Income Diversification or Value Proposition? Are you having the wrong conversation?

Andrew Chamberlain
Jul 14
3 min read

In the membership sector, income diversification is a constant hot topic. It’s seen as a necessary hedge against the perceived fragility of relying too heavily on membership fees. Conferences, board papers, and strategic plans are peppered with calls to “broaden the revenue base” or “create commercial income streams.”

The underlying assumption is that the business model is broken, that membership income alone is too risky or unsustainable. But what if that’s the wrong diagnosis entirely?

Instead of chasing new income streams, many associations should be re-examining the core issue: Is the value proposition strong enough to justify the membership fee in the first place?

The real risk isn’t income concentration, it’s value dilution

Associations that see membership revenue as a weakness are often those struggling to retain members or attract new ones; but diversifying income won't solve a value problem. In fact, it can be a distraction from the harder conversation: Is what we offer truly worth paying for?

Let’s draw a few comparisons with other industries.

1. The Gym Analogy: don’t blame the membership model

Gyms are also membership-based. Yet successful ones don’t obsess over “diversification.” They obsess over results, experience, and loyalty. The fee-for-service model works for them because they:

Regularly update their equipment and programmes.
Invest in customer service and personalisation.
Build community through events and shared goals.

When members drop out, the solution isn’t to open a smoothie bar or rent out floor space, it’s to improve the product.

Associations should take note. If renewal rates are falling, don’t launch a conference or an online shop. First ask what are we doing that’s indispensable to our members?

2. SaaS firms live and die by recurring revenue

In the tech world, Software as a Service (SaaS) companies prize recurring revenue. Investors love them because predictability equals sustainability. Their model is nearly identical to associations: monthly or annual payments in exchange for access, tools, and support.

Do these companies rush to sell branded T-shirts or license their logos to make extra cash? Rarely. Instead, they build better products and obsess over customer success, which is their equivalent of member engagement.

Like SaaS, membership revenue isn’t a flaw, it’s a feature. When properly earned, it’s the strongest indicator of trust and relevance.

3. Universities: one product, multiple values

Higher education institutions rely heavily on tuition fees, but they justify them through a multifaceted value proposition: access to expert knowledge, a prestigious network, personal growth, and career outcomes. Everything else (research grants, spinouts, philanthropy, etc) comes after they've established that core value.

Associations often have a similar opportunity, i.e., to become irreplaceable to their members' professional journeys; but that requires constant reinvestment in the membership experience, not a scattergun approach to side income.

What “income diversification” gets wrong

It’s not that additional revenue sources are bad, many associations should benefit from events income, publication subscriptions, and training fees. The problem is when diversification becomes a substitute for relevance.

Sponsorship can be fickle.
Commercial income often demands capabilities you may not have.
Government funding can vanish with a policy shift.

Worse still, these activities can cannibalise staff capacity, dilute focus, and leave your core value proposition underdeveloped.

The Value-First Alternative

Let’s reframe the narrative.

💡 Instead of asking “How do we diversify our income?” ask:

“What would make membership indispensable?”
“What do our members truly value that only we can deliver?”
“How can we build emotional and professional loyalty?”
“What data do we have about what members use, need, and love?”

When the value proposition is clear and compelling, membership revenue becomes a strength, not a vulnerability.

Income diversification can be part of a healthy strategy, but it’s not a substitute for relevance. Associations should stop treating membership fees as a liability and start treating them as what they really are, the strongest possible signal that you're doing something right.