By Christine Saunders
Non-dues revenue — earned by selling products and services — is critical to any association’s success. Marketing facilitates the transition from a broad corporate strategy to an actionable program of product and service delivery, first at a strategic level by designing a unique value proposition, and then by leading an integrated process of service design to exceed the target market’s expectations.
GETTING TO REVENUE: FOCUS ON THE EXCHANGE OF VALUE
All revenue, whether you’re McDonald’s, Toyota or a small association, comes when you deliver products and services. No matter what type of organization you are, the basic concept of the market is this: value exchange. You do something of value that the market will pay for. If there’s no value, there’s nothing to exchange. It’s a very simple concept, but it’s sometimes hard to execute with the clarity required to be successful.
If value exchange is where any organization creates revenue, where is the strategy that drives it? It’s in the value proposition statement. This is the critical strategic marketing tool that connects your organization’s strategy — goals, objectives, organizational mission and vision — to actionable, go-to-market tactics. Your value proposition is your elevator pitch. It’s what helps your organization connect who you are and what you do with what your audience (your market) wants and needs.
Put simply, when you are crystal clear about what your target market wants, you can identify opportunities to provide products and services they will pay for. A value proposition is nothing more or less.
FOUR COMMON TRAPS OF NON-DUES REVENUE DEVELOPMENT
Once an organization moves outside of its core membership offering and into the area of non-dues revenue, four common traps in decision-making await.
TRAP #1: IGNORING THE COMPETITIVE LANDSCAPE
One of the most common mistakes associations make is to assume they have, in their members, a “captive” audience from which to generate non-dues revenue with products and services. You may be the only game in town when it comes to your core offering of uniting a profession, trade or industry, but your competitive environment in other common services, like networking, professional development and continuing education, is always hyper-intense, with a vast array of non-profit and for-profit organizations competing for your members’ time, attention and money. Understanding gaps in the competitive landscape — not just providing the same service everyone else does — is a key to success.
TRAP #2: PRICING BASED ONLY ON COST — AND TOO CHEAPLY
Another common area of weakness is pricing. Classic pricing strategies are complex, but at the most basic level you need to factor in financial cost, the cost of your target audiences’ time and the return on their investment. You need to consider another dimension too, which is the “friction” — the expending of mental and emotional energy — your audience experiences when accessing your services.
Think of banking, and how hard the big banks now try to reduce the friction of having to go to a branch. When they get it right, it’s easy for us. But when it’s not right, the repercussions for the value proposition can be negative. When you want something done at midnight but you need to go to a branch to get it done, it becomes a negative price factor for the product or service you are using.
All these aspects are important in coming up with an actual dollar figure. All too often, associations do not have this discipline and, more commonly than not, they leave money on the table in an effort to price solely on a toe-to-toe peer comparison level — or worse, on gut feeling. Pricing to the true, holistic value of your service is what will get you the most return on your investment.
TRAP #3: SHORT-CHANGING YOUR SERVICE DELIVERY WITH “OFF THE SHELF” SOLUTIONS
While associations have many issues and opportunities in common, each of your value propositions is unique to your unique group of members. Who they are and what they expect of you is varied: there is a “culture” associated with different professions, industries and trades based on training, experience, the nature of their work and more.
If you deliver services only in a “we do this too” way, you risk sending a signal to your audiences that you don’t know them, that they’re not reflected in the solution, and — at worst — that you haven’t listened to them. This isn’t an issue of larger budgets being required to customize your offerings. Sometimes the solutions to tailor your services can be very simple and cost-effective. Mostly, you need to be aware that a service must be unique to your market (your members) if it is to succeed in driving the revenue you expect.
TRAP #4: SURVEYING YOUR WAY TO NEW PRODUCTS AND SERVICES
Surveys are an anchor of any organization’s ability to listen to its audiences. Surveys provide quantitative analysis and are great at benchmarking longitudinally and assessing market size, among many other things.
But they are not great tools for asking your audience what it wants. The problem is that people don’t always know what they want, or at least aren’t able to package the answer into the neat bundles a quantitative survey may look for. Remember what Henry Ford supposedly said about developing the Model T: “if I had asked people what they wanted, they would have said ‘faster horses.’”
Surveys are an important tool, but by themselves they may not always be the best at developing nuances or anticipating the unique needs of your members.
MARKETING STRATEGY 101: REVENUE STARTS WITH YOUR UNIQUE VALUE PROPOSITION
Marketing is too often aligned only with advertising and promotions. But it is so much more than that: it’s the true engine of business growth. In business school they teach a classic foundation called the “4 Ps” of marketing: product, price, place and promotion. Marketing is a professional specialization that identifies and designs products and services and supports pricing strategy, distribution and promotion.
Marketing should be viewed as the professional discipline that responds specifically to the needs and wants of your market. How? Trained marketers are skilled and proficient at methodologies that listen to, interpret and respond to market opportunities to drive revenue. There are textbooks written on this. The “bible” of marketing, of course, is Basic Marketing: A Managerial Approach by E. Jerome McCarthy, first published in 1960. And even with all the changes created by our digital environment, the fundamentals for management haven’t changed.
CREATING A UNIQUE VALUE PROPOSITION
What is a unique value proposition and how do you create one? By nailing down what your users want and need, finding a unique competitive space and then aligning it with what your organization can do or offer. Your value proposition lies at the intersection of those elements.
RESILIENCE THROUGH CHANGING TIMES
Once you have your value proposition and your non-dues products and services, marketing plays a vital role in keeping you informed about the “health” of those offerings. It helps spot new opportunities to grow and evolve your organization and to fine-tune your offerings. The external environment (remember the PEST and SWOT analyses from your organizational strategy exercise?) doesn’t ever stay the same — this is where trained marketers can keep you focused and on track.
