Building the Future on Member Value: Codevelopment as a Key to Customer Relationships in the 21st Century
By: Anna Caraveli
Associations need a fundamental shift in their orientation from programs, services, or advocacy positions to delivering value to their members. Anna Caraveli identifies a membership organization that delivers value by involving its members in the identification of needs and development of solutions.
Significant gaps still exist, however. For example, professional schools in universities have not fully risen to the challenge of providing their alumni with lifelong professional development. In associations, services are often dispersed or expensive. And, of course, it is difficult to duplicate the unparalleled access to an industry or profession and potential for community engagement that associations possess. This is a time of great opportunity for the associations that can be aligned with, and focused on, the core interests and motivations of their members.
Consider the case of the Veterinarian Information Network (VIN), a dynamic learning network that represents a different kind of membership experience. Members report that they value VIN’s comprehensive range of benefits, including up-to-date research and online access to medical specialists who are available to answer questions in real time. These benefits, they say, focus on the daily work of veterinarians and resonate with critical needs as the veterinarians themselves frame them.
VIN’s success reminds us that associations seeking best practices would do well to look beyond peer organizations to maverick market leaders and cross-industry innovators. They are the ones who have identified new competitive advantages. Among membership organizations, newcomers such as VIN might have something to teach associations in all industries. Statements of intent and the pursuit of generic goals such as quality service, member satisfaction, and member loyalty do not constitute strategy in and of themselves. Which members should an association pursue and on what criteria? How much of its resources should an association invest in recruiting and retaining members, and where should it invest those resources? And how can an association’s goal of increasing member value become translated into better business results?
Mature organizations can sometimes lose touch with the members or customers they were originally founded to serve. VIN has captured the loyalty of veterinarians by focusing on the needs of the VIN membership above the needs of VIN’s organizational structure, interests, and practices. Reconnecting with members on a profound and meaningful level should be the driver of new strategies and initiatives for reinvigorating an association. This approach requires digging deep under the surface to discover the real connectors between provider and member and how they can be translated into sustainable value for both.
Using VIN as a source of illustrative examples, this paper develops a framework for converting customer-friendly statements and initiatives into customer-focused associations in part by provoking answers to such questions. It identifies five anchoring arenas of action as laboratories for transitioning from product-intensive to relationship-intensive models: culture and competencies; value propositions; business strategy; relationships; and metrics. They represent areas for capacity development rather than a how-to list.
Cultural Reorientation: Putting a New Strategic Mindset on Automatic PilotThe battle for actually embedding change at the core of an organization is not fought on the strategy front as much as on the level of daily routines, long-held assumptions, and habitual patterns of thinking that have become second nature. Leaders must learn to recognize and deconstruct such unwritten rules that shape decisions, and replace them with new ones.
For example, a hurdle to significant reinvention and effective problem solving is that of automatically resorting to new programs, products, or systems as all-purpose responses to crises and opportunities alike. Program proliferation does not address root problems or sufficiently explore new options that may lie beyond familiar formats and programs. Instead, organizations must cultivate staff’s capacity for assessing value to customers and building portfolios of relationships and services that embody this value.
Many bold new strategies are constrained by habitual assumptions about the member or customer and nature of their relationship to the organization. A frequent assertion, for example, is that staff already possesses all the knowledge they need about their customer, whether from personal experience or through conventional marketing tools. In an organization whose business goal and measure of success is increasing value to its customers, no amount of knowledge is ever enough and learning is continuous. More than looking for the right tools or methods, associations must develop capacities for a new kind of listening to customers, one that is more than questions and answers but rather a relationship that involves codevelopment of ideas and co-production of solutions.
Constructing Compelling Value PropositionsInvariably, association leaders view low retention, poor return on investment, and lack of member engagement as marketing or communications problems. They look for solutions in new marketing positions; branding and communications strategies; process or program improvements; and expensive market research projects and campaigns. Member marketing strategies commonly rely on lists of all the benefits their offering might deliver, mistaking them for a customer value proposition. They assume that the greater the number of benefits the more appealing the membership. Yet such benefit-focused approaches do not necessarily translate into compelling value for members. At best, focus and identity become blurred. At worst, organizations may invest resources in benefits that are of peripheral or no interest to their members.
A value proposition, unlike a marketing or branding strategy, begins with the customer. It represents the optimal experience of an organization’s assets a customer can have, the reason a person or company will choose a service or product over others. It requires focus on one or two areas rather than the quantity of products and benefits. It must have both direct relevance to members’ key needs and distinctiveness over competitors.
At the core of VIN’s success is its value proposition of providing veterinarians with inexpensive, timely, and easily accessible peer support on areas that are critical to the practice of their profession. VIN’s focus is on the medicine itself.
