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, 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 350,000 employees, while Amazon had sales of $14 billion and 17,000 employees. However, those advantages did not 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. However, 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 for-profit companies and 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 interested in joining and even succeeded in getting those 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, just like Sears or any maturing organization, growth will be stunted without focusing on innovation.
1. 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 focusing 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.
2. 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 of 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 opposite results of what they hoped 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 innovative method to achieve continued growth is to go in the opposite direction and focus on the forest, not the trees. Instead of focusing on more granular segmentation, seek the value your broader audience needs. 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.
3. 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 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.
4. 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. As individuals and in our organizations, we have blind spots and do not always have a clear vision of the opportunities and challenges.
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.
5. 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 excerpt from the book Membership Recruitment: How to Grow Recurring Revenue, Reach New Markets, and Advance Your Mission. Find it on Amazon.