1

Chambers of Commerce in 2022

David May, CCE, CAE

Fort Collins Area Chamber

of Commerce March 2012

2

Objectives

Make sense of the forces impacting

chambers of commerce

Offer some insights on the future of

chambers of commerce

Provide ideas for action

3

Macro-Trends

A look at the Big Picture

4

5

The Fifth Wave

5 techno-economic revolutions

60-year cycles of capital

First Wave: Industrial Revolution, 1771

Second Wave: Railroads Introduced, 1829

Third Wave: Heavy Engineering, 1870s

Fourth Wave: Mass Production, 1908

Fifth Wave: Microprocessor, 1971

Deployment always ushers in a ‘golden age’...

…but disorienting economic and technological change

Source: “Re-engineering the U.S. Economy” Trends Mag

6

Economic Dislocation

Rapid adoption of information technology = shortage of technically-skilled people & surplus of under-skilled people - skills gaps

Economic growth anemic 2001-2010

Net job losses

Drop in home prices

Higher unemployment

Leads to ‘blame game’

Consequently, trust of government at all time low:

77% say they trust government only part of time

7

Even chamber leaders uncharacteristically glum

Overall, do you think your state is going in the right or wrong direction?

right direction 14%

wrong direction 75%

no opinion 12%

Overall, do you think the country is going in the right direction or wrong direction:

right direction 4%

wrong direction 84%

no opinion 11% (Source: Chamber Economic Outlook – WACE Poll, Oct 11 2011)

8

Are we Going to Hell in a Hand Basket?

9

America Will Be Fine*

High standard of life

High level of equality

Strong work ethic

Innovative and creative, technological innovation

Freedom of speech

Free markets

Rule of law

Democratic society

Still investing in future – most graduate schools / elite universities; technological breakthroughs

U.S. still leads world: 1995 U.S. produced 25% of world’s goods / services; 2010 same

American economy 2x China’s

America’s per capita income is higher than those of China, India, Russia and Brazil combined

35% of China’s population (half a billion people) live on less than $2 per day

Not Great Depression but Long Depression like 1873-1896 (gradual realignment of labor due to technological innovations) “Are We Looking at the Wrong Depression?” Stephen Davies, Mar 2012

* Eventually

10

The Point?

Country has hit a rough patch

But Americans are very resilient

Don’t lose perspective, don’t caught up in all the

negative stuff

Part way through a gradual realignment of labor in

response to technological innovations*

America has huge advantages, bright future

There’s much you can’t control so focus on what you

can control - your own performance and outlook (*Source: ‘Are We Looking at the Wrong Depression?”, Stephen Davies, Freeman Online, Mar 2012)

11

Chamber Trends

What Does Recent Data Say?

12

Discussion

What has happened at your chamber over

the past 5 years?

13

Chambers 2006-10

Membership

Number of member accounts ↓ 14.1%

$ value of members accounts ↓ 1.2%

Cancelled accounts ↑ 4.3%

$ value of cancelled accounts ↑ 30.6%

New members (accounts) ↓ 22.7%

New member revenue ↓ 15.3%

Change retention rates (accts)

2006: 84.9% 2010: 82.2% (Source: ACCE 2011 Operations Survey)

14

Chambers 2006-10

Revenue

Total non-dues revenue ↓ 11%

Total revenue ↓ 6.7%

(Source: ACCE 2011 Operations Survey)

15

New Member Sales

Looking at the past 3 months (July, Aug,

Sept) are your new member sales:

Way ahead of budget 3%

Somewhat ahead of budget 42%

Somewhat behind budget 49%

Way behind budget 7%

(Source: WACE Poll Oct 11, 2011)

16

New Member Lead Sources

What has been your largest source(s) for recruiting new members so far in 2011? (Select up to 3)

1. Member referrals 50%

2. Member sales reps (inside staff 47%

making cold calls or contacting

referrals)

3. Chamber events 43%

4. Board referrals 25% tie

4. Unsolicited calls or online 25% tie

applications (prospect generated)

