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Updated Member Value Strategy
NPA Board of Directors MeetingFebruary 11, 2019
Agenda
• Project and Process Recap • Review of Revised Scenarios and
Progress • Group Discussion and Confirming
Direction
• Market Testing Next Steps
2
Where we left off...
Following the October Board meeting and December/ January calls with the Work Group, McKinley and NPA staff advanced the following: Adding specificity around the definition and related variables for the
“multi” category, to determine when a conversation around the enterprise offering would be “triggered”
Adjusting the census-based dues model to incorporate a multiplier and escalation cap to ease the impact of dues increases for new, growing programs
Continuing to flesh out, advance and operationalize the proposed member engagement framework
mckinley-advisors.com
Dues and Membership Model Options
Membership Model Options
• Enterprise Offering: Customized membership package offered to “multis” that embody the agreed upon criteria (next slide) to qualify for a membership off-ramp offering
“Multis”
• PACE Census Dues Model: Dues based on number of individuals served (rather than gross revenue), including a multiplier and new program escalation cap
1-2 PACE Organization Members
5Note: all revenue numbers from FY19 invoices; dues calculations adapted since October 2018 presentation based on an addition to the “multi” category
6
Enterprise Membership Offering Criteria
“Multis” Today
• 21 total PACE organizations
• 3 multi sponsors
• 12,338 people served
• $378M+ gross revenue
• $696,909 dues revenue*
NPA proposes that “multis” that qualify for the Enterprise Membership Offering be defined as:
• 3 or more PACE organizations;• Under common control (ownership of 50% or more) OR
common management (defined as consolidated authority over financial decision-making);
• Which provide member-specific services duplicative of those provided by NPA (e.g., data, not advocacy); and
• Who attest to the common control or common management and the duplicative member-specific services provided.
*reflects FY18-19 dues discount to Trinity
Enterprise option will be in addition to either the gross revenue or census-based membership model
7
Enterprise Membership Offering• It is recommended that NPA not pre-set Enterprise Membership packages based on
current experiences, as the three “multi” members today have a wide variance in member needs and preferences that cannot, and should not, be generalized in a new model.
• Rather, it is suggested that multi-sponsors meeting the qualifying criteria be automatically funneled into the Enterprise Membership “off ramp” to determine their unique needs and related pricing. This formal approach will transition the status quo from “ad-hoc deals” to a standardized service approach for all multis that may wish to engage with NPA today and in the future.
• When constructing customized membership packages, NPA needs to weigh the overall financial impact and potential cannibalization of non-dues revenue when including discounts and complimentary offerings.
8
• The concept of calculating dues by PACE Census is viable because of: • Direct connection between NPA involvement and impact (individuals served) to support
the value proposition of membership • General alignment between dues and revenue today • Predictability and simplicity in dues budgeting/ forecasting/ calculations
• The dues ceiling and floor were maintained to match the current model. • A multiplier of $230 is recommended because this creates a break-even financial scenario for
NPA’s dues revenue.• An escalation cap is suggested for a member’s first six years to best account for the PACE
business model in this dues formula. NPA values being accommodating, sympathetic, responsive and supportive to its members as they grow and mature, but historical data suggests that viable PACE programs reach solvency around seven years in establishment. As such, this census model expects members to pay full dues (in accordance with their census and the dues formula proposed) by that time, with escalation caps provided during high growth years (0-6) to ease this transition.
Dues by PACE Census, with Multiplier and Escalation Cap: Model Overview and Assumptions
9
Census-Based Multiplier
Census-Based Dues Multiplier Model:
(Census) x ($230)* = Dues Amount
Members who are below $15,500 are brought up to the floor price. Members above $49,000 are brought down to the ceiling price.
*Breakeven financial analysis informed multiplier
*1-2 PACE Organization Members
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Census-Based Multiplier2019 Dues Based on Revenue
Floor ($15,500)
Millage ($15,501 - $48,999)
Ceiling ($49,000)
2020 Dues Based on Census
Paying More 4 40 0
Paying the Same 1 0 37
Paying Less 0 11 3
Current Floor-Paying Members: Of the 4 members paying more, the average dues increase is $1,964. The maximum increase is $2,325.
Current Millage-Paying Members: Of the 40 members paying more, the average dues increase is $4,617. The maximum dues increase is $10,246. Of the 11 paying less, the average dues decrease is $3,248. The maximum decrease is $10,192. The overall average dues difference is an increase of $2,920.
