February 18, 2013

"Membership ROI CAN Be Measured"

I recently read an article about returns on investment and it brought my memory to a place it hadn't been in 25 years of home builder association (HBA) membership; justifying the cost of my membership to my myself, as an employer, and then again, as an employee to my employer. Sales & marketing is the area within your business where HBA memberships and sponsorships come from, therefore approved. With any sales & marketing initiative, short or long term, dollars spent have to bring back dollars earned. 

The definition of return on investment (ROI) is simple;

"A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio."

ROIs are sometimes misunderstood or unclear because all factors are not fully considered or explored. 

The below "open letter" is for associates who need help in renewing their dues; it should help your company's decision maker become aware of the benefits of HBA membership. In order for you to know where the ROI comes from an awareness of variables come into play and collateral benefits, a constant variable, should be taken into consideration. These collateral benefits are derived from your financial investment in membership playing a roleThe question is "what is that role and does it  translate into a ROI for you?

For non members of the home builders association; if you derive any or all of your sales volume from the building industry, the below information should give you enough financial motivation to join by clicking here. 
 "An Open Letter to The Associate Member and Your Employer"

Dear Employer,
One of the most direct reasons why home builder association memberships are dropped is the lack of immediate business. NAHB estimates that fifty-five percent of new members drop out after one year. One year may seem like a long time to invest without a return but I would offer to you my opinion; that year is needed to familiarize yourself with your investment. To expect any size-able financial return, that you can actually touch and say "this came directly from my company's investment" may not be realistic.  Unless you have a product or service that has no competitors and is an absolute "must have" for builders and the industry you need to have patience in the HBA investment. 
During your first year of membership, or subsequent years when you are measuring the HBA's value to your bottom line, there are 3 areas that I would like to highlight for you that will bring you an ROI

3 metrics specific to your HBA investment that you may not be considering:

1. Member BenefitsDo you fly? Rent cars? Need insurance? Buy computers? Send packages via FedEx? Member benefits that bring you cash back in savings bring you back a return on your investment. Just recently I had an insurance quote given to me from a participating NAHB Members Discount (click here for full list of savings) and the savings would pay for my membership dues 3 years in a row. These are above and beyond what your state or local HBAs may offer as member benefits.

2. Industry Specific Education: your HBA membership has access to some of the top educational programs in our industry that can help you train your sales representativesYour reps could benefit from training in (to name just a few of many) GREEN/sustainability, aging in place or just to understand the builders' business and how your products or service interact. Whether it's one or two classes or a full compliment to achieve a building industry specific designation, NAHB Education (click here) is there for you as an "in house" trainer." This education is offered to non members, but at a much higher rate. 
Training one rep in industry specific education alone pays for your HBA membership and your developing a building industry professional (click here), a major plus for you.

3. Fight for housing >  associates who work directly with builders should incorporate into their ROI thought process "if it affects builders it will affect your company's bottom line." HBAs help builders with legislative and regulatory initiatives that help fight for housing. These efforts deliver more units per parcel or bring projects to fruition at a faster pace. That means more immediate sales volume opportunity  for you, possibly at a better GP with a pipeline of business opportunities for future company growth.  The key word; opportunity. 

The HBA investment should also be applied towards the recurring revenue stream from your current customer base and how advocacy helps with that constant stream. The primary focus should be on your customers' and potential customers' ability to buy your product or service because of the HBA's role in the fight for housing.

If you're a company that sells to both builders and associates, the same principle applies; "what affects them will affect your company's bottom line."

80% of associates and their employers don't understand how the association's fight for housing efforts have helped with their business opportunities. Your local HBA membership is also a national membership. The following article highlights the national fight for housing  >"Reflections on 2012: A Return On Your Membership Investment" (click here) 
Your local HBA can share with you their efforts to help grow the building industry specific to your region or within your state. Again, 

These above three metrics, that if applied correctly in your sales and marketing discussions, can demonstrate a clearer ROI, one that includes the tangible as well as the intangible. Once you've experienced the awareness of what the above three metrics bring in value, the intangible quickly becomes tangible. HBA dues are minor in the grand scheme of sales & marketing assigned dollars and could be a major ROI for you and your company.

I haven't discussed a fourth metric; an expansion of your sales efforts through social networking and HBA volunteerism, where a massive ROI can take place if your company's HBA representative is integrated properly. There is quite a bit of information to this and if you'd like to know more please click here for detailed explanation.

P.S. What you were originally looking for: Sales attributed directly to your HBA membership. There are so many factors involved ;

  1. Are you a name in a directory or do you attend general membership meetings?
  2. Do you just do more than attend the general membership meetings, meaning do you interact with others while there?
  3. Is your company representative (you?) accomplished in the art of developing relationships?
Only you can only answer those three questions. Gaining new customers directly from your membership depends not on the association but on you, your company's offering and your ability to influence. The above three metrics, however, give you, at the very least, a return on your membership investment.


 Michael Kurpiel, CGA, CGP

1 comment:

Diana Lucero said...

Great letter. Something I believe we can use here in New Mexico. So excited to actually see positive movement in our industry. This is definitely the time to remind past members of the importance of HBA.