Changing course: how a small-staff association used the Internet and an arsenal of new educational programming to turn a member need into opportunity.
Against the backdrop of declining membership and revenues that left bank accounts nearly dry by the end of each year, the Montana Grain Growers Association, Great Falls, with its staff of six and operating budget of $500,000, identified the greatest need of both members and nonmembers: improved skills in marketing their own commodity product.
Like many associations, MGGA historically has done strong work on public policy at both the federal and state levels. The membership comprises approximately 2,100 wheat and barley farmers across the state and 300 associate (agribusiness) members. Agriculture is Montana's largest industry, and wheat and barley account for approximately 40 percent of the income from that sector. But like most mature industries, farms and ranches are growing larger and less numerous, and the potential membership pool is shrinking.
Fortunately, MGGA already had in place effective mechanisms to identify member needs. The organization conducts listening sessions around the state to garner input on the organization's top priorities. Ten to twelve sessions of three hours each are held in major grain producing areas. Attendees include both members and nonmembers. These sessions remain invaluable to understanding the issues members deal with on a regular basis and for identifying the issues the organization should be focused on for the coming year.
For several years running, farmers (both members and nonmembers) had listed assistance with improving commodity-marketing skills as their top need. Since Montana is isolated and quite a distance from the consumer base, more than 95 percent of the state's wheat and barley production leaves the state as a raw commodity. In any given year, market conditions can allow for a 25-50 percent swing between the high and low of what the marketplace offers in price. Research conducted by MGGA and our state university showed that most farmers in the state were typically selling their product in the lower half of the market and leaving nearly $100 million on the table from missed marketing opportunities. This came as a result of lack of knowledge about local pricing conditions and confidence in applying the available information.
To address this need, MGGA first looked to private information providers. They showed little interest, perceiving the Montana marketplace to be too small. Consequently, in late 1998 the MGGA board decided to make a major shift in the organization's focus, which had been policy and regulatory issues, and delve into providing grain producers marketing education through workshops around the state and market pricing information via the Internet.
The association first set up an advisory council of users and public and private partners to help with direction and fundraising. Council members were chosen from three categories: providers of information (grain companies, commodity brokers), deliverers (local arm educators, state university faculty members, agribusiness companies) and, finally, prospective users of the new offerings (farmers and ranchers). An eye was given to potential funders as well. Three core components--marketing workshops, marketing clubs, and a comprehensive Web site--were identified as the desired outcome. These components serve as three legs of a stool, each providing support for the other.
Training and education
The marketing workshop component consists of formal classes that teach producers the fundamentals of how the marketplace works--futures, options, and cash marketing. The course work--which was developed in conjunction with the state university system, educational consultants, and government entities--is delivered throughout the state by interactive video. Delivery directly to the producer's desktop computer was explored, but even today the average Internet connection speed in rural areas is well below 56 kilobytes and, therefore, inadequate for such an option. (No doubt it will be an option in the future, as broadband is expanded in rural areas and costs drop.)
We achieved our goal of delivering the workshops within an hour's drive of most grain producers in the state. Since 1998, we have delivered some 35 different courses in more than 200 locations around the state (with several of the locations being used more than once).
The second component was the establishment of marketing clubs, which are local producer groups focused on putting into practice the skills taught at the workshops. The clubs serve as a local support mechanism where farmers and ranchers learn and share in a familiar environment. A local outside facilitator such as an extension agent or banker provides the meeting location, support materials, and speaker resources. Some 35 grain and marketing clubs are now established throughout the state, with about 400 producers participating in weekly, biweekly, or monthly meetings. Interestingly, to some degree the clubs turned out to be informal local chapters of the association.
Building an information base
The third component, establishing the stream of daily market information that producers need to make informed pricing decisions, turned out to be the most challenging. In 1998, market information Web sites were just being established, so we first went to other providers to see if they were interested in developing something unique to Montana. When we could find no takers, we decided to build it ourselves.
As with any start-up, fundraising was a challenge. We needed to convince both public and private partners that the initiative was unique and worth the investment. The association was able to use some leftover funds from an unfilled position to hire me for the newly created position of vice president of program development. With a focus on fundraising for the first six months, I traveled extensively to identify funding partners such as grain companies, the state and U.S. departments of agriculture, and private foundations. In the end, a combination of corporate donations and grants from state and federal entities came through to kick off the program. We even developed a contractual arrangement with our state's livestock producer organization (the Montana Stockgrowers Association) to provide market information to their member base as well.
During the design of the Web site, we were able to pick and choose the information components that were most critical for Montana producers. We developed partnerships with news providers, worked with grain traders and brokers to write daily market commentary, and compiled lots of historical pricing data. The goal of the end product was to put into place all of the news and pricing information necessary for producers to make daily marketing decisions. We do not provide marketing advice, but all of the pieces of the puzzle are available to farmers to make their own informed decisions. The association even trademarked the name for the program: Montana MarketManager (www.montanamarketmanager.org)--a decision that later paid off.