VIN does not try to be all things to all people. Its core membership at the moment consists of vets working in solo or small group practices and those specializing in exotics. Each member service seeks to satisfy a specific critical need. The sharp focus on a particular market segment and its needs increases VIN’s value to members. Its services, experiences, and products are integrated under one cohesive umbrella: the range of core needs that stem from the daily practice of veterinary medicine, as defined by veterinarians themselves. The main goal driving strategy and execution is simple: to provide veterinarians with the information, peer support, and tools required to run high-quality and competitive practices. All member benefits are directly linked to this goal. The source of value for each area of service is clear and specific, and each area addresses a specific need that is recognized by practicing veterinarians as a major hurdle to their ability to practice.
The value construction makes sense from the member’s perspective: The value of bundled, targeted, and timely peer support, delivered at the member’s convenience, justifies the higher membership fee. The fee seems almost inconsequential compared to the cost and inconvenience of purchasing each of these services separately. Given the fact that most members avail themselves of only one or two of the benefits their professional associations offer, the choice between a conventional association model and a targeted support network resembles one between shopping at a crowded retail shop and having a personal stylist identifying the best of what is available and customizing it to your needs.
VIN Member Services
Building a Business Model that Serves Your StrategyRather than extrapolating strategy from existing structures and processes, associations would be wise to create a business model that serves the association’s strategy. The following are key elements of such a business model.
Defining the Basis: It is important to identify the basis for developing your value proposition and business model that best leverages your strongest competitive advantage. For example, will you compete on the basis of a core product? Access to benefits you have secured through partnerships with other service providers, such as discounted airline tickets or health insurance? A knowledge base and area of expertise that only you can provide? Access to a network of experts you broker? The convenience and speed of your delivery systems or of one-stop shopping and comprehensive solutions?
The basis of VIN’s business model is the network itself. There are three primary avenues for delivering member benefits: peer interaction; specialist advice and help in medical problem solving; and up-to-date medical research, along with tools and breaking news that keep members current.
Creating Value: The value of the network, however, is not in static elements but the dynamic relationships among them. It is the balance and interaction among these three anchoring elements that create a value web and a trajectory of increasing value. VIN catalogs each online conversation and makes it available to later readers, thereby increasing VIN’s knowledge capital. As more experts participate, the quality of the information rises and VIN’s service to members increases. As more questions are asked and answered online, the value of the knowledge capital grows.
VIN’s is a developmental and value-generating model of membership. It is the nature of the learning community and member relationships that adds continuous value to that membership model, rather than new programs or external solutions gleaned from market research.
VIN’s model echoes a larger trend. It appears that the knowledge service providers that most resonate with customers use a developmental model of service. In it, the value of the customer experience is developed through lifelong engagement rather than through credentialing, one-time events, or sales transactions. Success is measured by learning outcomes or business results and by the effectiveness of the customer experience itself—the quality of online interactions, for instance, or the access to collaborative learning.
In designing membership models that are valuable and relevant to members, questions of value over time should supersede concerns with the benefit list. How does membership in your association contribute to members’ development through various life and career stages? What competencies or relationships have been developed through membership in an association that has made a difference to a member’s ability to succeed?
Technology Platforms as Competitive Advantages: Two milestone decisions allowed VIN’s concept to evolve into a viable business:
- Initially using a ready-made platform provided by AOL
- Focusing upon a few core offerings—community, continuing education, and information—that were self-supporting rather than requiring financial input from sponsors.
VIN’s membership has grown at increasing rates for 16 years. Paul Pion, president and cofounder of VIN, credits VIN’s creative use of available technology on an existing platform—AOL, where VIN was born—as a key reason for this success. Through this strategy, VIN was able to focus upon serving the information and personal needs of VIN members rather than being distracted by trying to create technology and pay for it. Once VIN and the World Wide Web had matured, it was an affordable and natural evolution for VIN to migrate to its own servers and technologies. But even then, every decision was made to use and create technologies that met the needs of the community rather than force the community to adapt to technologies that were less useful but convenient for VIN to provide.
Codevelopment and Coproduction: A New Framework for Member RelationshipsWhether associations rely on outside experts and mountains of quantitative data to learn about their members or use their own experiences, most have one thing in common: their knowledge is rarely derived by engaging members in substantive dialogue, problem diagnosis, and solutions. While established marketing research tools have an important role in customer knowledge, the customer-focused organization cannot rely on occasional projects or specialized methodologies for learning about its customers. Instead, they must become learning organizations in which listening to, learning from, and interacting with the customer are embedded in the culture and reflected in daily practice.