Current Ceiling-Paying Members:Of the 3 members paying less, the average dues decrease is $2,974. The maximum decrease is $5,070.
*1-2 PACE Organization Members
11
Early Program Growth Escalation Cap
$0
$10,000
$20,000
$30,000
$40,000
$50,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Projected Dues TrendNo Cap Dues Escalation Cap
An escalation cap will be applied to members in their first six years of
establishment (not in perpetuity) to ease steep dues increases due to rapid growth. The graph charts the dues path
for the quickest growing members.
Years 1-4 15% escalation cap
Year 5 20% escalation cap
Year 6 30% escalation cap
Year 7 Join full dues model
Charts linear census growth from 0 to 234 Census across 7 years
*1-2 PACE Organization Members
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Why Seven Years? Overlay of Current Members’ Census to Years Established
Census
<50 50-99 100-149 150-199 200-249 250+
Year
s Est
ablis
hed
1 year
2 years 1 1
3 years 2 2 1
4 years 1 5 3
5 years 3 2 2
6 years 2 2 3 1
7+ years 3 9 8 6 39
41% of members have been established for 7 or more years and report a census of 250 or greater
27% of members have been established for 7 or more years and report a census of less than 250
32% of members have been established for six
years or less
*1-2 PACE Organization
Members
13
Census Change based on Historical Census Data
0
200
400
600
800
1000
1200
1400
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Census by Years Established
Median
-50%
0%
50%
100%
150%
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
% Change in Dues by Years Established
Med. % Change
Many factors and variables, outside of census, contribute to
PACE growth over time –contributing to the “spikes” in
census and dues over time and reinforcing that there is no one trend line that NPA members
follow.
However, data shows that dues and census begin to stabilize most frequently around seven years of
establishment, supporting anecdotal growth trends and
forming the basis of the escalation cap proposed.
14
Dues Change Based on Historical Census Data
Reinforcing the suggestion that at seven years PACE
programs are positioned to enter the full dues model without an escalation cap,
historical data shows stable dues growth starting at seven
years established today –peaking to the ceiling around
13 years established with variability following between
years 13-20 based on program solvency factors outside of the
control of NPA dues. $0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Median Dues by Years EstablishedMedian
15
Census-Based Model Dues Impact
Dues Band No. of Members 2019 Invoiced Dues
Census-Based Model 2020 Dues
Floor $0 $15,500 1 $15,500 $15,500
Multiplier $15,501 $49,000 53 $1,566,749 $1,695,020
Ceiling $49,000 42 $2,038,399 $2,058,000
TOTAL 96 $3,620,648 $3,768,520
+$147,872
*1-2 PACE Organization Members
mckinley-advisors.com
Member Engagement Framework
Enhance Onboarding: Ensure the process of joining NPA is as informative and seamless as possible, such that the member organization and its staff immediately know who NPA is, what we do, and how to access resources
Personalize the Experience: Customize and tailor the member experience to best meet our members where they are with what they need; increase NPA touch points with members throughout their member lifecycle
Guiding Membership and Value Principles
Prioritize Measurement and Satisfaction: Leverage member data and business intelligence to understand perceptions and increase membership utilization
Amplify Communications and Awareness: Expand online resources/ communities and increase member marketing and awareness efforts
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Engagement FrameworkOnboarding
• Targeted programs for new members, including resource toolbox, personalized outreach, targeted communications, etc.