(Source: WACE Poll Aug 23 2011)

17

New Member Sales Incentives Please indicate whether you offer incentives for new member sales to

either Chamber staff, commissioned sales or volunteers (check all that apply): No sales incentives in place 36%

Sales incentives for inside sales staff 34%

Sales incentives for outside 16%

independent contractor sales staff Sales incentives for other Chamber staff 17%

Sales incentive for membership campaign 2%

Contractors Sales incentives for membership 12%

campaign volunteers

Sales incentives for Chamber 23%

member referrals Other 6%

(Source: WACE Poll Aug 23 2011)

18

Member Retention

Looking at the past 3 months (July, Aug, Sept) are your member renewals: Way ahead of budget 7%

Somewhat ahead of budget 45%

Somewhat behind budget 43%

Way behind budget 5%

Average member cancellation rate:

2011: 16% 2010: 16%

(Source: WACE Poll Oct 11, 2011)

19

Conclusions

Economy has been tough on individuals,

business, and chambers

But, chambers have been surprisingly

resilient

Lost members but saw high level of

membership loyalty during the downturn

20

The Future of Chambers

What’s Ahead for Chambers of

Commerce

21

Pace of Change

“The future ain’t what it used to be.” – Yogi Berra

22

Evolution, not revolution

Significant change underway, almost feels unbearable

Chambers being told we’re in a ‘race for relevance’

Yet, chambers are dealing with many of same issues they were 30 years ago

“Almost all change is evolutionary, not revolutionary.” – John Naisbitt

23

Evolution, not revolution

Reality: need sense of urgency, must get better fast

BUT work fast, don’t hurry, don’t panic

Change is spooling out at a fast but manageable pace

“The way work is done and what needs to be done doesn’t

change very fast, even now…People think work is changing

faster than it is.”

Heidi Schierholz

Economic Policy Institute

24

Trends:

Elevated member value expectations

Rapid movement to social media / Web 2.0

Traditional membership model is changing

Competition of chambers is increasing as technology fractures mass markets

More expected of professional staff

More collaboration among organizations

Advocacy more important, more treacherous

Funding model changing with more fund raising, less reliance on dues

Generational shift as Boomers begin to move off the stage

25

Trends: Elevated Member Value Expectations

Anecdotal, no data – frequent discussion

among chamber professionals and in

professional literature

Even longstanding supporters expecting

clear demonstration of value of chamber

Value proposition must be stronger than

ever AND clearly communicated

26

Trends: Technology - Social and Mobile

Rapid movement to social media / Web 2.0

Social media sites - just new tools for old ideas, but…

…they are challenging old premises

that you must be a member to receive info from the chamber

(Source: Adapted from Steve Drake, “Converging Trends Impacting Associations” March 2009)

27

Trends: Technology - Social and Mobile

Smart phone sales now account for 54% of all mobile phone sales in U.S.

Mobile internet use will overtake desktop internet use by 2014

Balance of mobile app use versus web browsing has shifted among smartphone users

Point: Chambers need a mobile strategy – be clear on goal, cost-benefit, develop app vs. mobile-optimized website

(Sources: Burns Marketing; ‘Monetize Mobile,’ by Beth Ziesenis)

28

Trends: Technology - Social and Mobile

Does your chamber have a mobile-optimized version of your website:

2011 2010

Yes 20% 12%

No 80% 88%

Does your Chamber offer a mobile app for

2011 2010

iPhone 22% 7%

Android 15% 6%

Blackberry 9% 8%

None of Above 72% 86%

(Source: WACE 2011 Technology Survey)

29

Trends: Technology - Social and Mobile

Cloud-computing becoming the norm

Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and

information are provided to computers and other devices as a utility. Users access cloud based applications through a web

browser or a light weight desktop or mobile app while the software and data are stored on servers at a remote location.

