Updated Member Value Strategy - npaonline.org

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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

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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

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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

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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

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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.

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• 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

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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.


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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


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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

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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.

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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

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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


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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

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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

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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, [email protected]

Christine Wagner, MPPAssociate Director, Analytics [email protected]

Megan Maher, Senior Consultant [email protected]

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Current Model: Gross Revenue Millage


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



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5%

53%

42%

2%

44%

54%

Floor Millage Ceiling

One Company MembersMembers(N=99)

Dues Revenue(N=$3,725,091)

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0

500

1000

1500

2000

2500

3000

3500Census

Single PACE Organization (PO) by Census

Avg. 363


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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


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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.


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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

Documents

Updated Member Value Strategy - npaonline.org