A Lesson in Quality From For-Profit Clubs
Associations may be more similar than we think to for-profit membership programs, where flawless service quality is a must.
Last month, two for-profit membership programs, Costco and Amazon Prime, made headlines for running into some apparent struggles. Costco said its holiday-season profits were down 15 percent from the previous quarter, and Amazon revealed it was considering a 50 percent increase in Prime’s yearly membership fee (it ultimately chose a 25 percent hike). When Ernie Smith examined these stories here at Associations Now, commenters offered differing opinions on how applicable the dynamics of such for-profit membership programs are to those of nonprofit associations.
While most association memberships offer a broader set of benefits than for-profit retail member programs do, I believe they can be useful examples to pay attention to and learn from. For the March/April issue of Associations Now, I spoke with Ozair Esmail, president and chief marketing officer of The Clubs Group, about the for-profit membership engagement model. Esmail got his start launching the Montgomery Ward Auto Club in the 1980s, and today he consults for clubs and associations on membership marketing.
What Esmail tells associations based on his for-profit club experience is simple: Quality matters, a lot. While that might sound self-evident, the context is worth noting. Clubs typically offer a narrow, focused benefit, and members interact with the club infrequently, so the company may only have one chance to provide a high-quality experience to a member, and one bad experience could easily send the member packing.
“What they thrive on when they engage people is that they provide the benefits so absolutely fantastic that their impression of that engagement is absolutely positive, and that carries them through,” Esmail says.
Associations, however, have a complicated relationship with quality. They don’t tend to focus on doing one or a few things and doing them perfectly. Instead, most offer a multitude of programs and services. On a nonprofit budget, it’s easy to spread resources too thin, and that hurts quality.
But, traditionally, associations have had a couple not-so-secret weapons: community and mission. If a member gets access to a community of people with common goals and experiences and comes to feel a sense of belonging, or if the member feels a strong sense of connection to the association’s mission, the association might get away with spotty service quality.
That’s a troublesome equation, though. These days, it’s easier to connect with a community of people through multiple channels, not just an association. And, if you’re instead relying on selling your membership package on the value of direct personal benefits, you have to be ready to follow that with high-quality service and customer experience, day in and day out.
We also know that members tend to join for one or two primary reasons, not the whole package, and many of them desire only a small level of engagement with the association. Serving members based on narrow interests or low desire to engage also demands consistent, high-quality service.
Esmail says the discount program at Montgomery Ward Auto Club had to be flawless, and when it wasn’t, his team acted swiftly to keep the customer happy. If, for instance, a customer called because a hotel didn’t honor a discount, they sent a check and dealt with the hotel later. Esmail says he knew that kind of service would eventually pay off. “The value that I was giving them, the check, was far less in terms of what they were paying me and what they will pay me in nondues revenue over the three, four, five, or 10 years time frame,” he says.
Clubs and other for-profits with membership programs focus on quality because they have no other choice. Great benefits and perfect execution are requirements for success.
At associations, we might see ourselves differently, hoping that a broader package of benefits, community, and mission will keep members around. But, when it comes to service quality and customer experience, why leave anything to chance? We might be a lot more like our for-profit brethren than we think.
Is your association providing the best service it can? How do you ensure that every member is treated right, whether they engage often or rarely? Please share your thoughts in the comments.