(Source: Wikipedia)

30

Trends: Technology - Social and Mobile

Percentage of Chambers using various social networking platforms

2011 2010 2009

Blogs 21% 22% 20%

Facebook 97% 86 64

LinkedIn 67 58 53

Twitter 65 55 44

YouTube 51 40 30

(Source: WACE 2011 Technology Survey)

31

Trends: Technology - Social and Mobile

Use of social networking has grown

dramatically

Social networking and social media are

valuable tools but not your purpose; a

means to the end

Social media technologies help you extend

/ enhance your chamber brand

32

Discussion

How do you think technology, especially

social networking and mobile technology,

will impact the chamber in the next 5-10

years?

33

Trends: Traditional Membership Model Changing

Variety of existing and emerging chamber models:

Traditional model – one size fits all i.e. one set of membership services that members pay different price based on size /type of company, so-called ‘fair share’ dues schedule

Affinity program model – nominal base membership fee but revenue from services / products; the “Sam’s Club” model (Detroit)

Tiered dues model – bundled offerings with some customization

Key investors model – value-focused traditional memberships offered but emphasis on accomplishing goals of major investors

Virtual chamber model – full service, but cut overhead costs by eliminating facility (Goleta Valley CA Chamber)

Free chamber model – very limited services, sponsor supported

‘Freemium’ model – full service organization, free membership with option to upgrade to a premium membership

34

35

Trends: Traditional Membership Model Changing

Migration of dues model continues:

“fair share” to bundled (i.e. tiered) to…what?

Traditional model:

joining is the norm

annual dues allow access to information, connect with

colleagues, participate in advocacy

one-size fits all with similar type and size of businesses

paying similar amount for same thing (‘fair share’ model)

many ‘checkbook’ members – support ‘the cause’ but

limited use of membership services

36

Trends: Traditional Membership Model Changing

Growing resistance to traditional model:

Young people growing up in pay-as-you-go world of

‘micropayments’ in individual transactions for specific

value

Ex. iTunes, cell phone minutes, car share programs

Some question the need to buy a bundle of services at full

price for things they may not use

Self-organizing - technologies allow us to get things we

need from each other rather than exclusively rely on

traditional organizations

37

Trends: Traditional Membership Model Changing

Competition on the increase

Technology-driven de-massification – mass

markets are fragmenting into smaller more

personalized pieces

For-profits reaching into traditional chamber

offerings to pick-off value

Economic developers rediscovering ‘improving

the business climate’ as way to attract investors

Technology enables ‘free’ chambers

38

Trends: Traditional Membership Model Changing

Competition on the increase (con’t)

Some associations experimenting with

‘freemium’ model:

free membership offered to all, nominal price for

an ‘active’ member

core product free, generate revenues from paid

service, advertising, sponsorship

Ex. Alliance for Women in Media

39

40

41

Migration to Tiered Dues Continues

Chambers Using Tiered Dues Schedule

2011: 28%

2010: 19%

Average Minimum Dues

Tiered $341

Regular $236

(Source: WACE Poll Aug 23 2011)

42

Conclusions

Paid membership model still has value for

foreseeable future

However, pressure to change the membership

model:

must deliver value in ways people want it (i.e. provide

members with something they can’t get elsewhere)

pressure to unbundle means at least migrating from

one-size fits all to tiered dues schedule that is

customizable

43

Discussion

Will membership be a viable construct in 10

years?

If ‘no,’ why not?

If ‘yes,’ what do you think it will look like?

Who will be the Chamber’s key competitors

over the next 5-10 years?

44

Trends: Funding Model Changing

Less reliance on dues, more on special funding

Campaign type funding is becoming the norm

Ex. Baton Rogue Moved away from membership as primary funding source

Shift from primary focus on membership events / services to initiatives to improve business climate / improve economy

150 investors provide bulk of funding through campaigns

10 percent of funding from public grants – local, state, federal

45

Discussion

Do you agree with the contention that there

will be more emphasis on special funding

and less on dues?