Now that the program is up and running, one of the largest ongoing program expenses is the maintenance of the Web site. Besides a full-time Web site manager, the site pays weekly and monthly fees for information and pricing feeds--all critical to providing up-to-the-minute market information. Advisory committee members, who include the ultimate end users of the information, suggested charging a monthly access fee. In addition, they suggested that membership in MGGA be required to subscribe. Requiring membership in the organization helped to show an exclusive benefit and avoided unrelated business income tax liability for nondues income. With an aggressive marketing campaign, the subscriber base grew quickly and the site was paying for itself within six months. We were eventually able to drop the subscriber fee when the income was offset by a franchising agreement with a dot-com company.
With an eye toward developing longer-term funding stability, the association started shopping the program to other states. (If we could develop a successful Montana MarketManager, why not a North Dakota or Idaho MarkerManager?) We discovered that most small farm organizations were also short on funds and, unless their boards of directors and members were fully committed to the idea, the programs would be hard to hatch.
We then turned to private partners for franchising. With our trademark in hand, we reached an agreement with a California dot-com that purchased the rights to create similar Web sites in other states. MGGA would have an ongoing revenue stream from Web sites in other states--without the headache of having to build and maintain the sites ourselves. It also reduced our costs of purchasing the news and pricing feeds. Perhaps the biggest benefit of the revenue stream was the fact that we were able to eliminate the subscription fee and offer free access to all members.
Challenges, yesterday, today, and tomorrow
After counting all of our successes, it goes without saying that a program such as ours certainly brings with it many challenges--not only in getting started but in keeping the program running as it matures. Not surprisingly, most of these challenges revolve around revenue. The novelty to corporate and foundation contributors started to wear out after the first year or two. And while the customer base for the Web site grew quickly--particularly once the subscriber fee was eliminated--it eventually slowed as we reached the saturation point for farmers who had Internet access and were interested in improving their marketing skills. And like many other technology companies at the time, our dot-coin partner hit rough times and consequently left agriculture--but not before at least one other state Web site was built and a substantial part of its trademark agreement was paid, so we did reap some benefit from the deal. In addition, we benefited from delving into the dot-com world in that it brought access to technol ogy and new ideas.
To replace the lost revenue stream from the subscriber fee, we increased our membership dues for the first time since the mid-1980s. Free access to the Web site certainly helped to soften the dues increase for most of our members. We have also contracted for delivery of educational components into other states and with other farm organizations. And we have started providing to our farmers more advanced educational course work, which generally demands higher tuition fees. The new revenue streams have helped keep us in the black (but admittedly more focused on fundraising than we would like).
Without doubt the Web site and marketing education initiatives have given our association new direction. The Web site in particular helped to slow down a decline in the organization's membership base. The added value helped us recruit new members, as well as move some current members to higher dues levels. It also helped make a dues increase more palatable. Clearly all of this positive financial news came as a result of a program that proved it could directly enhance a member's bottom line.
RELATED ARTICLE: Getting the Board to Bite
The Montana Grain Growers Association (MGGA) had a built-in advantage when it asked its board of directors to embrace and sign off on a fairly expansive program to assist members with marketing: It was the board itself that spearheaded the initiative to identify members' greatest need in the first place. Therefore, staff did not have to convince the board of that need. What MGGA struggled with was how to fill the need--and how to pay for it.
MGGA's board of directors represents a lot of small independent businesses and so are unfamiliar with making large investments in education. But the board trusted the staff and, perhaps more importantly, trusted the messages from membership about association priorities. It knew the initiative was too important not to attempt. Still, the board did not anticipate the business and expansion opportunities that developed.
Following are some suggestions for overcoming obstacles in turning member needs into member services--suggestions that also might help persuade a skeptical board to buy in.
* Be creative in keeping costs down. With virtually no budget for the project, MGGA found financial resources through corporate solicitations, grants, and an unfilled staff position. If an initiative doesn't cost the association anything directly and members want it, how can the board say no?
* Establish a plan for getting funds from outside sources. MGGA received funding from a healthy combination of public and private sources.
* Get the board involved in identifying the member need. That way you don't have to convince them of what the need is. In our case, board members were supportive from the beginning because they personally understood the need and shared a vision for the outcome.
* Communicate regularly, both to funders and members, about where the program is headed. We included monthly updates in our newsletter, regular reports to our funders, and quarterly roundtables with the advisory committee. Ongoing communication demonstrates appreciation for the investment. It also sets the stage for future funding requests.
Richard Owen, CAE, is executive vice president of the Montana Grain Growers Association, Great Falls. E-mail: firstname.lastname@example.org.
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|Date:||Jul 1, 2002|
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