Pion is a strategist who also uses gut instinct and common sense as his guide. Asked what the difference is between VIN and established professional associations, Pion has a two-word answer: “We listen.” Eschewing formal research vehicles and standard methodologies the VIN team listens through continuous conversation with members and peers. Pion personally reads, and often answers, almost every online exchange among members. He attends conferences and is deeply engaged in medical and professional issues as a peer rather than salesman.
This is not to suggest that more formal mechanisms for customer assessment are not important. But organizations that rely solely on formal mechanisms and dismiss knowledge manifested informally—in the nuances of conversations or through informal interactions—miss the most significant opportunities for gaining in-depth knowledge. It is in behavior, nuances of communication, questions asked rather than answered that one can fathom motivations or extract needs that are not yet fully articulated. Seeing your business through the eyes of your customers will uncover hidden sources of value you never realized your assets possessed. Morever, the conventional, product-oriented approaches to market research and customer service are usually high on expense and complexity but low on value. They can produce volumes of information that are not adequately shared and put to use. They operate within existing structures making it hard to quickly translate them into improved results. They do not engage a broad segment of staff in learning with and about their customers. They are not set up to capture the depth of knowledge required.
One large national association, for instance, is undergoing a massive process for increasing member value that involves membership relationship management systems, expensive consulting firms, and years-long research projects. Yet a quick assessment I conducted, in the context of a short consulting project, revealed that the highest level of engagement took place not in the programs the association invested resources in but in informal member networks: online chat rooms; local chapters; and hallway interactions outside formal panel presentations. These realms of member experience generated high value but were marginal to the association and nearly invisible to senior and middle managers. They did not inform strategic planning and re-engineering projects and did not serve as starting points for creating new services and programs.
The depth of knowledge required to engage and retain members today cannot be achieved by traditional means, such as standard market research or anecdotal observations or relegated to a specific time and occurrence such as an annual survey. What is needed, in addition to quantitative information, is dynamic, contextual knowledge of their customers. What are members’ changing needs over a lifetime and during specific life stages? How is knowledge of information actually applied in the course of a day’s work? What is the total spectrum of critical needs and interests (outside the immediate area of the association’s mission) that might compete with membership benefits but might also provide opportunities for bundled services?
Codevelopment: Identifying the right need and value proposition is only the foundational strategy, however. It is in engaging and developing members that ideas become translated into results. For VIN, the continuous cultivation of consultant and member networks is its core business. Access to specialists is a powerful value proposition for VIN’s members, but for the model to work specialists have to be motivated and inspired to act as mentors, especially when no fee is involved.
It is important to understand that the standards for customer service and engagement have been raised across the board. Michael Maccoby, a noted expert on leadership and the knowledge-age workplace, , argues that ours is “the knowledge-service age.” The tenor, scope, and framework in knowledge-age relationships have changed from passive listening or service to coproducing or codevelopment, in Maccoby’s words:
The tools we're using—the computers, the Internet, and so on—are very different types of tools. The relationships are different. The customerproducer relationships are different. . . . We're looking at coproduction between the producer and the customer. . . . That requires interaction and solution and coproduction. It's a whole new way of producing by coproducing.1Codevelopment is the mode of relationships created by VIN. Members are afforded opportunities to shape, not merely read about, news and trends in their profession. They are engaged in new product development and innovation. “Half the stuff we do comes from ideas we develop with clients,” says Michael Johnson, VIN’s director of sales and marketing. Some customer-generated ideas have failed. Others have been stellar success stories. For example, VIN stores a large amount of information. Its value rests on the ability of people to use it. A search tool was developed allowing members to quickly navigate through the virtual library and identify and retrieve the information they want. Regardless of success or failures, however, members are engaged in value creation for themselves and the network.
Customer-Intensive Competencies: New standards and frameworks for membership relationships require a host of new competencies rather than improvements in customer service processes. For example, competencies in building and developing valuebased relationships with members will become more important than functional expertise. Competencies include developing member knowledge from a broad array of formal and informal sources; helping members identify latent and unarticulated needs; engaging in learning and codevelopment relationships; and leveraging the knowledge assets represented by members to increase value.
Moreover, to translate platitudes into practice, disciplined and continuous processes must be established for learning about customers and sharing and applying this knowledge.
Metrics: Adopting Value-Based Measures of EvaluationA relationship-based and value-generating member strategy needs to assess factors beyond linear increases in numbers, such as the level of member engagement, the degree of participation in services, and the rate of conversion to higher levels of membership. Retention and development of existing members becomes a priority.
