This article is an edited excerpt from the book Membership
Recruitment: How to Grow Recurring Revenue, Reach New Markets, and Advance Your
Mission. Find it on
Amazon.
When I do presentations on the need for innovation, I often
share a comparison of Sears and Amazon as a case study. There may not be a
better example of the implications of whether or not organizations innovate and
embrace change.
In July of 1995, when Amazon first opened its online store,
Sears possessed everything needed to become what Amazon is today and more.
Sears had a dominant and trusted brand. They sold a full portfolio of products,
from clothes to appliances to tools. Sears had an enormous print catalog along
with an extensive customer list and warehouses to pack and ship purchases. In
fact, for over one hundred years, Sears mailed out its big book catalog to a
significant portion of the U.S. population. At times, the catalog was as large
as 1,500 pages and offered more than 100,000 products.
Even a decade after Amazon came on the scene, Sears still
held many advantages. In 2007, Sears had sales of $53 billion and had 350,000
employees, while Amazon had sales of $14 billion and 17,000 employees. However,
those advantages were not to last long. By 2018, Sears filed for bankruptcy as
sales dropped to $16 billion, and staffing fell to 89,000. By that time, Amazon
sales had soared to $232 billion, with over 600,000 employees.
So, what happened? Those who have done in-depth studies of
the demise of Sears point to several factors, including the emergence of
discount retailers like Walmart and category-focused retailers like Home Depot
and Best Buy. But a massive contributor to Sears's challenge was their failure
to capitalize on the movement to online shopping, leaving the door open for
Amazon to capture this market. Their lack of innovation and adaptation in
pricing and product focus, combined with its delay in moving from brick and
mortar to the internet, spelled disaster for this retail giant.
There are lessons from the Sears experience that can be
applied to not only for-profit companies but to membership organizations. Here
is the lesson. If you do everything recommended in this book to drive growth
through effective recruitment but do not use that growth to support innovation,
your organization will ultimately reach a point of steady state and even
decline.
In practical terms, this flattening of the membership growth
curve happens because, by effectively marketing to prospects in your chosen
field, you will ultimately reach a point of market saturation. In effect, you
become a victim of your own success. You have reached the prospective members
who were interested in joining and even succeeded in getting those who were on
the fence to become members. You have fully penetrated your prospect market.
What’s more, without investing in new product development, even the loyal
members you have added will become bored and lose their excitement for the
benefits that you provide.
In short, without a focus on innovation, just like Sears or
any maturing organization, growth will be stunted, and membership will begin to
diminish.
Sustaining the
Membership Growth Curve
So how can a membership organization sustain vitality and
growth? One of the most-read articles on
organizational resiliency by Gary Hamel and Liisa Välikangas in the Harvard
Business Review put it simply, “Strategic resilience is not about
responding to a one-time crisis. It’s not about rebounding from a setback. It’s
about continuously anticipating and adjusting to deep, secular trends that can
permanently impair the earning power of a core business. It’s about having the
capacity to change before the case for change becomes desperately
obvious.” As these authors concluded, “A
turnaround is transformation tragically delayed.”
Research conducted with nearly a thousand associations
supports this conclusion. Associations with membership increases in the past
year, and over the last five years, are significantly more likely to report
that their organization has a culture that supports innovation. Conversely,
those reporting declines in membership are considerably more likely to share
that their organization is only slightly innovative or not innovative at all.
There is no single recipe for successful innovation. As Matt
Ridley noted in his book, How Innovation Works, “Innovation is not an
individual phenomenon, but a collective, incremental and messy network
phenomenon.” However, there are some
methods that associations have used successfully to drive new ideas and
maintain relevance in an ever-changing environment. These innovative methods
include keeping a focus on seeing big-picture opportunities, using marketing
research to monitor member needs and perceptions, seeking outside perspectives,
and – very simply – trying lots of new ideas.
Keeping the Big
Picture in View
Maintaining a big-picture perspective is one of the most
significant steps for identifying new ideas and opportunities. However,
everything in our daily life seems to pull us toward the details and
incremental solutions. The proverb “You can't see the forest for the trees”
captures this challenge. We tend to develop ever more granular solutions to try
and fix a problem without stepping back and looking at the big picture and a
high leverage solution.
