The Demand Perspective
By: Anna Caraveli and Andrea Pellegrino
On any given day, your members pick and choose among numerous sources for information and support: online news feeds, LinkedIn, interactive databases, virtual practitioners' networks where they can ask for advice, and more.
Welcome to the on-demand universe your members and stakeholders inhabit daily. In this environment, your association can no longer rely on time-proven benefits to stand out from the competition. Attrition and stagnation are major threats. The problem with the tactical approaches many associations use to address these problems is that those cosmetic improvements still employ supply-driven models. Today, market leaders have realized that moving from product centricity to customer centricity is the winning strategy.
So You Think Your Organization is Demand Driven?
Every organization in every sector likes to think of itself as oriented toward the member, customer, and market, but what distinguishes organizations that are truly customer centric from those that simply profess customer focus?
The former have moved beyond clichés and promises to actually reorient their entire organizations—both strategy and operations—around their customers. The others are focused internally and organized around their own product lines and functions. Some walk the walk; others just talk the talk.
Through years of practice and research, we have identified seven building blocks for enabling your association to attract, retain, and grow membership in a demand-driven environment. These are neither tactical how-to lists for magical results nor a call for entirely new organizations. Instead, we propose a different framework for thinking through the most vital operations of an association.
1. Put Your Members at the Center of Your Business
What does demand or member orientation mean in practice? The concept is simple: You shift from talking about member value to actually delivering it. The challenge is in execution. Your members' success is not only what you communicate but also the single focus around which every aspect of your organization revolves, from culture and strategy to branding and product development.
Membership development is your core business, not a function relegated to the membership department. Every aspect of the organization is responsible for and contributes to it, for example, by
- Helping members solve key problems rather selling them products and services;
- Collaborating across departments to increase the value of these solutions;
- Organizing around customer problems or segments rather than around product lines.
True reorientation will naturally, logically, and gradually dictate the needed realignments around it rather than arbitrarily imposing them.
2. Become Immersed in Your Customers' Lives
To become the go-to resource for the solutions your members need, you must uncover the nuances of their lives outside your association.
Conventional market research is not adequate. What is needed is nothing short of continuous immersion in your members' world and a resulting empathy for their problems. From this perch you can discover motivations, criteria for determining value, daily details, habits, and patterns of work that give you clues to the solutions needed.
The Veterinary Information Network (VIN) is one example of a highly successful association based on continuous and deepening engagement and interaction. This virtual-membership association for veterinarians has grown from a few hundred members in the 1990s to 43,000 members and growing today. Members engage with each other and the association through numerous online forums where they may collaborate on clinical problems, ask peers or specialists for advice, share insights on treatment, or react to trends in their profession. VIN staff from the CEO down are immersed in this virtual-member universe, observing, participating, and facilitating. As a result, they develop foresight into their members' daily work and challenges, enabling them to design innovative and targeted solutions to problems that would not have surfaced otherwise.
Market alignment is the way you connect your assets to customer needs through the right value proposition. A value proposition is not equivalent to lists of products that the provider considers assets. It is discovering how to organize, leverage, and deliver assets that translate into benefit for members. It refers to the value members experience from your association, the reason they choose your services over others. The value of a service provider is proportionate to the outcomes it enables. The greater the problems it helps solve, the higher its value. We have found two alignment strategies particularly effective in resonating with demand.
Alignment with members' greatest pain points. Every time we ask veterinarians if they are VIN members, their eyes light up. The usual response is a deep sigh accompanied by gushes of enthusiasm: "I just have no idea what I would do without it. I don't think I could do my job." VIN is aligned with demand at the points of maximum pain where solutions were most needed.
VIN was founded to help veterinarians solve the problems that made it difficult for them to compete and succeed: isolation, lack of access to specialist consultation for second opinions, and disparate, outdated, and expensive research databases. To be more effective, VIN aligned itself with small-to medium-veterinary practices. To alleviate their pain, VIN created virtually "the largest veterinary practice in the world." VIN's website serves as a portal to a menu of research and educational resources, consultative services, guided conversations, relationships, and experiences through which members can access all the elements needed to succeed.
Subsequent programs and services succeeded because VIN understood its members' needs in sufficient detail to be able to align them with the right sources of pain. For example, VIN understood that the difficulty in getting continuing education credits in distant physical locations twice a year loomed large in vets' minds. The opportunity they saw was not in developing continuing education curricula but in repackaging them online and delivering them on demand throughout the year.
