Is It Time to Start Thinking More Like a Retail Store and Less Like an Association?

            Many associations today are struggling with what to do about decreasing revenues from the sale of advertising, exhibits and sponsorships. Many continue to see a flattening or decline in the sale of these important sources of income and have tried ways to turn this trend around with limited success. But, as hard as the association marketplace has been hit with the effects of declining sales, no industry has been more impacted than the retail industry. We have witnessed the challenges faced by many of the largest store brands including such companies as Woolworth’s, FAO Schwartz and Circuit City which at one time were leaders of the market sectors and are no longer to be found. Other retailers have closed stores or shifted to online only sales. But, there are some retailers who have strongly survived and, in fact, have found new strengths in the changing economy.

            Michael’s is a national chain that sells a large variety of arts and crafts supplies as well as seasonal decorative goods to be used in consumer’s homes. These are large stores selling thousands of products most of which sell for under $10 each. So what is the key to their success? They have established themselves as the expert on custom framing and offer this service in each of their stores. I am an amateur photographer and when I have a picture enlarged that I want to frame, I head to Michael’s. The staff in the framing department is very knowledgeable about their line of frames and are extremely helpful to me in choosing the right frame and color of matting to bring out the best of my photos. They have a video system that can display an image of my photo in the exact frame and matting as the finished product will be, and the quality of the workmanship of the finished product is excellent. They are my go-to retailer when I need custom framing.

            Another store that I love is The Container Store. Here, they sell thousands of containers designed to hold all of my household goods for every room in my house by offering a wide range of product sizes and features each designed to help me keep my home better organized. Most of the products in the store are priced under $20, but they offer something that no other retailer offers. They sell two lines of custom closet organizing systems that maximize the space and functionality of each of the closets in my home. I can store clothes and other items in an efficient, attractive, and accessible way while maximizing the storage capacity of each of my closets. I go to the store with the dimensions of each of my storage spaces and a highly trained and knowledgeable person custom designs my space and then shows me a color rendering of how each wall will look. Over the years, I have done all of the closets in my home (as well as my garage) and have always found the experience to be positive. The products are very well made, durable, and effective in solving my home organization challenges and the personal touch of working with a designer adds value to the overall experience.

            What do these two stores have in common that makes them successful? It’s really simple. They require the customer to come into the store to purchase their most expensive specialty products. I can’t have my picture framed online. I need to bring it to the store in order for their framing expert to look at the photo and help me choose the best combination of frame and matting to enhance my picture. Although I can purchase frames from a number of online sources, I can’t receive the level of service that I get when I am in the store at the framing department and can see the many options that are available and how each will work best with my picture. I can also buy closet organizing products from other sources (both retail and online), but none offers the level of expertise and value that comes from going into the store, seeing the products on full display and receiving the personal service that assures that I get the right solution that will work for me, my family, and my home. Both of these successful retailers have found that by offering a higher priced custom service which requires the customer to physically come into the store, they increase their revenue, provide a service that is of great value to their customers, and take advantage of the customers’ presence in the store to sell them complimentary products. It’s a win-win relationship that is working for these retailers every day.

             I am not suggesting that associations open retail stores to stay competitive, but I am suggesting that associations look at this and determine the things they do best and which are also unique and valuable to their customers and prospects. These are some ideas on possible solutions:

            Enhance the relationships between your members and industry suppliers. Just like a customer has to walk into a Michael’s or Container Store to receive the best service, you should establish your association and its products as the best place for buyers and sellers to meet and where business is successfully conducted. Create an environment in all of your products where both members and vendors are welcomed and can interact with each other. Your convention and tradeshow are already doing this, but see how you can extend this model to your electronic and print products, as well. Each of them should be an inviting place for industry suppliers to inform your members about the products and services they offer.

            Provide the highest quality of service to your customers so that they want to come back and exhibit, sponsor and advertise again. Do all you can to assure that each customer gets the highest ROI on their investment in your products by maximizing the exposure of your supplier companies to your members over the longest possible period of time. You want your products and events to be the primary lead generator for each of your supporting suppliers. Your role is to create an environment that allows buyers and sellers to be introduced to each other in a welcoming atmosphere.

            Focus the efforts of your sales team to sell the higher priced products by training them on the best practices of relationship selling. The best sales people are not selling a product; they are providing solutions that meet the marketing goals and strategies of their customers. The most effective sales people listen before they speak. What are each of your customer’s unique challenges and goals and how can your products (either individually or as a package) meet those needs and exceed those goals? You want your association to be viewed as the “marketing partner” of each of your customers to assure their success in the segment of their market that your association represents.

I welcome everyone's comments and feedback on this posting.

Cost vs. Value: What Are You Really Selling?

Cost is What You Pay. Value is What You Get.

 I teach several marketing courses at the University of Maryland and one of the important parts of each  semester's class is the discussion on value. The example I use is as follows: Why do people continue to purchase Mercedes-Benz cars? When compared to a lower priced option such as Honda or Toyota, the differences seem hard to see at first. Both cars can easily be driven at 60 mph; both use the same readily available fuel; both meet government safety regulations; both come equipped with leather seats, superb sound systems, GPS, and other accessories that make the driving experience enjoyable. So why do some people spend $60, $70, or $80 thousand dollars for a car that provides nearly the same functionality as one costing half the price? It is because of the value to the consumer that the Mercedes brand delivers. For some consumers, that value comes from the status of owning the brand; for others, it is the perception of reliability; some may feel that the ride is smoother and more comfortable; and for others it is the overall customer experience from the purchase through the car's maintenance at the dealership. What Mercedes has so successfully done is use value as a tool to position itself apart from its competition.