Member Experience
• Tailored, member-specific service plans (built off interview or survey needs)
• Increased site visits and touch points throughout the year
Research and Measurement
• Sponsor level reports and supports
• Real-time member satisfaction data collection
• Annual NPA service utilization reports and review
Marketing and Communications
• Launch of e-communities and expanded virtual resource/ knowledge share/ communications forums
• Enhanced membership-wide and member-specific marketing plans
• Leverage NPA discipline consortiums virtually and for awareness building
Target Audiences:New members, PACE sponsors, PACE organization leadership, PACE center staff 18
Engagement Framework Update
19
Target/Strategy
Onboarding
Member specific service plans
Track service
utilization
Periodic touch base
and site visits
E-CommSponsor strategy support
Expand Awareness
Measure Satisfaction
Identify gaps and
redundancy in service
needs
Track PACE staff
changes
New Members
X X X X X X
PO Sponsors
X x X X X
PO X X X X X x X x
PO Leaders X X X X X X X X
PO Staff X X X X X X X
Engagement Framework Action Examples
20
Implement a member engagement plan within the scope of NPA resources as follows:
• Develop onboarding plans for each target audience• Establish a service utilization baseline based on existing data• Track service utilization through iMIS and review data periodically• Use service utilization data to identify less engaged members for targeted outreach (e.g.,
member-specific service plans and site visits)• Generate reports of service utilization data to demonstrate value and identify
gaps/redundancy in service needs• Engage leaders and staff in e-communities• Develop annual communications plan, including periodic new staff orientations• Measure satisfaction by functional area: policy, data, education, networking and
information/resources• Track staff changes to engage new staff on an ongoing basis
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• What are your reactions to the revisions presented here? • Do you agree with the “multi” definition proposed? Why or
why not? • Does this census-based dues approach with multiplier and
escalation cap adequately address the challenges this project aimed to solve for? Why or why not?
• What do we want to learn from market testing this model? What information should we gather to further vet this model before final approval and implementation?
Discussion Questions
Next Steps
Concept Modeling and Refinement; Working Group Guidance and Engagement
(Ongoing)
Winter Board Meeting(February 2019)
Market Testing Interviews around Model Concepts
(February 2019)
Further Refinement and Implementation Roadmap
Development(February – March 2019)
Board Vote on Recommendations(March 31, 2019)
Implementation of Model Changes and Engagement
Strategies(July 1, 2019)
Thank You!
Jon Hockman, CPF, FASAE, Principaljhockman@mckinley-advisors.com
Christine Wagner, MPPAssociate Director, Analytics cwagner@mckinley-advisors.com
Megan Maher, Senior Consultant mmaher@mckinley-advisors.com
24
Current Model: Gross Revenue Millage
*1-2 PACE Organization Members
Companies Total FY19 Dues Paid
Floor 5 $77,500
Millage 51 $1,583,148
Ceiling 40 $1,960,000
Total 99 $3,620,648
.002475 millage
multiplied by gross revenue
Floor: $15,000Ceiling: $49,000
Status Quo
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Members Avg. Dues Paid Avg. Gross Revenue Min Census Max Census Avg. Census
Floor 5 $15,500 $3,443,785 8 65 44
Millage 51 $31,042 $14,103,323 51 429 170
Ceiling 40 $49,000 $57,297,489 191 2,929 650
Current Model: Gross Revenue Millage
*1-2 PACE Organization Members
26
Current Model: Gross Revenue Millage
*1-2 PACE Organization Members
5%
53%
42%
2%
44%
54%
Floor Millage Ceiling
One Company MembersMembers(N=99)
Dues Revenue(N=$3,725,091)
27
0
500
1000
1500
2000
2500
3000
3500Census
Single PACE Organization (PO) by Census
Avg. 363
*1-2 PACE Organization Members
28
Gross Revenue to Census
-50 M
0 M
50 M
100 M
150 M
200 M
250 M
300 M
350 M
- 500 1,000 1,500 2,000 2,500 3,000
Gro
ss R
even
ue
Census
Revenue to Census
*1-2 PACE Organization Members
29
Gross Revenue to Census
QuartilesCensus Revenue
Min 8 $0First 137 $11,950,000
Median 207 $18,179,871Third 426.75 $32,158,441Max 2929 $320,917,744
RevenueFirst Second Third Fourth
Cens
us
First 21 3 0 0
Second 3 19 2 0
Third 0 2 22 0
Fourth 0 0 0 24
Most one-company members are aligned between revenue and census relative to where they fall compared to other members. For example, 21 members are in both the first quartile for census and revenue and only 3 members are in the first quartile for census and second quartile for revenue. With census and gross revenue
relatively aligned, it was considered non-viable to develop a “hybrid model” that combines revenue and census, as this would add complexity without introducing new cost benefits.
*1-2 PACE Organization Members
30
Dues Revenue YOY*1-2 PACE Organization Members
$1,375,316 $1,497,317$1,773,371
$2,053,017$2,330,082
$2,965,232$3,204,848
$3,397,624$3,620,648
$3,768,520
FY '11 Paid FY '12 Paid FY '13 Paid FY '14 Paid FY '15 Paid FY '16 Paid FY '17 Paid FY '18 Paid FY '19 Invoiced FY '20Projected
Dues Revenue Year over Year
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