Why or why not? Please explain

46

Trends: Generational Shift Four generations in the workplace: WWII, Boomers, Generation X,

Generation Y

WWII – only vestiges remain in workplace

Boomers:

Leading edge of the generation is beginning to retire

Sizable minority will still be working in 10 years – can’t or won’t retire

Some will reposition – part-time, consulting, coaching

The majority of current members will retire during next 10-15 years

Generations X and Y

Communicate and collaborate differently

X’s tired of Boomer shadow, want to elevate their careers

Y’s want to work for less hierarchical organizations

Y’s want to use personal technology at work

Key question for chambers: Will Generations X and Y see value in joining?

47

Generations of Members

Baby Boomers Generation X Generation Y

Born 1946 – 1964 1965 – 1981 1982 - 1995

Size 78 million 48 million 80 million

Why They Join Opportunities to lead and

leave a legacy

Opportunities to further

their careers

Opportunities to learn

from others

Communication

Styles

Appreciate meetings

Believe no news is good

news

Prefer clear, concise

communication – no

over-explaining, clichés,

or corporate jargon

Prefer email

Prefer frequent

feedback and problem

solving via technology

instead of phone calls or

meetings

Turn-offs People suggesting they

try something new

Chaos, distrust, loyalty

that goes unrewarded

Dismissing their ideas

because of their lack of

experience

Source: Adapted from “The End of Membership as we Know It,” by Sarah Sladek

48

Discussion

How do you see the generations being involved in the Chamber in 5-10 years?

What does that mean for the governance of the Chamber? How do we facilitate a smooth shift over the next decade to include more governance participation by the younger generations?

What does that mean for membership?

49

Trend: More Expected of Professional Staff

Boards expectations of professional staff have gone up

Board expecting value, members demanding it

Boards asking hard questions “What is this costing us?

Why are we doing this?”

Most chamber staffs not growing in size but are growing

in sophistication

Chambers outsourcing to get things done with staffs

managing more outside vendor relationships

50

Trends: More Collaboration

Collaboration among chambers and other

community organizations is up

Merging is common topic but no evidence that

actual number of mergers is up

51

Trends: Advocacy More Important, More Treacherous

Huge debate about role and price of government and who pays

Highly charged political environment

Growing expectation of transparency and accountability of government and those lobbying government

Era of anti-capitalism and government sponsored capitalism

52

Trends: Advocacy More Important, More Treacherous

Local politics have been nationalized

National money, agendas and volunteers flow into local

races through national political networks

“The Blueprint: How the Democrats Won Colorado” by

Adam Schrager and Rob Witwer

U.S. Chamber increased candidate and issues advertising

and ground operations in battleground states; causes

issues for some local chambers

MoveOn.org targeted U.S. Chamber / chambers

Technology has enabled grassroots activism

53

54

55

56

57

Trends: Advocacy More Important, More Treacherous

Growing anti-government sentiment in

country

Local & state government budget

challenges

More local chambers getting involved in

politics

58

Trends: Advocacy More Important, More Treacherous

“We have been monitoring local chambers and

their political activities for many years. The trend

has been that chambers are becoming more

politically active.”

- WACE Opinion Poll, Steve Snyder,

July 2011

59

Trends: Advocacy More Important, More Treacherous

Government involvement in chambers

Do you have any ELECTED governmental official (city, county, school, etc.) serving on your chamber's board of directors? 27% Yes 73% No

Do you have any governmental PAID Staff (city, county, school, etc.) serving on your chamber's board of directors? 37% Yes 63% No

Is your city/town government a dues paying member of your chamber? (not individuals, but the city/town as an entity). 55% Yes, 38% No

(Source: WACE, Government/Non-Profit Service on Board - November 1, 2011)

60

Trends: Advocacy More Important, More Treacherous

Business needs chamber to stick up for them

More controversial, not less controversial. Don’t back down

• Develop language about advocacy program – website and one-pager in marketing kit (see FC Chamber Government Affairs FAQ)

• Explain relationship with USCC (see FC Chamber page; see front page of San Luis Obispo Chamber)

• Can hold elected officials accountable without being confrontational – scorecards; examples: NCLA, Portland

• Be clear on values and policies (Where We Stand)

• Grassroots activation network (NCLAaction.net)

61

Trends: Advocacy More Important, More Treacherous

“A person who does not make a choice

makes a choice.”

