The seductive pull of member subscriptions

One of the strengths of the professional body model is an annuity income stream. A steady flow of annual member fees that enable you to build the operational capabilities to promote your sector, serve your members, and deliver on your public interest objectives.

This annuity model continues to be the main source of income for many professional bodies providing the financial resource to establish centres of expertise, publish respected periodicals, invest in ancillary business activities such as training and events and (in some cases) build up substantial financial reserves.

What’s not to like?

For all its strengths the annuity model can become a millstone, driven by the need to maintain a cost base often built-up during periods of strong member growth. As professional bodies mature, the risk is that the drive to obtain new members becomes a financial imperative, an all-consuming objective at the expense of other, more strategic priorities. 

Pressures on subscription models typically arises from a fixed cost base that has grown out of kilter with the needs of members. Heritage headquarter buildings are expensive to maintain and often underutilised. Back office functions represent an overhead that can be difficult to rationalise. Cross-subsidised training or events businesses that appear (at least pre-Covid) to make a contribution often fail to deliver the return on the investment that go into them. Esteemed periodicals can feel very 20C amidst the bite-size information sources your members increasingly rely on. 

These challenges are often compounded by static member numbers which can lead to costs outpacing subscription revenues and the need for above-inflation increases (with all the member resistance this can bring) just to keep the show on the road.

All the while, the professional world continues to change rapidly as members ask whether what they get for their money is worth it. Belonging to a professional body may once have been essential to building a career. This is no longer something that can be taken as a given. 

Do it to your annuity model before your annuity model does it to you

Despite these challenges, most professional bodies provide valuable services to their members and to society at a cost that more than justifies the subscriptions they charge. Fundamentally this is about having clarity of purpose as well as the leadership capabilities and strategy in place to deliver. What is clear, however, is that many organisations can also be smarter about how they demonstrate the value they create. 

A common problem here is the expectation gap between value delivered and the perception of this value among members. Yes, bundling multiple services together into a single annual fee has the advantage of efficiencies of scale and of protecting important public service priorities, but are you able to justify all these different component to your members?

In practice, that might make for some uncomfortable discussions internally, for example if you are cross-subsidising services that only benefit a small section of your profession. More broadly do your members really understand what you do and – in practice – how little it costs them individually? Some of your most valuable activities may be negligible but if members do not know this then they cannot be blamed for being sceptical.  

The renewal process itself is also worth thinking about. What can you do better to minimise attrition, attract new members and make existing members feel valued?  Effective communication is clearly important here. At a practical level however, it is also about removing hurdles for those hesitant but willing to renew and not taking for granted that most will do so irrespective of process. For example, in an age of Netflix and Spotify where the monthly, auto renewing member fee is now ubiquitous, is there scope for you to move from an annual subscription charge to something more akin to this model? 

Despite the risks associated with annuity income all the indications are that this business model will remain core to most professional bodies for some time to come.  The challenge is to be smart about how you explain the value you create and friction free with your billing. Here are some questions to facilitate this process: 

  1. Is your current subscription rate a reflection of your cost base or the actual needs of members?  
  2. Are you cross subsidising commercial activities you would otherwise pull if this subscription income were not available?
  3. If so, can these activities be said to provide real member value or a future ROI that justifies this investment? 
  4. Are you confident that your commercial activity is not just relevant but optimal in terms of delivering on your core purpose as an organisation? 
  5. If not, what can you jettison and where might this resource be better spent? 
  6. Can you explain the value you create to a typical member in less than two minutes and have them convinced that the benefit that accrues to them is worth their subscription? 
  7. Is your renewal process utterly user friendly? If not, what needs to change? 




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