where are they spending money?” Because the easiest money to get from a member in a non-dues program is money they’re already spending. And now you can say, “Look, through this program you can spend less with us.” So, it’s really different for every industry, every association, because every industry spends their money differently. But I think one of the big things that members ought to be looking at is things like training. Every training- highly trained culture creates less errors, better people that think, better employees, and another one is benchmarking being able to understand, “What’s the competition doing out there?” in a compiled results fashion. So I can say, “Wow.” I can go to our team and says, “Guys, we’re not operating in the top third of our industry in terms of costs in these areas, or revenues in here.” And that helps, motivates our team to want to reach that goal. So, I think benchmarking and training are two areas they should look at. They should really look at their overall members’ balance sheet and income statements and see where they’re spending their money so they can drive it back to the association if they can.
McGrath: That’s interesting because it kind of goes back to that idea of solution selling where you find out, “What is the problem and how can the association meet the need?” And that solution may not even have anything to do with what they’re currently offering, which is really-
Morrison: Even in a thriving business, they have things that keep them up at night. They believe, I heard it years ago, if you find your members’ pain and give them the medication you can charge or sell whatever you want because they just want it relieved.
McGrath: Great. Another question: the Metal Treating Institute, I know has had success with, a great deal, tremendous success, developing and growing certificate programs for its membership. What advice do you have for associations who’ve not yet explored a certification or credentialing program for their members? What kind of advice do you have for them?
Morrison: Well, the first advice is just to do it. Training is going to be so important as we go down this path. I was just talking to a friend of mine yesterday who said that she’s going to give her kids the opportunity to not go to college because it’s such a large, debt-ridden expense when you can go to a trade school and then get involved with an association that’s providing the types of training that’s targeting right to it. So training, specifically online training, is going to be the key. Now, behind that no one just goes and gets education in association management. They go get their CAE. So, that’s what our association did. We spent some time and money to put together three different certificate programs at three different levels. And it gives the person looking to get more education, it gives them a goal. They want to get their heat treat specialist certificate and that’s what they buy. They don’t buy the courses, they buy the certificate. So, it just depends on the funding you have whether you want to just do a certificate program that says that you accomplished certain requirements or if you actually want to do an accreditation program that puts people at their performance and how much things they know. So, the biggest thing I say is get in it, start small, move big. In that six year range increase in our net worth, training has played a big role. We went from doing nothing in training now we do over a hundred grand in online training every single year and it’s created an incredible, profitable center for our association but yet has saved our members over two million dollars in costs when you look at what it would have taken them to get that training outside the association.
McGrath: Right, and I know what we’re seeing is with skill gap they need that. There are members that need, or non-members, that need that education and they’re just not able to turn anywhere else. It’s great that you’re doing it. So, great. So, thanks so much Tom Morrison and thank you all. And please look for other in our series Ask the Experts.