National Association of RealtorsÒ
e-Commerce Assessment:
Membership Invoicing Module

Vermont Association of RealtorsÒ

 

 

 

 

 

 

By: Grant Thornton, LLP

EXECUTIVE OVERVIEW

 

 

The National Association of Realtors recognized that in order to implement their vision to create an environment that promotes growth and cross selling of services and products between their Members, Member Associations and current and future business partners within the Realtor Organization, improved technology, centered around eCommerce, was required.

The Association’s goals for this effort were to:

The solution was to build an electronic application platform, titled "The Realtor eCommerce Network". This application platform consists of several components:

  1. Membership Authentication – This is handled through a central database on the national server known as National Realtors Database System (NRDS). NRDS provides a secure repository of membership information accessible by all members and associations and was built as a platform upon which future NAR systems can be added.
  2. Central Payment Clearinghouse – A central, national clearinghouse for authorizing and accepting payments with a wide variety of payment options, including on-line, automatic and in-person transactions.
  3. Electronic Funds Transfer – Provides support for electronic transfers between the member Realtor organizations and can be used by modular applications.

While there are many benefits to the new systems, this study focuses on the benefits of processing "Membership Dues" utilizing the eCommerce system.

 

PROJECT SCOPE

 

 

 

SYSTEMS OVERVIEW

 

 

MEMBER INVOICING MODULE FEATURES

Dynamically created Invoices

Payments made via the Central Payment Clearinghouse

Funds transferred to billing associations through the Electronic Funds Transfer System.

 

FINDINGS OVERVIEW

 

 

Vermont has approximately 1400 members assigned to 550 offices. 65% of it’s members have responded to the electronic membership program. This success it is felt is due in part to the fact that Vermont passes the savings along to its members who sign up for electronic membership. Requirements for membership include on-line billing, on-line registration for educational courses and material and an e-mail address. The following is a summary of key benefits:

 

ROI SUMMARY

 

 

The following worksheet summarizes the identified benefits for processing dues using the eCommerce Membership Invoicing Module. The findings compare improvements in expense items, typically found on the Income Statement, to the cost of ownership. These items provide the basis for calculating Payback, Return on Investment (ROI), Net Present Value (NPV) and Internal Rate of Return (IRR). Indicator definitions are:

Each indicator as looked at over both a 3 and 5 year period which is consistent with software application life cycle.

 

 

 

IMPROVEMENT AREA

Year 1

Year 2

PERIOD

Year 3

3 Year Total

Years 4&5

5 Year Total

             

Total Improvements

$14,194.22

$14,194.22

$14,194.22

$42,582.66

$28,388.44

$70,971.09

Cost of Ownership

$ 3,408.71

$ 35.71

$ 35.71

$ 3,480.12

$ 71.41

$ 3,551.53

Cash Flow

$10,785.51

$14,158.51

$14,158.51

$39,102.54

$28,317.03

$67,419.57

 

Performance Indicators:

 

3 Years

 

5 Years

       

Years to Payback

0.32

0.32

       

Return on Investment (ROI)

1124%

1898%

       

Net Present Value (NPV)

$ 39,067

$ 67,420

@ 8.75%

Prime Lending Rate

Source: Wall Street Journal 3/8/2000

Internal Rate of Return (IRR)

412%

415%

 

 

SAVINGS SUMMARY

 

 

This worksheet summarizes the estimated savings for the one State and 14 Local associations which make-up the Vermont Board of Realtors.

The savings come primarily from reductions in the amount of time spent processing member invoices. There is approximately a 75 hour reduction at the State Board resulting in a $1,579.68 savings and a 430 hour reduction resulting in $10,552.20 savings for the 14 Local boards. For a detailed analysis of these reductions for each activity refer to the Process Analysis Worksheet in the Appendix.

In addition, there are $2,062.34 of savings associated with reductions in copying, mailing, and invoice form printing expenses at the State Boards.

Benefits

State Association

Labor

Copies

Annual Mailing

Outstanding Dues

Postage

Annual Mailing

Outstanding Dues

Invoice Forms

75 Hours @ $ 21.06 $ 1,579.68

910 eMembers @ $ 0.43 $ 391.30

47 eMembers @ $ 0.43 $ 20.12

14 Mailings @ $ 2.07 $ 28.94

47 eMembers @ $ 0.32 $ 14.98

$ 1,607.00

Subtotal – State

$ 3,642.02

Local Board

Labor

430 Hour @ $ 24.54 $ 10,552.20

Subtotal – Local

$ 10,552.20

TOTAL SAVINGS

$ 14,194.22

Metrics

 

Savings Per Member

1,400 Members @ $ 10.14

   

Savings Per Board

14 Boards $ 1,013.87

COST OF OWNERSHIP

 

 

Ownership costs are basically limited to marketing the program to members which is considered an on-going cost. In the Vermont Association’s case, an additional one-time cost was incurred by both the Local and State boards to develop a program to maintain and update it’s membership. The cost for the local database program was excluded since most boards have the option of using the NRDS run-time program which would result in no development cost. Most boards chose to use either the run-time version or the State developed program. This program resides on each board’s server and is batch uploaded to the NRDS database weekly.

In addition to the costs incurred at the State and Local levels, there are costs incurred at the National level. These costs are for maintaining the NRDS database and server and the cost for processing payments. These costs, however, were excluded from the scope of this study primarily because it was felt that the benefits of receiving payments sooner at the National Association and the deceased cost of credit card transaction offset any increased cost to support the system at the national level.

 

 

 

 

COST OF OWNERSHIP

CHARGES

Membership Marketing Costs (Ongoing)

Newsletter (1/4 page in 10 page Newsletter)

Meetings (2 @ 15 minutes)

Emails

$ 23.23

$ 12.48

Subtotal Ongoing Charges

Membership Database Program (One Time)

$ 35.71

$ 3,373

Subtotal One-Time Charges

$ 3,373

TOTAL COST OF OWNERSHIP

$ 3,408.71