Payback time: turning an association Web site into a profit center. (Web ROI).

IN JULY 1999, WHEN I JOINED THE RISK AND INSURANCE MANAGEMENT SOCIETY, INC. (RIMS), New York City, the association's Web site (www.rims.org) contained more than 2,000 pages of static information. About five years old, the Web site had no structured plan for what it should contain and where things should be located. The result: A huge amount of information, most of which was hard to find and out of date. Given that RIMS is the world's largest association for risk management professionals--serving more than 4,000 entities represented by 7,500 individuals--it was clear that change was imperative.

As a result of member complaints about the Web site revealed during a 1998 member needs survey, I was hired to bring the management of the Web site in-house. After assessing the problem, I realized that in doing so we would simply transfer the problem from one location to another. We needed to completely overhaul the Web site and the entire information technology infrastructure.

Encouraging innovative thinking

In August 1999,1 asked for volunteers to participate in an in house Web task force that would develop the requirements for the new site and its key features. Out of a staff of 55, two people were selected from each department. We included a mixture of junior and senior (but not too senior), Web-savvy, and tech-challenged staff. We also included member volunteers from the RIMS Technology Advisory Council. The mixture of staff and volunteers (14 in all) reflected the end users and would aid the out-of-the-box brainstorming sessions that lay ahead.

To encourage creativity, task force members agreed that no ideas were bad and nothing would be laughed at. We considered all suggestions, even seemingly crazy ones. The task force's subsequent ideas resulted in new, innovative features, such as these:

* A messaging system. When discussing excessive e-mailing of members, a problem many associations face, one task force member asked, "Could we leave our members messages [that they receive] when they log in?" This conceptual question resulted in the creation of RIMSMAIL, an all-inclusive messaging system that routes messages to our members according to their preferences. RIMSMAIL forwards messages to a member's regular email address, unless the company specifies another option. RIMSMAIL allows staff, chapters, and members to communicate with each other; and

* A dedicated search engine. Member surveys showed member frustration with search engines and their results, which were often irrelevant to the member's queries. This prompted one group member to ask, "Can we have our own search engine, which only searches risk management Web sites?" The question resulted in the creation of www.askrims.org, a search engine with more than 500 risk-management-related Web sites. Our search engine now has an index of more than 30 million words from more than 100,000 pages of information.

At the end of six months of such innovative planning, the task force had identified a number of key features and requirements that would offer new member benefits and streamlined processes.

Moving forward

The next challenge for the task force, then, was to turn comprehensive requirements documentation into a request for proposal. We submitted the RFP to five companies, of which four responded within our time frame. Price quotes for three of the RFPs ranged from $1.4 million to $1.8 million, plus hardware or software. The winning company, ActiveMatter.com, came in with a fixed-price bid of $650,000, plus hardware and software. Realizing that many associations have similar Web site requirements, ActiveMatter.com executives had already built many of the features we wanted, such as the buyer's guide, job bank, speakers bureau, and online registration.

Six months after our first meeting, the task force had created a mission statement, analyzed requirements, created a logical model of the new Web site, collected and summarized feedback from member and nonmember surveys, solicited input from association committees, benchmarked our Web site against those of similar organizations, and reviewed vendor proposals for the project.

In early 2000, our executive council approved a $963,000 budget request for the building of the new site. This was no small decision since the association's reserves totaled about $6 million--and the $1 million request was the most significant single investment the organization had made in its 50 years of existence. However, the organization had already recognized the importance of a robust Web site and realized that a substantial investment was required. Leadership had involved several volunteer committees--along with the RIMS Technology Advisory Council--in various stages of the Web site requirements analysis. A number of RIMS's 83 chapters had also bought into the idea of a Chapter Web Site Creation Tool. All of this activity built momentum for buy-in of the project. In addition, we had committed to getting the Web site to pay for itself within three years of launch, albeit with banner advertising, a strategy that we would quickly have to revisit. In the end, one of the executive council members summed up the decision process when he asked, "Can we afford not to do it?"

Responding to surprises

We started the project in May 2000. In April 2001, we launched the site on schedule and on budget at our annual conference and exhibition in Atlanta. That was the good news.

With the launch of the site came a few surprises. For example, within the first 24 hours of going live, 25 percent of our 8,000 members decided to log in and update their records. Because we check the data before it transfers into our internal system, this added a huge amount of unscheduled work two days before our annual conference.

Another unexpected result: The number of hits rose from 1 million per month to 5 million per month in the first month of going live. Since we were hosting the new Web site in-house, the high volume of visitors maxed out the Ti line. We cured this by increasing the bandwidth to a dual Tl.