Overcoming this myopic tendency is often a struggle for
associations. For example, one of the often-repeated tenets in association
marketing is that segmentation of members and prospects into ever smaller
groups will produce better results. The theory says that highly targeted
messages sent to each segment detailing specifics about the association’s
benefits and services will solve a membership decline. You might hear something
like, “If we tell the prospects that we publish articles in their specialty,
then they will join.” Besides the
complexity in managing this type of program, the real issue is that by trying
to serve these limited segments, an association can take its eye off the big
picture and the more significant marketplace trends. Through their push for
ever-finer divisions, they may accomplish the very opposite results of what
they were hoping to achieve. Even if the message encourages a prospect to join
by highlighting specific information as soon as they receive a copy of their
first magazine and newsletter, they will see that the membership they purchased
is not what they expected.
That is why one innovation method to achieve continued
growth is to go in the exact opposite direction and focus on the forest and not
the trees. Instead of focusing efforts on more granular segmentation, seek out
the value needed by your broader audience. Advice in the book Blue Ocean
Strategy included, “think noncustomers before customers; commonalities
before differences; and desegmentation before pursuing finer
segmentation.” By identifying the
broader needs in the marketplace, you have the opportunity to realize
extraordinary possibilities.
Similarly, Amazon launched its business as an online
discount book retailer. They could have stopped there and simply provided
specialized services to book buyers. Instead, they used their highly efficient
infrastructure to broaden their product offerings. The result was outstanding
growth. In the next chapter, I will look at how some associations have achieved
exponential growth by looking at larger opportunities and expanding to new
markets.
Using Market
Research
Keeping your membership offerings thriving also requires
staying on top of the trends and demands of the markets you serve. Market
research is a tool to keep your finger on the pulse of these opportunities.
Regularly conducted qualitative research, whether in-person or online focus
groups or in-depth interviews, provides meaningful directional information.
Additionally, quantitative research offers statistical validation when
evaluating new opportunities. Consistently deployed, these tools provide data on
long-term trends that you may miss with a one-off research snapshot.
By understanding and capturing what is going on in an
industry, an association can stay ahead of the competition and aggressively
take hold of new market opportunities.
Seeking an Outside
Perspective
Dr. William Osler, one of the founders of Johns Hopkins
Hospital, famously said, “A physician who treats himself has a fool for a
patient.” The quote should be an excellent reminder to us as membership
marketers. We, as individuals, and our organizations, have blind spots and do
not always have a clear vision of the opportunities and challenges in front of
us.
So, another innovation opportunity is to aggressively seek
insight and guidance from others to maintain a resilient program. This need
becomes more important each passing day as the level of expertise needed to
manage membership marketing is at an all-time high with the increasing
availability of marketing channels, more sophisticated data analysis tools, and
new regulations and laws. Getting guidance can come in a variety of forms,
including attending and networking at professional development events, bringing
consultants or contractors on board, or hiring a marketing agency. Each of
these options provides valuable insights.
Trying Lots of
Ideas
A final key to maintaining resilience for a membership
organization is continuing to focus on innovation by always trying a lot of new
ideas. Hamel and Välikangas concluded their Harvard Business Review
article with this advice. “Most companies would be better off if they made
fewer billion-dollar bets and a whole lot more $10,000 or $20,000 bets—some of
which will, in time, justify more substantial commitments. They should steer
clear of grand, imperial strategies and devote themselves instead to launching
a swarm of low-risk experiments.” Not
every new idea will be a winner, but building this innovation practice into an
association’s culture will ultimately lead to success. As the great inventor and innovator Thomas
Edison famously said, “invention is 1 percent inspiration and 99 percent
perspiration.” His methodology was always trial and error. For example, “In
developing the nickel-iron battery, his employees undertook 50,000
experiments.”
This article is an edited excerpt
from the book Membership Recruitment: How to Grow Recurring Revenue, Reach New
Markets, and Advance Your Mission. Find it on Amazon.
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