A great example of how this works is to think about McDonald’s. Its core product offering, hamburgers and fries, has been a staple for decades. It’s sometimes hard to think about McDonald’s without thinking fryers and grills. But its marketing experts continue to listen to customers and respond to their wants and needs. Sometimes they do it better than others.
For instance, when McDonald’s wanted to branch out from its current menu for new ways to create revenue, it created “meal deals” to entice you to buy more. This development uses pricing techniques and has ostensibly been a success at fulfilling untapped customer wants.
Another success has been the company’s expansion into the coffee and bakery category to drive greater frequency of visits between meals and to address competitive pressure from the likes of Tim Hortons.
Other times, however, it seems that McDonald’s struggles to keep up with changing consumer eating and nutritional habits. Trends toward fresher, healthier, more local foods have put pressure on McDonald’s to respond and keep up. It just appears that it has a hard time moving so far away from its core offering, which is a cautionary tale for any organization.
So how can a manager keep up with and respond to everything? It’s not easy, but it’s a process, built on the marketing mindset. It may not always be successful, but the resilience of your organization — your brand — is based on discipline and a commitment to a few marketing fundamentals.
Put simply: your customers are changing, your competitors are always changing and the environment you operate in — your PEST — is always changing. So must you to protect your revenue and identify new opportunities.
HOW TO MAKE YOUR NON-DUES REVENUE RESILIENT — A MANAGERIAL APPROACH
Identifying, maintaining and improving revenue opportunities can be supported by trained marketers, starting with three simple steps. This is your managerial approach to ensuring you have the right marketing mindset at work in your organization to stay resilient in changing times.
STEP #1: THINK ETHNOGRAPHIC STUDY, NOT SURVEY
Ethnography is a type of specialized research grounded in the social sciences. It requires observation and “listening” by a trained, objective researcher, who takes copious notes on behaviour and patterns. This type of research has been brought to the forefront in recent decades by engineers and customer experience practitioners, who need to design, refine and improve processes, products and services.
How does ethnography apply to non-dues revenue? As a basis for studying your members’ wants and needs, you can apply the qualitative and observational aspects of ethnography to capture important nuances in why members may or may not like a new service you are delivering, for example, or it may suggest ways to better optimize existing non-dues services. And realize that what your members want and need changes — more frequently than you may know. The insights you will gain in this process are invaluable to product and service design and development, and will help you avoid the common surveying trap. Plan for regular updates at a frequency that makes sense for the scope and scale of your product and service offerings.
STEP #2: LOOK CRITICALLY AT THE COMPETITIVE MARKET WITH ANALYTICAL MAPPING FOR GAPS AND UNIQUE OPPORTUNITIES
If you have existing non-dues revenue sources or are planning to identify new ones, this step needs to be a regular activity. It can also become a report to your board and decision-makers. Make sure you understand whether there are new entrants and how your own features and benefits line up, analyze new ideation from your team against competitors and assess trends. Like McDonald’s, associations are both constantly influencing the competitive landscape and being influenced by it.
A detailed and methodical analysis of your competitive standing in the marketplace requires a degree of frankness and honesty that is sometimes hard for internal teams to achieve alone. This is not a given, but a caution that institutional bias — “our members think we’re great” — is out there. Starting the exercise with a Porter’s Five Forces model — it’s a business school classic — and the hypothesis that “we’ve got work to do to keep up” will stand you in good stead.
STEP #3: REVIEW CUSTOMER EXPERIENCE DESIGN
The final aspect that needs to be revisited regularly to identify new opportunities and keep your non-dues revenue competitive is customer experience design.
Put simply, customer experience design, or “CX” in modern marketing parlance, is a way to capture and purposefully plan for how and when your audiences engage with your products and services. And because this happens increasingly online and on the go, re-examining this element frequently is particularly necessary. Your customer experience starts with how they learn about your offerings and extends through to buying them, to using them and then, one hopes, to referring others with positive feedback. The reality is that your operating CX environment changes regularly. Every time Amazon, Facebook, Google or YouTube launches a great innovation or new technology, every time they anticipate our needs or provide amazing personalized service, our expectations change. The bar rises.
That doesn’t mean you need to be exactly like Amazon; that would be nearly impossible, not to mention costly. But it does mean that you need to continuously improve your level of service in a way that meets the specific expectations of your unique audiences. You need to be seen to be responding and innovating at a pace unique to your organization, or else you will appear to be out of date, which will negatively affect your ability to competitively price and promote your services.
There is a specialized toolkit within the CX discipline that analyzes and articulates your current and future states and helps prioritize problem areas and new opportunities. These tools include heuristic analysis, customer journey mapping and more. The right mix for your organization should be, in some measure, on your managerial radar for regular and proactive updating.
WHAT IS A VALUE PROPOSITION?
A strategic marketing tool that translates a company’s vision and mission into an expression of the needs and wants of its audiences. It is also known as an “elevator pitch.”
BUILDING REVENUE RESILIENCE — WHAT TO DO NEXT
For associations the takeaway should be that a marketing mindset of continuous improvement and refinement must be adopted to protect all revenue, but especially your non-dues revenue, which is where associations are often in the most competitive environment.
Whether you are reviewing existing revenue sources or planning new ones, be vigilant for the four traps of driving revenue, and be attentive to maintaining and constantly adjusting your products and services. The discipline of professional marketing includes tools that create the conditions for an organization’s growth, including a focus on product, pricing, placement and promotion. Look for ways to integrate key elements of ethnographic research, disciplined competitive analysis and ongoing improvements to customer experience design to protect and enhance your revenue sources.