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Is Your Association Business Model What You Need to Compete?

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By Mike Mercurio

Our association business models for the most part are similar. The National Association of REALTORS® provides guidance in its Models Document which delineates three different Management Models. They differ in a number of ways, including the concept of the role of the volunteer in the decision making process. NAR refers to these as the Administrative, Management, and Leadership Models.

For decades our current business models have sustained our needs and allowed us to establish ourselves within our respective jurisdictions as the voice of local real estate. For the past 100 years our industry has sustained many changes and through it all our associations have survived. But can we survive in today’s and tomorrow’s environment? Can we compete with our competitors and survive?

Let’s first acknowledge the obvious. Our competition has changed dramatically as a result of the ever changing and growing technology. Our members needs and success is largely dependent on technology. With this acknowledgment, it is fair to state that our competitors each year are providing and developing more and more products, benefits, and services for real estate professionals, our members, and the pace seems to be quickening. Knowing this, we all should ask ourselves if we can compete with companies whose business models are strikingly different than our own, especially in the area of decision making.

Our competition, with few exceptions, have business models that are focused on profitability and market share. Our association’s competition isn’t what is once was; our competition has many faces and characteristics and there seems to be several new ones every day. Our competition operates and performs under a business model that is focused on profitability and market share. They are concerned with performing well to meet the expectation of their shareholders or investors. Their leaders speak of return on investment (ROI), dividends, shareholder equity, price per share, market penetration, market share analytics etc. to name a few. They are driven on a different set of business objectives that results in a different set of goals and plans to be successful.

Contrast this with local associations which are volunteer based organizations (the degree to which depends on the NAR Model you have chosen for your organization). Their focus is performing as best as possible to attract and retain, members by establishing a strong value proposition, and then providing the best benefits and services to satisfy the members, year after year. Our terminology consists of words like committees, strategic plans, government affairs, education, professional standards and events etc.

Many local associations, in many ways, actually operate like elaborate clubs. Some association are operated more like a business, yet even those are limited in their ability to create a business model necessary to compete on this level by companies focused on shareholder stock values and investor’s ROI. In a profession such as real estate, which is being defined more and more each day by technological innovations, associations must embrace a business model which will enable them to better position themselves for the competition so they can better serve their members, again, year after year (good times and bad).

Today, associations are dependent on revenues that are threatened by competition whose business models can spend more and outperform the traditional association’s volunteer based management model.

Over the next few months I hope to expand on this theme and share a business model which has enabled my association to grow while many associations have seen a decrease in membership and revenues which usually result in a decrease in benefits, and operations.

For more information visit http://sdar.com.

Mike Mercurio is the the CEO of the San Diego Association of REALTORS®.

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