Member relationships are not all the same. Yet membership campaigns and allocation of resources often treat membership as an undifferentiated whole. A strategic approach to membership development differentiates among member relationships so that it can prioritize efforts and construct a clear rationale for investment. On what criteria will strategic goals and priorities be determined, and on what basis will you measure the value of your member relationships? Do you judge value by the sales revenue a membership generates? Its longevity? The market segment it represents? The access to resources or market share it provides? Its ability to grow over time? Developing measures for assessing membership lifetime value rather than transaction will allow an association to determine the kinds of member relationships that are at the top of a theoretical pyramid of value and develop a strategy for converting low-value to high-value relation- ships. The goal is to build a portfolio of relationships along value trajectories, and invest proportionately in relationships that generate the most value.
VIN gives us an example of a relationship with clear value-based measures of evaluation. Members I talked to are clear about the value of their membership and measure it by results. “I could never handle confidently running a two-vet practice in a rural area,” a young vet tells me. “Relying on VIN’s network at any time and on any type of issue that arises makes all the difference in my ability to operate and practice good medicine.”
Conversely, VIN does not evaluate the health and potential of its membership pool by numbers alone but by the way members use and benefit from the network. Criteria for setting priorities or evaluating progress are based on how an initiative benefits the community. “We do not see ourselves as providers and clients,” says Johnson. “We see ourselves as part of this community, and every community member with a role in both deriving and generating value to the whole.”
A key measure of success is not just numbers or rate of growth but degree of use. VIN assesses how many of the network’s multiple tools and services their members actually use or are at least aware of. Retention strategies are linked to increasing use and participation. Many of the products and tools the network develops are in fact meant to facilitate navigation through complex information and allow targeted selections. VIN, then, is set up to capture, measure, generate, and apply value. It assesses its effectiveness on the basis of how well it accomplishes these goals rather than on quantitative measures such as the volume, the variety, or the quality of the information; the number of member renewals; or the number of benefits. Strategy is driven by the underlying questions: Why should veterinarians become VIN members? How well do our services and assets correspond to the critical needs they face daily and the results they aspire to produce?
Implications for AssociationsBeyond functional improvements or new strategies, associations need a fundamental shift in their orientation from programs, services, or advocacy positions to delivering, and constantly increasing, value to their members. Leaders must learn to construct a different framework for thinking about their core business, one that views their charge in terms of managing a portfolio of customer relationships rather than products or physical assets. Staff roles and responsibilities, incentives and rewards, organizational structure, and measures of success will all look very different when the core business and its basis for competitive advantage are redefined.
To engage, and derive sustainable value from, today’s customers, conventional tools and organizational models are not adequate. Interactivity rather than transaction becomes a new mode of communication. Strategic applications of technology to increase interactivity and expand the value of customer experience become critical assets to develop.
Associations should become learning organizations, constantly engaged in the pursuit of innovative solutions, driven by the questions that ultimately matter: Why should someone join our association instead of another association or professional or educational service? What matters most to our members and how do their needs change over their lifetime? How do we contribute value to their lives and meet their needs in ways that are meaningful, distinctive, and memorable? And what capabilities and structures do we need to develop to deliver on the claims we make?
Anna Caraveli, Ph.D is the senior consultant with Kaludis Consulting. She can be reached at firstname.lastname@example.org.
1Michael Maccoby, “Workforce and Workplace Issues for the New Century,” keynote address, Third Annual National Policy Forum: Shaping the Dialogue in Labor and Employment Policy, Industrial Relations Research Association. Washington, D.C. June 7, 2001, www.maccoby.com/Articles/WorkforceWorkplace.shtml, February 25, 2007.
Rate this item:
Please Sign in to rate this.
The focus of this paper is timely and needed.
Marketplace innovators are using communities built around product or service co-creation to deliver value determined by and for the end users themselves. How? Through the use of open business models and deploying product development methodologies that involve the end user in creating the value from the beginning.
Examples include InnoCentive, NineSigma, and InnovationXchange to name a few. The latter is owned by the Australian Industry Group one of the few associations who have adopted open models of customer engagement.
The paper would be even better if it could have defined the means of engagement VIN has taken through a project that shows co-development at work. For instance, do they engaget member customers through each phase of product development (ideation, business case, design, deployment and measurement)?
It would be great to have more on this topic.
More Articles From Spring 2007 Issue
Focus on Finance: Optimizing the Financial Team
June 27, 2013
Executive Issue Briefing: What Are You Mandated Under the ACA?
July 9, 2013
International Delegation to Australia
July 14, 2013
|View full calendar|
ASAE U Online
Models & Samples
|Find a Job
Post a Job
Board of Directors
Standards of Conduct
Endorsed Business Solutions
American Society of Association Executives™ (ASAE), 1575 I St. NW, Washington, DC 20005
© Copyright 2011 ASAE. All rights reserved.
|Social Media | RSS | Advertise | Mobile Edition | Site Map | Contact Us | Privacy Notice|