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Features
Yes, that's right. All members are not created equal, so don't waste your time on the ones who don't matter. Sound harsh? Read on.
Whether the economy is hot or cold — or somewhere in that lukewarm malaise we seem to be in now — business survival is never easy. Businesses of all types and sizes go bankrupt and die every day. One thing is for sure: Only the smart survive. While companies focus on branding and customer-loyalty strategies to attract and retain customers, the consumer's attitude is, "It's all about me." Consumers expect companies to do anything to earn their business. We've all heard the story about the guy who returned a shirt to Nordstrom with an ink stain from a leaky pen. Was it the store's fault? No, but they replaced the shirt anyway to drive customer loyalty. I saw someone return a lawnmower to Home Depot because he didn't like it after using it for several weeks. Was that the store's fault? No, but they stand behind what they sell. What are the true costs of these actions? Someone has to pay. In recent years, the for-profit sector has become ruthless in its customer-acquisition tactics. The hunt for high-value customers has forced corporations to adapt to a more segmented customer base. While customers are saying, "It's all about me," companies are moving from a customer-is-king attitude to one where only certain customers are kings. What about the rest? They get standard service, and the company isn't too concerned about letting them go elsewhere. This might explain some of the less-than-stellar service people have experienced at some establishments and have been complaining about for the last couple of years. Practices that work well in the for-profit world often are adopted and modified in the nonprofit world. Organizational branding and shared services are good examples. Does this mean associations should "fire" their low-value members and focus on high-value members in order to prosper and grow? All Customers Are Not Created Equal Successful companies are using sophisticated analysis and deployment strategies to segment customers into categories such as "high value" and "low effort." This lets them allocate a disproportionate amount of resources to high-value customers, resulting in improved loyalty and higher revenues from customers who are good for business. For example, think of the frequent traveler points offered by many airlines, hotels, and rental car companies. Successful companies employ these simple concepts:
Corporations need to make tough choices. If they're smart, they'll keep the good customers and let the competition have the low-value customers. This way they drive up their competition's operating costs while driving down their competition's profit margins. When this happens, the aggressor is likely to prosper and the competition will likely die. Proof of this is a comparison of the top 10 corporations over a 10-year period. In a relatively short period of time, some dominate and some fail, change strategies, or are acquired: think Sears and Wal-Mart, Dell and IBM, Chrysler and Daimler-Chrysler, TWA and Southwest. Feasibility In deciding whether this is a useful tactic for associations, the first step is to examine some factors about which members turn to their associations or that in some way affect how they interact with their associations.
With all the "noise" in our world today, associations are faced with the daunting task of focusing time and resources on delivering value to members so they will truly benefit from what the association has to offer. Without improved focus, associations risk falling into the "mile-wide and inch-thick" trap, in which members perceive a low return on their membership dollars and a reason not to renew. Associations need to focus on the key issues affecting their membership and then integrate these issues into the value proposition they offer. Using this strategy, the association will actually provide more tangible value, improving its chances of attracting and retaining high- value members. Steps for Improved Profits and Long-term Health Here's a page from the corporate playbook. Corporations who practice good analysis and deployment strategies actively segment customers into high-value, low-effort categories. For an association, the attributes that classify members as being high value or low effort might include the following.
Once the criteria have been established for a high-value member, the association needs to refine its recruitment effort so that it targets high-value members. It's important to continue to measure the membership acquisition rate (defined as the percentage of people targeted for membership who actually become members) and the membership retention rate. It also is important to develop measurements that will tell you how many of your members are high-value members. Each association should establish its own criteria, which could include such things as "spends at least $500 on association products or services in a year" or "writes an article for an association publication or serves on a committee." A member who is considered high-value and stays for many years and a low-value member who falls off after a couple of years have very different cost bases to the association. Leaders should organize recruitment and retention efforts based on the member's long-term value to the organization. Associations can't afford to wait for high-value members to fall off the membership rolls and then try to recover them. If a high-value member doesn't renew two or three weeks after the first renewal notice mails, that member needs a phone call immediately. Of course the better strategy is to ensure that those phone calls are never made. If you dazzle your high-value members with personal touch and service throughout their membership terms, they'll renew immediately. The SAMA Example The Strategic Account Management Association (SAMA) is an example of an organization that is trying new and innovative approaches in the following areas:
SAMA has a tiered membership structure that can meet the needs of every would-be member, from individual membership to corporate members with a variety of tiers in between (bronze, silver, and gold). The association is constantly looking for new and innovative ways to improve member loyalty. SAMA conveys a clear brand value proposition to current and potential members — one that appeals to the type of members they want to attract and retain. The three messages SAMA conveys are that SAMA is "connected, focused, and fast." Connected. SAMA says they have spent 40 years building a vast network of contacts across the globe — practitioners, researchers, academics, and consultants — all of whom add constantly to their body of knowledge on customer-supplier partnering. SAMA claims to be the source of the best research, best practices, and best professionals. By positioning its community of interest this way, SAMA lets prospective members know their brand stands for research, integrity, and relationship-building opportunities with other similarly focused professionals. In addition, by offering such a flexible, tiered membership model, SAMA also reaches out to a wider swath of potential new members. Focused. SAMA claims to be "the only organization solely devoted to "developing and promoting the concept of customer-supplier partnering." This tells prospective members that, in the entire world, there is only one place to find what you need on this subject. This powerful statement suggests that members need look no further than the association to find the resources, tools, and relationships they need to be successful. Taking this type of bold position means the association must deliver on its brand promise by providing educational programming, tools, and resources that live up to member expectations. Fast. SAMA offers Web site and human support to assist busy executives quickly. It appeals to global members who need access to information when North America is asleep. SAMA promises to deliver on its value proposition when the member wants it, not the other way around. That's powerful. (To learn more about SAMA's membership value proposition, see www.strategicaccounts.org/ public/membership/membenefits.asp.) Fire Members? Should you fire your low-value members? Common sense says no — if they write you a check, you should cash it. But be mindful of becoming a mile wide and inch deep. It's a mistake to try to please 30,000 different members in 30,000 different ways. Should you find ways to turn low-value members into a high-value members? Common sense says yes, but be careful. You need to resist the urge to make this your organization's focus. Develop and test specific strategies and keep a close eye on the resources you're expending. Should you set your sights on high-value members who will help build your brand, fill leadership positions, and bring in more revenues over time? When it's put like that, clearly, the answer is yes. The challenge for associations is planning to put the resources behind it. When describing military engagement, General Norman Schwarzkopf, head of coalition troops in the Persian Gulf war, said simply, "Plan your work and work your plan." The same is true for organizations. Now is the time to act, because in the fight for high-value members, only the smart will survive. Author Link: John S. Parke is the president and CEO of Leadership Synergies, LLC, a company specializing in sales strategy consulting, sales training, and sales audits. He can be reached at 410-414-9920 or jparke@leadershipsynergies.com.
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