Clearly, these were positive surprises, but in any technology project of this size, unintended consequences--both good and bad--are part of the process.

Creating new revenue streams

We started to realize other more significant results one year after the launch--in the form of new revenue streams, an increase in new members, cost savings from automation, and a decrease in operational expenses.

While some revenues were intended, creative pricing structures turned out to be a basis for success in generating some of those revenues. Of six significant new revenue streams, several are enhanced by such pricing strategies:

Job bank. For the first time, we charged a fee ($150 for members and $200 for nonmembers) to post jobs in the job bank. We worried needlessly that the fee might decrease job postings. When the new Web site went live, postings almost doubled. The fully automated system, which reduced staffing costs by 40 percent of a full-time employee, created a $60,000 per year revenue stream, and eliminated the related printing and mailing costs.

Once we realized the success of the job bank, we looked for new ways of capitalizing on the pricing model. After numerous requests for access by nonmembers, we started to offer a $30, 60-day subscription, as well as a resume-search service. The resume search service allows people such as recruiters, who may not wish to post a job, to search through resumes using various search criteria. Access is free to anyone who posts a job, but the 60day resume-search service costs $100 for nonmembers and $50 for members. We set the pricing to encourage the posting of jobs.

RiskWire. For more than 15 years, RIMS has offered members a daily news-aggregation service, summarizing the top risk-management-related articles each business day. For years, the bulletin-board-based service maintained a constant 300 monthly subscribers. The new Web site allowed us to increase member benefits by offering the RiskWire service free to all members. we found a sponsor who more than covered the annual direct cost of the service.

E-groups. One popular feature of the new rims.org site is E-Groups, which allows members to post messages to groups with similar interests. To date, RIMS has 42 e-groups, ranging from a 40-member agriculture industry group to our most popular c-group, risk professionals, which hosts more than 9,000 subscribers. The risk professionals e-group is open to nonmembers at a rate of $150 per year, $100 for six months, or $60 for one month.

As part of an integrated sales and marketing effort, RIMS has put together various pricing models for sponsors of the different industry- and interest-specific e-groups. The risk professionals sponsorship is priced at $60,000 per year. Sponsors receive a 35-word description and Web address, which appear at the top of each of the e-mail messages generated daily. If an e-group doesn't have a sponsor, we market and promote association products and events.

AskRIMS.org. To get a more prominent position in the search results, vendors can become key-word sponsors. If a user searches for a word that is sponsored, the sponsor of that word is given a prominent placement in the results. For example, if the word "compensation" has been purchased and someone searches for "worker's compensation," the sponsor information will appear in a top position on that page. If someone conducts a search using a string of sponsored words, we use only the first sponsored word. We are still working out the pricing model for this relatively new feature.

Online buyers-guide. The online buyers-guide, which replaced a printed version, is a self-maintaining directory of vendors and service providers who opt to list themselves under product classifications. The online system generates approximately $50,000 per year and contains more than 400 companies. For a plain-text listing in just one category, a company can be in the directory for as little as $60 per year. However, larger companies typically choose multiple-premium listings, which include their company logo, Web address, and a detailed description of their product or service, all for $150 per listing per year.

Online exhibitor directory and virtual exhibit hail. After integrating the Web site with Expocad (www.expocad.com), a software tool for managing booth sales, we now produce a virtual exhibit hall linked to the online exhibitor directory. Using a process similar to that used in the buyer's guide, companies post their own information and product descriptions. The information collected is also used in the printed version of the exhibitor directory, allowing numerous cost savings.

By offering exhibitors not just a basic listing but two additional choices--a bold listing and bold listing with logo and Web address--we expect to increase revenue by about $20,000 this year.

Increasing efficiency

Our Web site is achieving significant cost savings and organizational efficiency, demonstrated by numerous examples:

1. Newsletters. We stopped publishing two member and chapter newsletters, replacing them with online newsletters dedicated to chapter and member activities. This saved $135,000 per year in printing and publishing costs and significant staff time.

This transition, however, wasn't smooth. Many members complained because they liked to read the printed newsletter on the bus or elsewhere. To address this concern, we built additional functionality, including the ability to print the entire online newsletter, not just each individual article. By listening to our members and taking appropriate action, we overcame the initial backlash, and the new format is now widely accepted.

2. Member directory. We faced a similar backlash when we replaced the printed Member Directory with the new Risk Management Directory. We changed the name because both members and nonmembers who logged onto the Web site and updated their profiles were included in the directory. Although only members have access to this online tool, anyone can be listed in it. The majority of members soon embraced the new technology, which increases their search capabilities, ensures up-to-date information, and saves RIMS about $60,000 per year, plus staff time.