Similarly, VIN determined that creating new research data would not solve the greatest problem vets faced in keeping up with research: paying many separate, expensive subscription fees for dispersed databases. VIN's solution was to create a powerful search engine to help members quickly access thousands of databases and research sources, including VIN's own conference proceedings, archived discussions on its message boards, and breaking news.
Alignment with your customers' entire value chain. Your members do not live only in relation to your association. The value chain that enables them to succeed includes their relationships with customers, employers, providers, suppliers, vendors, regulatory and policy communities, and so on. In our interconnected economy, it is critical to understand how to leverage members' value chain to increase your own value to them and identify opportunities for new members, partners, and business lines.
Driven by changing demand, VIN broadened its focus from helping veterinarians practice good medicine to helping them develop their support personnel into better managers and problem solvers. In this way, VIN increased its membership pool and revenue while increasing its value to veterinary practices.
Rethinking member strategy—acquisition, engagement, retention, and growth—from a demand perspective has intriguing possibilities for associations. In a demand-oriented organization, engagement is not a final destination. Members or customers are viewed as assets, and ROI is generated by developing them throughout their lifetime. The basis of business strategy is converting customers from purchasers of single products to buyers of larger, integrated strategic solutions. This implies
A shift of emphasis from acquisition to retention. Growth and revenue targets are met through increased member engagement and spending, cross-selling and upselling service bundles, cultivating the members' value chain for new members and customers, and spinning off new business lines that correspond to new solutions.
Constantly moving members up a value and engagement continuum. Picture where your members would fall along a continuum of value and engagement, ranging from nominal members and occasional users to members for whom the association is indispensible. What levels in this continuum would you want your members to occupy in an ideal scenario? Retention and growth are achieved by moving a percentage of membership from the low end of the continuum to the high end. If members are truly at the heart of your business, your association must develop multiple paths for member advancement and converting engagement into retention and economic value. (See "Member Engagement, Value, and Connection Continuum" above.)
The Global Business Network (GBN) was a very successful boutique consulting firm that is now part of the international consulting firm Monitor. It utilized a membership model to engage member CEOs in online and onsite scenario planning and conversations on their future. Membership benefits included participation in online forums, briefings about trends in their markets, and access to GBN's "fellows," who counted among them noted thinkers and practitioners. Higher levels of engagement and revenue included participation in regional workshops and conferences. The highest rungs in the value and engagement continuum were customized programs and, at the very top, major multiyear consulting contracts.
As the GBN example demonstrates, there must be structured paths for converting member engagement into increasing levels of value and spending.
Two-way engagement. Engagement does not flow only one way from the member to the association in the form of committee service, sponsorships, exhibitor sales, registration fees, and so on; rather, it also flows from the association to the member in the form of indispensable, member-designed tools, knowledge, and connections that increase the member's bottom line. True engagement means that members themselves become solution providers to the association rather than passive consumers, contributing insights, connections, their value chains that can be tapped for new members, and more. In a two-way engagement, members and associations create a self-sustaining value cycle in which value constantly increases in proportion to participants' engagement. (See "Engagement Value Cycle" below. Click to enlarge.)
5. Demand-Oriented Product Development: Become a Solutions Broker
You don't have to discard all your existing products and services to meet your members' demand. However, you must use a fresh lens to gauge their value to your member needs for solutions. The value of products is dynamic and dependent on the uses and solutions they enable. Association leadership and staff have to be willing to shift their commitment from legacy product lines to their customers' success, even if this necessitates new configurations and mixes of products and services.
Product development must correspond to member development, supplying a range of solutions that correspond to the various tiers of engagement and value your members can choose from. The following are steps leading toward demand-oriented product development:
- Redefine the objectives of your program and product development in terms of the solutions they enable.
- Leverage and reconfigure your existing products into new service packages that facilitate solutions.
- View your products and assets, as well as partners' resources, as your palette from which you can craft new value for your members.
- Expand your view of what constitutes a program, service, or benefit. The most valuable benefits VIN offers, for example, do not look like conventional benefits or programs. They include access to important relationships and discussions, to new research before it is published, and to veterinary specialists in real time.
