When it comes to trade associations, companies have an extraordinarily wide variety from which to choose — representing individual industries and policy positions, to name a few. In the United States alone, there are literally thousands, not even counting the professional associations that might serve a company’s employees.
And therein lies the challenge. How is a company to decide which trade association membership is vital, and which might be nice to have?
Trade associations exist to bring enterprises together with shared interests to address priority industry issues. Sometimes they want to show a united front to lawmakers, regulators, the public, nongovernmental organizations (NGOs), or media outlets on various policy issues. Just as often, it is to share industry information on trends, new technology, and best practices or tackle problems together that members face. These associations are often funded with a mix of membership dues, non-dues revenue, sponsorship dollars, and targeted services that support its members.
Any given company might have hundreds of potential associations across a mix of industry-specific and industry-agnostic issues from which to choose. Each association will vary on the issues it addresses, the approach it takes, and the constituencies it serves. Prioritizing memberships has become challenging for companies given the numbers, with various business units sometimes coming to different conclusions and taking it upon themselves to join various groups. This can cause firms to suddenly find themselves members of dozens of associations that serve similar purposes, which can end up being an expensive proposition that prevents companies from getting the most out of their memberships.
Trade association memberships can be extremely valuable to companies when they are supported appropriately. This requires focusing on the three key areas where they can play the biggest role:
- Public advocacy: Through trade associations, companies can promote policies favorable to themselves and their industry and oppose those that threaten industry interests. They can work to improve an industry’s reputation with the public, lawmakers, and NGOs and other interest or pressure groups, while simultaneously insulating members from criticism by letting the association rather than individual members take stances on key issues or new regulations.
- Cross-company collaboration: Trade associations offer a forum for organizations to work with peers, trading partners, and even rivals to address industry issues and build better working relationships. Often, trading partners find themselves on opposite sides of the table. Being part of the same industry association gives them opportunities to sit on the same side of the table, promoting a different dynamic that can result in co-created solutions. If done well, this can grow into business as usual. They can also coordinate change across an industry, unlocking opportunities for transformation that would be impossible (or much slower) if pushed by individual companies alone. One example is in the adoption of new technology.
- Education and research: Trade associations often provide data and research, as well as professional development opportunities that help companies stay ahead of the curve. The education and research function bolsters advocacy work and promotes an industry in the media.
Evaluating trade associations
Once a company understands what each association offers, the question becomes how to design an effective trade association strategy to gain maximum value from memberships.
To start, a company must:
- Evaluate associations based on their scope, portfolio role, and relevance
- Analyze how well associations align with the company’s corporate business, environmental, social, and government advocacy goals
- Assess the current level and nature of engagement with current association partnerships
- Evaluate each association’s value proposition within the company’s overall portfolio, and identify the appropriate executives to take advantage and ownership of an association’s membership
For an external perspective, companies should also assess in which associations their peers, customers, and suppliers are currently participating.
Which memberships make sense
After evaluating current memberships, companies should develop an effective go-forward strategy that drives smarter, better, and cheaper engagement with trade associations. This is likely to mean developing a new roster — keeping those that have proved their worth and potentially adding new ones previously overlooked or that have become more relevant because of industry trends.
What does smarter, better, and cheaper mean?
- Smarter means having a clear rationale for which associations to join. Whether a company punches above or below its weight in industry conversations is often tied to the soundness of its association strategy.
- Better means setting out goals for memberships and plans to reach them. It isn’t just about joining an association; every choice should also involve making sure the right people at the company operate at the right levels within an association and sufficient resources are made available on an ongoing basis to handle association activities and maximize an association’s value to the enterprise. What a company gets out of industry associations is often a function of what it puts in. Sending junior representatives who stay in “listening mode” will forfeit the opportunity to productively steer industry conversations.
- Cheaper means engaging with associations as cost effectively as possible, which consists of reducing redundancies or overlaps in memberships, exercising governance over association spending, and prioritizing the company’s investment in associations that focus on areas that generate maximum returns. The balance companies must achieve is avoiding unnecessary spending while not cutting back so much that the company runs the risk of forfeiting its voice.
Trade association memberships should be key components of a coordinated corporate business, marketing, and public affairs strategy, and as well thought through as every other aspect. Companies need to make sure associations fulfill their needs and not just settle on the same memberships every year.
Hunter Williams, Helen Feng, and Aditi Athavale contributed insights and research to this commentary.