3. Online registration. Our annual conference, responsible for almost 60 percent of the association's $10 million annual budget, attracts about 10,000 attendees, vendors, exhibitors, and staff. Our association went live in mid January 2002 with the online registration process for the April 2002 conference, By the pre-registration cut-off in mid-March, the Web site had processed more than $3 million in transactions, which represented 58 percent of all registrations.

The online registration system has proven so effective that staff members even process paper applications through the Web site, automatically writing the data directly into our internal system and generating an e-mail receipt and itinerary confirmation.

4. Online member application. Seventy percent of all member applications are received directly through the Web. Staff members input the remaining applications through the same system. Applications, which used to take from two to six weeks to process, now can be approved or declined in one day.

Realizing additional benefits We have improved efficiency in many other areas, including the processes related to selecting conference sessions; updating session descriptions; obtaining audiovisual requirements; and servicing speakers, moderators, and coordinators. Using a fully automated online system increased efficiency for our conference staff, allowing them to focus on other areas.

The new RIMS messaging center provides efficiencies and new tools for our chapters. Chapters no longer need to maintain their own databases. Several chapters asked us to merge their databases into our system, giving us a huge list of nonmembers to prospect. We also encouraged chapters to build a fully functional Web site using the tools we created. Within two weeks of going live, more than 50 percent of our chapters had built Web sites.

Because each Web site is directly tied into the RIMS.org database, chapters can have their own job bank, calendar, and members-only sections, which seamlessly integrate with our internal association management system. We have seen an increasing number of member applications come directly from the chapter Web sites. Jobs posted through the chapter Web sites go into the same database as the rims.org job bank, and the revenue generated goes to RIMS.

We have realized other benefits by capturing demographic information at different areas of the Web site. For example, if a nonmember attempts to access a members-only part of the site, we record who they are and what they try to access. The membership department then follows up and tries to convert the person into a member.

We now accept only online award nominations, process all publication sales via our Web site (including automated billing and fulfillment), and maintain an online speakers bureau. Accessible to members and conference registrants, the speakers bureau represents more than 3,000 speakers who can update their session descriptions, while registrants can access biographical information for speakers or moderators of scheduled conference sessions.

Living up to cost and revenue projections

The initial return on investment projection called for the Web site to pay for itself by the end of its third year, primarily from selling banner advertising. While we all know that banner advertising was a pipedream, the new RIMS Web site quickly began to realize significant--and in some cases unpredicted--cost savings and, along with it, new revenue streams from other sources. Within three years of launch, we expect the Web site to cover its initial $1 million startup cost--as well as additional operational and programming costs incurred during the three-year launch period. (See sidebar "Projected ROI for RIMS Web Site.")

The investment in our Web site has significantly increased member benefits and is allowing RIMS to be much more relevant. So much so that for the first time in 10 years, the number of RIMS members is on the rise. An ongoing phone survey of new members indicates that one of the primary reasons for joining RIMS is to gain full member access to the Web site.

Our future still shows challenges, including the completion of phase two of the online membership renewal system and a Web site redesign. With challenges come opportunities. RIMS.org has set the stage for our association. to move forward strategically, allowing the leadership, staff, and members to focus on meeting the organization's mission, goals, and objectives.

PROJECTED ROI FOR RIMS WEB SITE

The original return on investment for RIMS Web site was estimated to
cover the initial development cost within three years. While sources of
revenue and savings changed, RIMS was still able to meet this goal.


Costs for Web Site

Original capital investment              $970,000
Additional programming                    190,000

Total                                   1,160,000

Revenue and Cost Savings
 in First Three Years

Total revenue and cost savings          1,353,000
                                   (See detail in
                                 following chart)

Net revenue after three years            $193,000

Original Projected Three-Year Return on Investment (Including New
Revenue and Savings)

                                             YEAR
LINE ITEM                           2001     2001        2003

Banner Advertising               $150,000  $250,000  $300,000
Sponsorship                        10,000    15,000    20,000
Additional Members                  4,000     6,000     8,000
Additional Conference Attendees    10,000    15,000    20,000
Full-Time Employee Savings         60,000    80,000   100,000

Total:                            234,000   366,000   448,000


LINE ITEM

Banner Advertising
Sponsorship
Additional Members
Additional Conference Attendees
Full-Time Employee Savings

Total:                           $1,048,000

Actual Revenues and Cost Savings Realized and Projected

                                          YEAR
                                2001      2002      2003 *
LINE ITEM                      ACTUAL   FORECAST   BUDGET

