Exploiting Technology for Better Member Relationships
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- Cuthbert Underwood
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1 enabling the next generation Exploiting Technology for Better Member Relationships
2 Summary Membership organisations cannot afford to ignore the opportunities for technology to enhance relationships with their members. Just as commercial businesses have recognised the potential of Customer Relationship Management (CRM), member organisations can use similar approaches through Member Relationship Management (MRM). No. of Members 35,000,000 10,000,000 8,000,000 6,000,000 4,000,000 MRM recognises that these businesses and their associated membership bases have different motivations to commercial organisations and their customers, and consequently this calls for a different approach to enhancing relationships. It focuses on needs beyond those addressed by commercial CRM and delivers specific functionalities for the various types of membership organisation. While the opportunity is not yet fully defined, MRM is a small but growing force in relationship and can contribute significantly to achieving the goals of membership organisations and improving their performance. The significance of membership organisations Membership organisations must maximise the value created for members Membership organisations are non-profit making organisations that exist for the benefit of their members. Examples include trade unions, trade associations, charities, sports clubs/societies and professional institutions. In addition there are organisations like the AA, which have become commercial but retain some features of membership organisations. Employers Associations 2,000,000 0 Charities Business Publishers Higher Education Trade Unions Golf/Health Clubs Professional Institutions Membership Organisations Political Parties Trade Associations Figure 2: The main sectors and membership estimates Given the scale of membership organisations, it is surprising that technology suppliers have not served them more directly. While budgets are limited, their scale is large and operational needs are similar to many of those in the commercial world. Membership Organisation Objectives Employers Association Franchises Provide value to members Build closer relationships with members Retain members Extend range of services (e.g. new electronic services) Increase revenues Reduce operating costs (e.g. self-service on the Internet) Improve the membership experience across different channels Charities Sports Clubs Trade Unions Leisure Clubs Professional Institutions MEMBERSHIP ORGANISATIONS Religious Organisations Trade Associations Higher Education Political Parties Franchises Business Publishers Figure 1: The main membership organisation sectors Membership organisations are a significant force in society, comprising many organisations and individuals. Recent research by Logical estimates the member base to be at least 68 million in the UK alone (See Figure 2).
3 Three key drivers are common to most of these organisations despite their diverse objectives and membership bases. Improve relationships Cut costs Increase value Given increased overheads, these organisations need to see where technology can help them. It will be most effective where an organisation can meet their own needs but at the same time share the costs of development with others. In commercial businesses CRM has been able to achieve this, where the use of technology has been combined with a strong understanding of where the organisation interacts with its customers. But is there a similar potential for MRM? Delivering to the membership base CRM must be adapted to meet the needs of membership organisations In principle, MRM looks to achieve the same goals as CRM: Capture information about customers/members and their relationship with the organisation Understand their needs and habits better, and so tailor the relationship in appropriate ways to meet both personal and organisational objectives Promote the products/services of the organisation costeffectively by focusing on those who are likely to want them Reduce the costs of servicing customers/members through the automation of operations and self-service Allow a common approach to customers wherever they are situated and however they are dealing with the organisation Events Events MRM additions Members Members Annual subscription Publication subscription Committee Conferences/events Event booking Event feedback Exhibition Meeting/speaker Abstract tracking Trade shows Accommodation & hospitality booking However, there is one big difference: the fundamental purpose of MRM is to increase member value whereas CRM is used to increase sales and customer profitability. Membership organisations have some very different requirements compared with businesses trying to manage and retain relationships with customers. Publishing and information-sharing activities, for example, newsletters, learned journals and periodicals, are often central to member-based organisations. Events such as trade shows, exhibitions, public meetings and networking activities are also typical. All these activities require a high degree of co-ordination and organisation. Membership organisations also need to manage subscriptions and collect fees or 'dues' from members. Some have a fundraising arm for charitable purposes, while for others the coordination of member training and professional qualifications is a key function. The key to effectively addressing these specific needs is to fully understand the processes going on Sales & marketing Core CRM components Report Financial reporting Sales analysis Auto