One of the ways in which Associations differ from many commercial businesses is in the requirement of associations to draft and approve an annual budget. The budget cycle drives the annual organizational cadence and often elicits protracted debates to establish the rates for membership dues, annual meeting registration fees, the price of a 10X10 exhibit booth and much more. The problem is that the data points to support the debate are often limited – mostly historical activity, some trend data, and some minor input from the association board.
Decisions often come down to what the executive team thinks the members are willing to pay and whether a 3 or 5 percent increase from last year will be acceptable. Once an organization establishes its budget targets based on the revenue forecast, then the departments haggle over allocation of the funds to support the priorities. Unfortunately, this process is flawed because everyone knows that the targets were set based on gut feelings rather than solid data. This limits the association’s ability to commit to new initiatives with confidence because they just don’t know if they’ll have the funds to support it.
Associations need a revenue forecasting tool that takes the inputs from prior years, utilizes sound statistical modeling, and produces a future forecast that delivers confidence. Organizations running a state-of-the-art data analytics solution like Nucleus have such a tool at their disposal – and what’s more, Nucleus clients have the ability to conduct what-if analysis to see how alternative decisions would impact the outcome.
The visualization included in this blog illustrates a forecast for membership renewals based on a series of inputs including historical revenue trends. Filters are available for users to test, for example, the impact of a 3% increase vs. a 5% increase in dues on the overall net revenue forecast. Another example would be forecasting the revenue of an annual meeting based on changing locations and the proximity of the members.
Understanding member behavior better and making decisions with confidence are the hallmarks of a well-run association, which can be made possible with a platform like Nucleus. So that innovative initiative awaiting approval? Get started! You can clearly see that you will have the funds to support it.