As an association executive, you, too, should look at how your products are positioned in the marketplace. Are you competing on price or on value? When faced with price resistance from a prospect, the easiest thing to do, perhaps, is to offer a lower price in order to get the sale. Once done, you have established the price that customer will expect to pay for all future purchases and in so doing, you have lowered the product's value. Under these circumstances, it is far better to discuss the value of the purchased media, rather than its price. What constitutes value for association products? Several things:

1) Buying power and influence of your association's membership. Explaining that your readers/event attendees are the key influencers of purchasing decisions made within their organizations is key. If your members control the money, then the value of reaching them is very high.

2) Quality not quantity of readers/attendees. I recently managed a trade show for a client and spoke to an exhibitor about his experience at the event. He said the traffic to his booth was awful. His location was not well-lit, and was near the back of the exhibit hall. But, he left with three very lucrative leads that make those problems seem insignificant. For him, the quantity of exhibit hall attendees was poor, but the quality was excellent and he has committed to exhibiting again next year.

3) Add value by rewarding your biggest clients. When a company is consistently supporting your association and its products, rewarding them for their loyalty adds value to their relationship with you. Mutli-product packaging and discounting is one way to do this, but others may include offering a free ad to a client one time per year, or giving them special recognition as a supporter either in your magazine or at your event acknowledges their importance to your association. We work with clients who have a "corporate partner" status and others who offer platinum, gold, or silver sponsorship status for their largest supporters. Recognition and access are what most industry suppliers want, and providing both to your biggest customers will go a long way to maintaining those important relationships.

Discuss some of these ideas and others with your sales staff. Ask them what they think will work best. Then, give some of them a test drive. You will become the "Mercedes" dealer of your market while letting the "Hondas" and "Toyotas" fight it out for the rest.

Strategic vs. Tactical Approach to Sales

Most association sales directors are very good at managing the process and developing effective tactical tools. They produce attractive media kits, hire, train, and supervise good sales people, and manage the sales pipeline so that they know their market and the players in it. These are each important and valuable tools that are key to effective sales results, but they are all tactical in nature. In order to be more effective, a strategic approach must be integrated into the sales process before the tactical tools can be put to use. This approach helps your organization answer the question, "what do we want to be and how are we going to get there?"

I have developed a program called the 2 Hour MBA that takes the basics of business and marketing and applies them to the sale of print and web advertising, exhibits and sponsorships. This process involves analyzing each product and the environment in which it is competing. It looks at both the internal and external factors that have impact on an organization's products and the ability of the organization to sell them. Then, it assesses your integrated communications strategies by looking at who is really the buyer of your products and how to best deliver your value message to them. The result of this process is that you develop a highly effective strategy upon which the tactical steps are built and executed.

Feel free to contact me to learn more about this approach. It takes the methods used by corporations, product managers, and leaders in the business community and customizes them to fit the unique needs of the association leader. To learn more contact: rsilverstein@AdSalesExperts.net.

Is Your Association Behaving Like an Airline?

How do you feel about how airlines do business? Today, you have to buy your ticket, then pay again for selecting your seat, and another charge for checking your luggage. One airline even wants to charge you for printing out your boarding pass. This is like buying a ticket to the movies and then having to pay an additional fee to get the actual paper ticket you need to gain admission to the theater. Once on board, you are charged again for a snack or even the use of a blanket. Want to watch the "free" movie? You have to buy the headphones in order to hear it. The flying experience is really the constant feeling of the airline with its hand in your pocket charging for what used to be included in the price of the ticket. As consumers, wouldn't we be happier if the airlines didn't do this? Tell me what the ticket costs to go from point A to point B, and in that price include all of the services that make the flying experience easy and pleasant.

In some ways, associations do the same thing as the airlines. They price their products and services individually. There is a fee to purchase exhibit space. Want to advertise in the conference program? That is an additional charge. Want to be a sponsor? An even higher additional charge. There is one fee to buy an ad in a magazine and an additional charge if you also want to buy an ad on an organization's website. Is it getting to the point that your customers are feeling about your organization they way you are feeling about the airlines? And, how many people from within your organization are your customers dealing with each time they make a purchasing decision? It's confusing and inefficient, but worse than that, are your customers feeling about your association they way they may be feeling about the airlines?

The solution may be to create a single point of entry through which your customers can purchase all of your offerings at a single package price. You can create a number of different packaging options by combining, for example, print and web advertising, exhibits and sponsorships, or advertising across multiple products such as your magazine, conference program, and website. Price these packages so that they deliver fair value to your customers while providing your organization with a fair return in its investments in the products and events being offered. In today's value-driven economy, your customers may greatly appreciate this approach for its simplicity, flexibility, and ease of access. This will result an increase in overall revenue coming into your organization. This is a win-win solution that, perhaps, the airlines should adopt as well.