responses Contact centre Field service Contact & activity Web functionality for end users e-commerce e-publishing System admin & security E-commerce Communication Forecasting Reporting & analysis Customer service Contact Mailing list Web enabled Access controls System administration Security Order Product configuration Product information Figure 3: The additional 'tools' of Member Relationship Management at these different 'touchpoints' or the points of interaction between the organisation and its members, employees or supplier/partners. For membership organisations, these touchpoints exhibit different characteristics to commercial companies. Consequently, managing the member relationship requires an extended set of 'tools' when compared to CRM, combined with a more limited use of many of the core tools provided by CRM. This is shown in Figure 3. Few membership organisations will use all the components of a typical CRM system but do need many basic facilities combined with member-specific components. However large organisations (e.g. political parties) or commerciallyoriented membership organisations (e.g. health club chains) will need the full functionality of CRM plus additional member-centred functionality. So to be successful, MRM must provide at least basic CRM combined with a broader range of member-centred functionality to allow organisations to manage interactions such as donations and training. Training Training Accreditation Certification Continuing professional development Publication \ Fundraising Fundraising Donor Campaign MRM additions
4 Can CRM software packages meet the needs of membership organisations? There is a market for off-the-shelf MRM technology solutions CRM is big business. According to the Hewson Group, the European market (including associated services) was worth about 7 billion ($10 billion) in Managing relationships to win custom and loyalty has, and always will be, a difficult task for companies looking to secure repeat business in a competitive environment. Despite the mixed success of loyalty schemes, organisations continue to plough millions of pounds into giving customers the personal touch of the corner store. This has been good news for technology and software vendors like Siebel, Oracle and SAP who offer help to confused and frustrated businesses. Today these and other suppliers provide solutions with impressive functionality but they do not necessarily meet the different demands the member places on relationship. Generally seen as expensive in the eyes of membership organisations and in need of tailoring to suit their needs, using CRM as a solution comes at a price unless the membership organisation has a strong commercial component. In short, CRM technology has a great deal to offer membership organisations but it is relatively expensive and requires bespoke configuration for less commercially oriented businesses. If one of the major players also builds 'out of the box' MRM, this route could become very attractive for medium to large membership organisations. However, there is little evidence of MRM activity among the traditional CRM suppliers, although those that offer bespoke solutions, like Siebel, can deliver if you can afford it. There is some evidence, however, that these vendors are now producing offerings suited to the medium-sized enterprise as the large corporate end of the market becomes saturated. With the greater commoditisation of product that this entails, there is a real opportunity for one or more CRM suppliers to address the needs of membership organisations unable to pay for expensive bespoke solutions. Specialist MRM suppliers Specialist suppliers provide membership organisations with an alternative There are a growing number of companies providing specialist MRM software and services, although the base is still small. Logical estimate that there are no more than thirty such companies in the UK. These companies tend to offer services to specific niche areas within MRM. For example, Gladstone MRM specialises in providing software to sports clubs. More comprehensive dedicated MRM software systems are available, such as TIMMS from US-based TMA Resources. This system is licensed to Minerva in the UK and is a capable package with a broad range of functionality for several types of membership organisation. Fisher Technology, a UK listed company, offer another specialist product, called imis. Abbatia Ltd, a small MRM consultancy specialising in independent schools alumni, estimate the (currently latent) European MRM market to be worth about 1 billion ($1.6 billion). Given the limited information available on this sector, this figure is almost arbitrary, and comprehensive information on the UK is nonexistent. University College London are undertaking a comprehensive study on the not-for-profit market and while not aiming to understand the MRM market, it should provide a useful insight into the scale of its potential. MRM specialists provide solutions that can benefit organisations with some scale, typically operations involving over ten staff. There are also many smaller businesses who have less than ten staff members but who could potentially benefit from MRM technology. Unfortunately the larger MRM systems, such as TIMMS and imis, are not cheap to procure and deploy, especially if they need customisation. In summary, MRM specialists make sense if their standardised 'offthe-shelf' MRM offering can meet the needs of a particular organisation. The challenge for these suppliers is to increase the number of niches they serve (e.g. from trade unions to fund-raising charities, and from campaigning groups to sports clubs) as well as the core functionality that CRM systems provide.
