Partnership v. Membership: Suppliers Should Not Be Association Members

partnership v membership Flax Associates

Elizabeth Engel and I are addressing the interactions and relationships between members and partners within associations.  Elizabeth shared her thoughts in a prior post.  Here is my take.

Suppliers and Members are Involved with Associations for Different Reasons

Suppliers should not be considered association members and the relationship between associations and the supplier community should be revisited.     

Consider these questions:   

  1. If association members were not present, would representatives from supplier companies remain involved? 
  2. How do association members react if the proportion of supplier representatives significantly increases at an event?

Association executives can easily answer these questions.  Under the first scenario, suppliers disappear in a nanosecond.  In the second, regular members gradually stop attending association events.

Why?  The supplier community and association members have divergent interests and motivations. 

Why Do Suppliers Join Associations?

Suppliers become involved with associations for one main reason: to sell products and services to target prospects.  Associations represent fertile fishing ground.  

I’ve interviewed numerous corporate executives over the last 11 years from supplier companies (on behalf of associations) and they mention an interest in enhancing visibility and awareness, demonstrating thought leadership, generating leads, and a shared interest in regulatory or legislative issues.  The approach, purported reasons, and methods vary, yet the rationale for suppliers eventually trickles down to additional sales and business opportunities.     

Traditional association members join for different reasons including networking with their peers, education and insights on new trends, and protecting their legislative or regulatory interests.

Why Do Associations Establish a Membership Category for Suppliers?

Simply put, the association faced a revenue decline or were seeking funding for a new initiative. 

It happens all the time. The decision to add a supplier membership category revolves around securing additional funding, the expected number of new ‘members’, and what price to charge.   Little thought is given as to the motivations of suppliers. The strategic focus necessary to correctly structure benefits and pricing is lacking.

Suppliers Can Offer Value

Suppliers are positioned to add value.  Their representatives interact with many companies and individuals on a regular basis.  To sustain their business, they need to understand key challenges, issues encountered, and ways to solve these problems.  As a result, they gain a deeper and broader understanding of the issues and problems association members face.  While their primary goal is sales, they recognize that understanding the ecosystem of their clients provides significant advantages over their competitors.

Suppliers can develop content, conduct research, and offer other ways to enhance the industry.  While the information may be self-serving or viewed unfavorably (especially in the health care and education fields), in many instances, suppliers are at the forefront of developing products and new solutions. Their insights and solutions add value, are of interest to association members, and enable the members to function more effectively and efficiently.

Supplier motivations are to sell.  At the same time, they are positioned to develop content and information of value.  

Reconsider the Relationship

Associations should evaluate how they engage with the supplier community.  Rather than treating suppliers as ‘members’, reconsider the benefits offered, pricing strategy, and positioning to make the relationship meet the needs of the association.

In most industries, a small group of suppliers dominate the space. Mergers and acquisitions accelerate this trend and the larger suppliers continue to increase their market share and influence.  These companies maintain the resources, capabilities and interest to become more actively involved and are positioned to contribute and spend at a much higher level.   

The Importance of Differentiation

Associations often offer all their members the same benefits and charge standard fees (or the fees are on a sliding scale).  Given their common interests, this makes sense.  However, associations should differentiate among suppliers and capitalize on the abilities and resources of the larger companies.  Smaller firms may be in position to buy exhibit space or advertising; yet not able to invest at a higher level.   Associations should maximize this financial opportunity and offer additional and more valuable benefits to larger suppliers at significantly higher fees.

One association maintained over 130 supplier companies as “associate members,” paying low fees and receiving many benefits.  This group required significant staff time, offered limited revenue potential, and the association was better off revisiting these relationships.    

Rename and Restructure the Relationship 

Associations should capitalize on this opportunity and revisit, rename and restructure these relationships.  Specific steps include:

  • Member Views – Gain an understanding of how your members views the supplier community – where, how, or if they add value. Assess the cultural factors and dynamics between suppliers and your association leadership and members.
  • Supplier Interests – Interview a cross-section of suppliers to figure out how they want to be involved, their level of interest and ability to invest, and what impact their involvement will have on their business.
  • Determine Base Level Benefits for Suppliers – Determine low level and inexpensive offerings related to visibility and recognition, event participation, and discounts on traditional benefits (e.g. exhibit space, advertising).  Rather than calling them ‘members’, figure out another term that appropriately and positively describes the relationship (e.g. friends, supporters) and arrive at the price point.
  • Differentiate Opportunities for the Larger Firms – Assess and determine more valuable benefits for suppliers with the ability and resources to invest at higher levels.  This can serve as a significant revenue source and provide value to the member base.

Most associations are unwilling to re-calibrate their current arrangements as suppliers will complain and it may lead to difficulty with a few members.

For associations that address this head-on, they are better positioned to serve the interests of their ‘true’ member base, increase financial support, and function more effectively and efficiently.   

Agree? Disagree? 

Please leave your comments below, or feel free to contact me if interested in revisiting your associations’ relationship with the supplier community.

Flax Associates helps associations and nonprofits establish mutually beneficial partnerships that enhance value offered and result in additional funding. We help develop the strategy, structure, and ability to implement. If you’d like to discuss your current sponsorship strategy and plans to boost your revenue, please reach out by email (lewis@flaxassociates.com) or phone (202 266-2655).