The Strategic Use of Loss Leaders in Associations

The Strategic Use of Loss Leaders in Associations

Associations often find themselves balancing financial sustainability with the mission to serve their members and their industry. An article by Spark Consulting highlights one effective strategy borrowed from retail: the concept of loss leaders in associations.

Loss leaders are programs, products, or services offered below their Cost of Goods Sold (COGS) to attract and retain members, fulfill the organization’s mission, or support the profession or industry. In associations, these might include discounted student memberships, valuable government advocacy work, or free resources that bolster professional standards. The idea is to offer something so compelling that members engage more deeply with the association and invest in other, more profitable areas.

However, according to the article, the key to effectively using loss leaders is balance. Not every program can be a loss leader. Associations must regularly evaluate their offerings to ensure they remain relevant and impactful. This might mean letting go of outdated programs that no longer serve their purpose, even if they were once popular. By freeing up resources from less effective areas, associations can invest in new initiatives that better meet the evolving needs of members.

The challenge lies in making tough decisions. To stay relevant and effective, associations must be willing to adapt, ensuring that our offerings align with current member needs and industry trends.

While loss leaders in associations are a valuable tool, they must be used strategically. By maintaining a balanced approach and being willing to evolve, associations can continue to thrive and fulfill their mission in a changing landscape.