5 Should membership organisations deploy MRM? MRM must be an organisational initiative, not just new technology MRM is a growing opportunity with stronger support than ever before as more companies offer this technology. While CRM has been very successfully exploited by some commercial organisations, the track record of implementations is mixed and membership organisations need to avoid the expensive mistakes others have made when implementing MRM initiatives. Three clear lessons can be drawn from CRM implementations: Focus on organisational priorities - be clear on the objectives of MRM and convert these into measurable objectives. Choose the system that meets these needs most clearly and a supplier on whom you feel confident for future improvements and support. Simplify then automate - use the introduction of MRM to simplify the way you work by focusing on doing what creates value for members as efficiently as possible. Customise the system as little as possible and, if necessary, change your methods rather than tinker with the technology. Treat as an organisational project not a technology one - technology enables the improvements you want such as reduced costs and better member relationships, it doesn't make them happen. Be sure that you understand the business case for MRM and who will be responsible for obtaining these benefits. Maximise efficiencies and realise benefits partly by leveraging technology (e.g. dedicated software systems) and partly through treating of members as a whole process. The exact solution required, and its level of complexity will depend on the specific needs of the organisation. However, by redesigning processes around dedicated technology solutions, all organisations can become more cost effective and drive member value. We have identified five initial steps that membership organisations need to take in achieving this (see Figure 4). Logical has used this approach successfully, for example, working closely with a member-based trade association undertaking a review of its major operational and relationship processes. The business case for extending web-based functionality to members was strong on cost grounds alone, with further benefits to be gained through enhanced member service and an improvement in operations. In this case, a CRM-based technology solution was finally selected as it met the organisations requirements more closely than specialist MRM offerings. Both association members and staff were involved in this initiative. Can you afford to ignore MRM? MRM could be essential to increasing your value to members In the commercial world, your members are witnessing increasing sophistication and benefits through technological advances in CRM systems, such as more personalised, relevant and timely offers. They will therefore increasingly expect more targeted communication. Membership organisations can use MRM where they need to improve their performance to: Improve relationships Cut costs Increase value For these organisations, the benefits can be considerable, especially if they use MRM technology to help deliver both efficiency and new opportunities to interact with members. So, rather than questioning whether membership organisations should be using technology to better manage their members, perhaps the question should be turned around to read: "Can membership organisations afford to ignore using technology to better manage their members?" Clarify Vision Process Review Touchpoint Analysis Business Case Select Suppliers Clarify vision and mission Identify areas where improvement is needed Consolidate MRM objectives Review organisational Identify touchpoints Develop processes and where you interact Select suppliers technology and technology to with members and with whom you process blueprint assess the other stakeholders can work for change and extent to which and hence points effectively, whose confirm business change is of opportunity to solutions require case for MRM required to meet create (or destroy) the minimum of objectives value for members tailoring to meet your needs and who you expect to be around in the future Figure 4: Steps to achieving Ashridge a solution Business School UK -
6 About Logical Logical is an international professional services and IT network integration company with over 60 offices worldwide. Logical shapes, integrates, designs, deploys and manages IT solutions for organisations seeking to leverage next generation technology for competitive advantage. For more information about how Logical can help your business, visit our website at enabling the next generation Logical All trademarks are acknowledged. The information contained in this brochure is subject to change. Ref: UK/LAS/WP/09.02 Logical (UK) Limited 110 Buckingham Avenue Slough Berkshire SL1 4PF United Kingdom Tel: (+44) Fax: (+44) For a full list of our UK office locations please visit our website at
2006 www.insight.com/uk
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