ADDITIONAL REVENUES

Banner Advertising              $8,000      $ --      $ --
Career Services                 25,000    48,000    60,000
Buyer's Guide                   50,000    50,000    50,000
Membership Directory            62,000    62,000    62,000
E-Group Subscriptions                0     2,000     5,000
E-Group Sponsorship                  0         0    15,000
Member Newsletters             125,000   132,000   132,000

Subtotal:                      270,000   294,000   324,000     888,000

COST SAVINGS

Annual Report                   22,000    23,000    23,000
Chapter Handbooks               51,000    48,000    30,000
Printing & Postage              35,000    40,000    45,000
Stationery & Supplies           10,000    30,000    35,000
Committee Volunteers Project     8,000     8,000     8,000
Speakers Bureau                  8,000     8,000     8,000
askRlMS.org                          0         0    25,000

Subtotal:                      134,000   157,000   174,000     465,000

Total:                        $404,000  $451,000  $498,000  $1,353,000

* PROJECTED

RELATED ARTICLE: TRACKING RETURN ON INVESTMENT OF FINITE RESOURCES

BONNIE J. CHAMBERS

At the Risk and Insurance Management Society, Inc., we used a modified return-on-investment (ROI) calculation to justify revamping our outdated Web site. As the new functionality became available, we realized that the formula tracked the Web site's revenue but did not capture its increased efficiencies or added value to our members.

NEED FOR REVISED MEASUREMENTS

To accurately track all the variables related to ROI, we began using different metrics.

* Activity on the Web site. Going beyond mere hits, we track and report on detailed information, such as length of stay, pages clicked on, and unique visits. We also contact by telephone all new members three months after joining. Part of our inquiry covers use of the Web site.

* Hard-savings schedule. To identify savings, we earmarked several projects or cost areas most likely to be influenced by the Web site. We tracked the real dollar expense against the bench year of 1999, before we began revisions to the site. These cost areas include postage and printing, supplies, annual report, buyers guide, chapter handbooks, projects calling for committee volunteers, job bank, and member directory. In 2001, we identified approximately $400,000 in savings. For 2002, the savings increased to approximately $450,000. These savings offset much of the original investment in the Web site.

* Soft-savings calculation. Quantifying soft savings is a challenge. Time and money saved by posting materials for committees, for example, rather than printing, collating, and mailing, are difficult to capture. The ability to update materials, while ensuring that the latest version is always available, is also difficult to quantify. We have implemented a continuous process to assess the responsibilities of all regular staff and the possible need for temporary workers. This allows us to immediately identify the time when someone is available to take on new responsibilities as their traditional ones are eliminated or modified. In the past three years, we have eliminated three positions as a result of technology.

Of course, our information technology and Web site staffs have grown, contributing to an overall increase in expenses in this area, not including depreciation. The technology positions added or filled have generally been at higher salaries than the positions eliminated in other areas. As we progress, we anticipate the rate of expansion in IT should slow.

Bonnie J. Chambers is the chief financial officer, Risk and Insurance Management Society, Inc., New York City. She is a certified public accountant, certified management accountant, and is certified in financial management. E-mail: [e-mail].

FOCUSING FINITE RESOURCES

BY BONNIE J. CHAMBERS

Now that the Web site is in place, we face the challenge of continuing to maintain it without draining our resources. As members and staff become more comfortable with the new technologies, requests for improvements pour in. How do we determine where our finite resources should be focused?

We follow four mandates, which may help associations executives who are involved in similar ventures:

1. Put all requests in order of priority. Not static, this list is re-evaluated when new requests come in.

2. Avoid unnecessary bells and whistles. They can consume a significant portion of the total available resources, overwhelm members with too many options, and occupy staff time on maintenance issues.

3. Treat every enhancement as a finite project. Ask for bids and, if possible, lock in a cost cap to avoid project creep. Ask for detailed descriptions of what is included in the enhancement. Can any details be eliminated? Is a lower version of the equipment suitable?

4. Understand the ramifications of each request, or enlist the help of someone who does. Check out Web sites for descriptions of equipment and software. Ask for explanations in laymen's terms.

While maintaining the value of our Web site is critical, we must do it at a reasonable cost.

Bonnie J. Chambers is the chief financial officer, Risk and Insurance Management Society, Inc., New York City. She is a certified public accountant, certified management accountant, and is certified in financial management. E-mail: [e-mail].

Andrew P. Steggles is chief information officer, Risk and Insurance Management Society, Inc., New York City. E-mail: [e-mail].