– old Jewish folk saying

62

2022

What Chambers of Commerce Will

Look Like in 10 Years

63

Question

How will your chamber be different 5-10

years from now?

64

Chambers of Commerce, 2022

Basic purpose unchanged: create a bright economic future and strong

quality of life through promotion of free enterprise

Relevance of chamber: depends on local circumstances and strength of

business community

there remains a need for an on-the-ground forum of business leaders to advocate for business and community’s economic future

65

Chambers of Commerce, 2022

Funding model: memberships will exist but Chamber less dependence on

membership dues

key community builders will invest more for major initiatives that improve business climate

successful chambers will have clear value propositions and be communicating them effectively

successful chambers will be aggressive and unapologetic in fund raising – do due diligence, identify needs, build value case, ask businesses to invest, communicate results

66

Chambers of Commerce, 2022

Membership model: membership will still be useful construct – confers

sense of belonging & ownership thus loyalty

chambers are brokers of power, information, talent so people will still want to use to accomplish things for their businesses, careers, community

membership dues will not be primary source of funding for most chambers

a few chambers will be using ‘freemium’ model

chambers will know individual member needs even better – data mining, wise use of membership software

67

Chambers of Commerce, 2022 Membership composition:

Generations X and Y will ‘join’ but redefine ‘membership’

many chambers have fewer members and more revenue

less emphasis on trying to serve everybody to serving those who are committed to the chamber’s mission

Composition of membership will change - many new professions will emerge including: body part makers, nano-medic, old age wellness consultant, memory augmentation surgeon, vertical farmers, personal branders, and others*

Competition: more intense

more niche virtual and actual organizations

*(Source: www.fastfuture.com)

68

Chambers of Commerce, 2022

Governance model:

tipping point reached – Boomers still on stage

but Generations X and Y in dominant role

board sizes relatively unchanged in small and

mid-sized chambers; some metro chambers with

mega-boards will reconfigure and slim-up

strong CEO’s leading with strong strategic

guidance by boards

69

Chambers of Commerce, 2022

Issues: state-directed capitalism declining but chambers still

fighting back government intrusion in economy

workforce competitiveness

mobility

‘Silver Tsunami’

regionalism

energy

immigration

water supply (in the West)

70

Chambers of Commerce, 2022

Government affairs: chambers will be very involved in advocacy

more will have political programs to counter agenda of no-growthers, environmental groups, unions, others

chambers do traditional direct lobbying of government but ‘reaching past’ elected officials to directly micro-target voters politically and on specific issues

governance structures will allow fleet decision making – one week or less on most issues

71

Chambers of Commerce, 2022

Staff size and skills:

same size or smaller

chambers outsourcing services and duties to

leverage external expertise meaning increased

role of staff as resource coordinators of external

vendor relationships

all staff facile using technology

72

Chambers of Commerce, 2022

Technology: old news by 2022 - all chambers will have mobile

strategies because most people access chamber via mobile devices

highly sophisticated use of web, mobile, social media to extend brand and add value to members / investors

websites more powerful and relevant

center of chamber’s communication network

content-rich sites

write once / publish in multiple places

Web 3.0 - sifters

73

Actions to Consider

To stay professionally relevant:

Use American Chamber of Commerce

Executives (www.acce.org) Information Office

Be active with appropriate ACCE Divisions

Join your state chamber executive group

For those in the West, join the Western Association

of Chamber Executives (www.wace.org)

Study the WACE Toolkit (must be member of WACE)

74

Actions to Consider

“Spine up” regarding advocacy i.e. expect choppy

waters and prepare to respond

If chamber not sticking up for business, who is? Without strong

business advocates bad things happen.