- Create modular service and product bundles that can be repackaged and reconfigured to resonate with the needs of various member segments and situations.
- Upsell by coupling off-the-shelf products with extra components, such as product support, strategic advice, online delivery, and so on.
- Utilize technology-enabled tools and platforms to develop new, revenue-generating models of service and learning.
6. Technology-Enabled, Demand-Oriented Delivery
Many associations have made use of social media, yet few have succeeded in leveraging it to accelerate business, retention, and growth objectives. The strategic potential of Web 2.0 technologies is not only in functionality or social applications but also in providing you with all the elements for up-to-date, on-demand services: collaboration, interactivity, community, choice, and customization. They also offer an entirely new range of options for creating value and generating revenue:
- Move beyond public platforms such as Facebook and LinkedIn to create private, branded platforms on which you can assemble all the elements that are essential to your members' success: information, programs, interactions, access to key relationships, and more.
- Create subcommunities that address the specific needs of all your member segments.
- Create new business and membership models of service, such as subscription-based services and research-based membership communities.
- Establish feedback loops and launching pads for new products.
7. Align Operations With a Demand Orientation
Making a demand orientation operational is where the rubber meets the pavement. Unless both strategy and operations are aligned with a demand orientation, you have not moved from the level of platitude to demand-based delivery and value. Roles and responsibilities, ways of doing business, organizational structure, metrics, and business models must be built around the customer. An association that aligns its operations with a demand orientation will exhibit the following characteristics:
- Collaboration occurs across functions and departments.
- Organizational structure, roles, and responsibilities are built around customer value. New positions evolve emphasizing customer relationships, such as account managers and executives with responsibilities over member and market segments rather than product lines.
- Staff are rewarded for their contribution to this value chain.
- Portfolio-management systems allow staff to manage member relationships.
- Metrics, incentives, and rewards are demand oriented. Staff has more autonomy for decision making and, at the same time, is held accountable for results.
To reorient your association toward demand, you don't have to worry about just the right message or invest in expensive marketing campaigns and logo redesigns. You simply have to identify and deliver the solutions that will make a difference in your members' ability to succeed and organize your association so that these solutions are both effective and profitable.
Sidebar: Two More Examples of Demand-Driven Associations
The two associations below serve as excellent examples of organizations that have adopted practices to align their work with their members' needs.
Sermo, a virtual network of physicians, began by engaging physicians around discussions of difficult cases. They expanded by targeting physicians' value chain: suppliers, service providers and drug and medical equipment manufacturers. Companies can subscribe to a different category of corporate membership for substantial fees in return for access to the conversations among doctors and the early insights into medical breakthroughs and needs they generate. One of the benefits for existing members was that corporations now supported the network and made it free of cost to doctors. (See step three: "Align Your Association With Your Members' Needs for Solutions—Alignment with your customers' entire value chain.")
The American Academy of Family Physicians demonstrated a demand-oriented model of member and business development through engagement. TransforMed was set up as a new AAFP subsidiary to test and implement the recommendations of The Future of Family Medicine Report for a dramatic redesign of family practice. It engaged a number of family practices in a laboratory community, The National Demonstration Project, to test and evaluate the new, patient-centered practice model. As a result of this engagement and collaborative process, a new online and offline for-profit service was spawned, The Delta Exchange. Subscribers pay $30 a month for basic membership to the community (In addition to their AAFP membership fees) for ongoing support. They can also purchase additional, a-la-carte customized services for significantly higher prices. After less than a year of operation, The Delta Exchange has 11,000 members, is already becoming financially self-sustaining, and boasts a 95 percent rate in retention. (See step four: "Demand-Oriented Retention: Move Members Up the Value and Engagement Continuum.")
Anna Caraveli is managing partner of Connection Strategists in Alexandria, Virginia. Andrea Pellegrino is president of the The Maia Marketing Group in Arlington, Virginia. Anna and Andrea are collaborating on transitioning organizations to demand-oriented models. Emails: firstname.lastname@example.org, email@example.com
Online Video Extra: Staying Relevant With Members
Angela Broderick, CAE, executive director for the Society of Teachers of Family Medicine, gives tips on how your organization can avoid being irrelevant through marketing and an updated application process. Broderick presented on membership growth during ASAE's 2010 Healthcare Conference.