Monday, March 31, 2008

Increasing Member Value through New Product Development


There is much conversation around increasing the value of membership.

Here are some suggestions on increasing membership value through new product development, adding real value to what the association tangibly provides to members. New Product Development also keeps membership exciting and prevents you from being eclipsed by your competition.
When looking at new product development, an association has a choice of two strategies. First, an association can introduce new products in a current product line (e.g., new seminar titles, book titles). This strategy simply involves doing more of what you are now doing successfully. It is a lower financial risk, but also lower profit strategy.

The second strategy involves the creation of new product lines (e.g., starting a compensation survey or a webinar program). Obviously, this strategy involves much higher financial risk, but if done properly can result in significant new revenue for an association.Here are five characteristics that a new product should include to help ensure success.

1. Desirability -- It may seem overly simplistic, but start your evaluation of potential new products by making sure to select items with a high perceived value attached to them by the members or customers. Use focus groups, executive interviews, and surveys to determine your members and customers real and felt needs. And 'stay close to the customer' by spending time talking to your members to confirm the findings you receive from research. Then test market your new product idea to a small sample of your membership to see if your research is accurate and if the price is acceptable. Fundamentally, your best research is whether or not your sample of members opens their checkbooks and buys your new product.

2. Profitability -- After you have discovered what your customer wants, package the new product in a way that makes it economically feasible for your market situation. Take advantage of the leverage found in your particular marketplace. For example, is your membership small but has access to large sums of money? Then package your new product in a format that can command a high price and provide you with high profit margins. With a small market, a new book selling for $19.95 is unlikely to return the margins you might want for the effort required to produce and market it! Is your membership large, but lacks access to corporate funds or discretionary income? Then sell a high volume product at a lower cost like the $19.95 book.

3. Renewability -- Whenever possible make your new product a continuity product. The costs of making one sale are so high that profitability on any but the highest margin product becomes difficult. For associations, membership is the ultimate continuity product. Be creative and duplicate this success by designing new products around a regular renewal. For example, you may want to turn your seminars into a multiple course certification series. Encourage standing orders for your new DVD releases. Try turning your publications program into a book club.

4. Duplicability -- Your staff's time and energy is one of your greatest resources. So avoid creating highly customized products that require constant involvement and servicing by staff (e.g., customized workshops, research libraries). Instead try and let printing presses or web do the work for your staff. Try putting rapidly changing specialized information into an electronic newsletter.

5. Reach-ability -- Make sure your audience is reachable through the channels available to you. For instance, before you decide to hold a conference in Europe, be sure mailing lists exist in your field so you can appeal to potential attendees. Also some products can be sold through the mail or your Web site and others need a personal phone call or sales visit. Evaluate if you have the staff, expertise, and budget to market through these channels.

If you would like more information on growth strategies, you may want to look at some posts from last year. I did a number of posts related to the Five Growth Disciplines -- Introduced of membership marketing. One post related to extending the membership product line (adding new levels of membership).

3 comments:

Scott Briscoe said...

I like this list, Tony. It helps to put ideas into perspective.

One of my favorite articles on idea management is from an old Executive Update issue (May 2002). It's old, but still relevant, and, if you have the discipline to administer it, I'd think it would be pretty effective.

Tony Rossell said...

Scott -- Thanks for sharing the link to the article. I think that it gives some good guidance on how to best evaluate new ideas and provide the resources needed to get them going. Tony

Product Development said...

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