Have language that explains relationship with U.S. Chamber

Have language that explains why chamber involved in advocacy

and / or politics

If have political program, hire an election attorney to write

opinion letter to guide you on permissible activities

75

Actions to Consider

Help your chamber identify / package /

communicate value

Press your state and national chamber

associations to spend significant attention to the

topic of the future of chambers; need them to

collect info, analyze, interpret

Read The New Rules of Marketing & PR

Read The End of Membership as We Know It

76

In Closing

Chambers are important to our

communities’ success

Time of significant and challenging change

Chambers need to be at top of their game,

counting on you to be at top of yours

What you do is important, so thank you!

77

Parting Thought

“If you’re not confused,

you’re not thinking right.”

-- Unknown

78

Resources

ACCE’s Information Office

www.acce.org/info/

Others

Western Association of Chamber Executives

(www.wace.org)

Chamber Leader Blog (www.chamberleader.blogspot.com/)

Chamber People (www.chamberpeople.com/)

79

Resources

80

References ‘Far too Soon to Write off America” Ian Bremmer Dec 27 2011

“Private Employment Has Recouped Only Three-Eighths of Its Recent Loss” By Robert Higgs | Sunday February 19, 2012, The Independent Institute

WACE Polls: July, Aug 23, Oct 11, Nov 1, Dec 2011

WACE 2011 Technology Survey

“The Future, Here and Now” by Lisa Junker, Association Now, Oct 2008

Steve Drake, “Converging Trends Impacting Associations” March 2009

“Exploring the Future of Associations” Paul Borawski, American Society of Quality

Race for Relevance: 5 Radical Changes for Associations, Harrison Coerver and Mary Byers

“Goodbye, Dues” by Erin M. Fuller, Associations Now March 2011

“The New Face of a Membership Organization” by Kim Fernandez, Associations Now, Feb 2010

81

References “Mega Trends for Chambers in the Next Economy”, Mick Fleming,

American Chamber of Commerce Executives

ASAE PowerPoint Presentation – Greg Melia, etc

“Chamber Choices: Factors to Consider When Evaluating Your Chamber Focus Areas,” Dave Kilby, July 2010

ACCE 2011 Operations Survey

“A Whole New Mindset” by Kristin Clarke, Associations Now, June 2007

“What Does the Future Hold” by Robert Olson August 2001

“The Future of Chambers in an e-World,” David May, February 2002

“Top Tech Trends” by Laurie McCabe, Partner, SMB Group; www.FreeEnterprise.com

‘Monetize Mobile,’ by Beth Ziesenis, Associations Now, March 2012

“Re-engineering the U.S. Economy,” Trends E-Magazine July 2011

http://en.wikipedia.org/wiki/Cloud_computing

“What Is Cloud Computing?” by Rivka Tadjer, PC Magazine, November 18, 2010

82

References “Associations Next: Serious Questions for 2010 and Beyond,” Jeff

DeCagna

Lessons from the Recession, by Jim McGarry, Executive IdeaLink, Dec 2009

David C. Olson, Minnesota Chamber of Commerce, 11/2/11

The Blueprint: How the Democrats Won Colorado by Adam Schrager and Rob Witwer

“Public Sector Day of Reckoning,” Trends E-Magazine, march 2011

“Picturing It: The Year 2020” Public Management Mag, Jan/Feb 2012

“The Freeland Surge is the Industrial Revolution of Our Time,” by Sara Horowitz, The Atlantic, Sept 1 2011

“Tense Time for Workers, as Career Paths Fade away,” Rick Hampson, USA Today Jan. 2011

The End of Membership as We Know It, by Sarah L. Sladek

83

References

ReMembership: New Thinking for Tomorrow’s Membership Organization,

by Kyle J. Sexton

“The Future of Chambers & Leading Them,” Kip Lilly, Lilly Foresight

Dynamics, Minnesota Chamber of Commerce Executives, Feb 2011

“The New Workforce” Trends E-Magazine July 2011

“Shape of Jobs to Come,” Fast Futures, www.fastfutures.com