I was talking to a local Realtor association President yesterday, discussing the economic impact on organized real estate—specifically, real estate boards in economically hard-hit communities. This President was running scared. “We've been spending reserves,” she said. “The cash flow statement looks ok, but our overall balance sheet shows we're really spending down our cash reserves.”
“Well, that's what cash reserves are for,” I said. “We used to call them 'rainy day funds', and we are currently in the middle of a thunderstorm. It's fine to spend some to be there when the members need you. That's why, when you had all that spare change in your treasury you decided not to offer a dues rebate.”
Sally hesitated a bit, and then said, “Well, that's not all of it. We're not spending money to keep afloat and continue providing services—we seem to be doing some therapeutic spending. You know, like when I get depressed I go out and buy a new pair of shoes? Well, we're talking about new landscaping and new signs for the association building. And we are spending a lot of money on public advertising and community service projects, something we've never done before.”
In and of itself, of course, these are not bad ideas—but Sally's association has just lost 25% of its full members, and quite a few affiliates. That means a significant loss of income and—equally as importantly—a significant loss of the target market for the products and services an association sells to members. So, not only has Sally's group lost 25% of its dues income, its non-dues income like forms sales and the association store are also significantly decreased. What to do?
In my discussion with Sally, I suggested that now is NOT the time to cut visible, tangible member services. Some services which a Realtor association offers will never pay for themselves—ethics enforcement is one. That's an expensive program, if you figure in training costs, staff time, and member contributions of time and expertise. And while it can be streamlined and made more efficient, members tell us it's important to them, and should never be cut back. The same is true for education programs—at a time when members need skills the most, associations have to offer them more value, not less. If anything, now's the time to beef up Realtor membership programs, and make sure our members know we are really there for them.
Realtor associations have long depended on the MLS to attract and retain members. Oh, I know, there are really successful associations which do not have their own MLS, but most of us have never really developed the skills of membership development. One exercise every Board of Directors should engage in now is to ask themselves, “If I were a prospective member, would I become a Realtor? If there were no MLS, would that still be true?” And if the answer is 'no' from even one Board member, the leadership group needs to do a little self examination. Joining and maintaining membership in the local association is an economic investment for members. As one association exec said, “Anyone can join an association when the money's coming in, but the current environment is one in which we need to expand our membership programs and make the investment worthwhile."
(Of course, we should also debate the efficacy of the MLS in today's market and how long it will last—but that's the subject for another blog, and about 10 years of meetings.)
So, maintaining or enhancing member services is a necessity. By the same token, association managers should know every single nook and cranny of association finances. How much does each and every program cost? Include the overhead, staff time, member contributions, offsetting income—develop a complete picture for every function or service! In an association, some things are not going to pay for themselves, but are a part of the members expectations—ethics enforcement and lobbying are two important one, and should be funded by dues dollars. But many other programs are just there because they've always been there, not because they are valuable in and of themselves. Be prepared to make some hard decisions in those cases. And again,make sure you have a written business analysis for each product or service and some measurable results which you can analyze.
One association I know decided to have a First Time Homebuyer Expo this year. It was lots of work, renting a facility, writing press releases, placing advertising, securing speakers and exhibitors and so on. The association declared it a success based on the feedback from the exhibitors: “It was fun,” they said. “We loved the lunch afterwards, too.”
“Yes, I imagine it was,” I said. But ever the consultant, I asked: “Was it successful? Is that the same as 'fun'? How did you measure success?”
“Well,” a staff person said, “We had a lotta people come.”
“How many?” I asked. “And how many were members and their friends and relatives, as opposed to the buying public? What exactly did it cost in staff time, advertising, publications, and so on? Did anybody make any sales from this event?” Now is not the time to be casual about the answers to these questions: we are talking about return on investment here and as in any product release, success must be measurable and demonstrable.
To summarize, maintain service and products meaningful to members. Ruthlessly evaluate existing and proposed programs and services with a written business plan for each. And there's another caveat here: consider your service delivery.
In one Realtor association I'm familiar with, over half the members work over 30 minutes away from the association office. Now imagine this: how good is your association program—educational or otherwise—which entice members to take time and gas (at $5 a gallon, almost) to drive to an event? Better yet, how good is your convention, if you're a state association or a regional cooperative? How well have you marketed your product? Are there more effective ways to deliver services—online courses, YouTube media displays, staff and leadership visits, or web casting? If your association didn't invest in delivery technology when times were good, it will be more difficult to do so now—but there are an abundance of services from which you can subcontract these things. And most of all, don't go backwards! It's not the time to drag out (or continue) your 70's technology (like, say, printed MLS books or flossy magazines or conventions) when the world would rather read online and order using PayPal.
Instead of bemoaning the fact that this is a tough time for real estate associations, restructure your thinking to embrace this as the golden age of real estate associations.
Many brokers are cutting back on services like training and advertising, and physical overhead. For associations this means more opportunities to offer services to the collective member market which is no longer funding them. If your association brokers hated the idea of a fast-start sales training program, they may really like it now. Or perhaps it's 'Rent a Personal Assistant', community open houses, a call center, or a basic computer service department. But the secret is, find out what the members need—not what you think they need, or would like for them to need, or what NAR tells you they SHOULD need. And will they shell out a few dollars to subscribe to an online video magazine called “Toolbox”? If the content is really meaningful, of course they will.
This is a time when we all truly must think like the trade association that we are, a cooperative of professional people trying to benefit from shared products and services.
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