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April 17, 2012

A Fine Point on Pricing

Behold the artisanally sharpened pencil.

For $15, cartoonist and artisanal pencil sharpener David Rees will select a pencil for you; sharpen it, lovingly; package it in a handsome protective tube; and send it to you along with a certificate of authenticity and a bag of the shavings.

Put-on? Capitalism at its finest? In an entertaining (and occasionally profane) interview with GQ, Rees insists that what he's doing is more the latter than the former:

It's a real thing! I've sharpened like, getting up on 475 [pencils]. I've made money doing this. It's not just like a silly--it's not like I built the website and then didn't build up the business. I did it, and I invested in my tools, and I learned a [remarkable amount] about pencils. ... I did my research. I learned a lot about pencils. So it's not a goof. It's a real thing.

Yes, its a real thing---further proof that, as they say, the appropriate price for something is what somebody is willing to pay for it. It reminds me of a familiar conversation in association circles about pricing: As a 2010 Associations Now feature pointed out, industry-specific goods and services can be sold at a premium because there's nowhere else to get them.

But are you sure that what you're selling is so special? I don't think any reader of this blog needs another lecture about how the internet has upended meetings, education, membership, and more, but Rees' enterprise has left me wondering how many associations have taken the uncomfortable but necessary step to study what those shifts have meant for their pricing. It may be that a lot of those comfortable revenue drivers are slowly but surely becoming the equivalent of artisanally sharpened pencils---nice enough for what they are, and the result of lots of careful effort to be sure, but easily found at a much lower cost elsewhere.

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March 26, 2010

Sponsorship innovation

I've been thinking about sponsorship opportunities, and the challenge of communicating value and ROI to sponsors. Sometimes, I'll be honest, I've sold sponsorship packages to people and not been completely convinced the entire investment was worth it, but they had a budget they wanted to spend and made their choice. However, I've also noticed that many of the corporate contacts and advertising agencies we work with are increasingly looking for ROI justification. What about these crazy ideas?

  • Offer money back as a refund if the sponsor is not satisfied with the results of the sponsorship?
  • Offer a full or partial refund if an event that is sponsored based on an event attendance level isn't met?
  • Offer a scaled sponsorship fee related to actual attendance (pay $2000 if attendance is between 50-100 people, etc.)?
  • Only bill for the sponsorship if it generates X amount of leads or sales for a company?
  • Create an actual ROI report for every sponsorship opportunity, based on some kind of standard, shared with each sponsor after the event?
  • Sell exclusive, multi-year sponsorships for certain events?
  • What about sharing profit margins and costs with sponsors, and working with them to help you find an appropriate balance for the association and for them?
  • What about letting sponsors share in major decisions related to the sponsorship (like food selection, meeting space, curriculum, etc), or letting them plan the specific sponsored event completely, with staff support and some controls?---note to all meeting planners, please don't kill me if your sales department asks you to do this
  • Providing/arranging for specific one-on-one time for sponsors and attendees for in-person events---attendees would love this, right?

I am coming at this from a relatively small association and these are half-baked ideas at best right now. I would love to hear feedback from all types and sizes. And I'd love to hear any innovative ideas related to sponsorship!

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January 21, 2010

Is micropricing the answer to your revenue woes?

In the last few days, some association bloggers have made comparisons between associations and the newspaper industry:

The discussion focuses on whether the association business model is doomed to the same fate as newspapers, and it arose from a broader discussion about the association model on ASAE & The Center's Executive Management listserver.

However, another theme that arose in the discussion is "micropricing," which I'll loosely define as "small fees for single-resource access." Think 99 cents per song on iTunes or $9.99 for a book on an Amazon Kindle. Some newspapers are poised to try this method with their online content. The discussion on micropricing in the comments to the SocialFish post has been good (you should go read it), and I want to pull that topic to the forefront here. I think micropricing could work for associations, and here's why:

For a long time, membership strategy for many associations has been to put access to resources behind the member wall, with just a small sample available for free to nonmembers in the hopes that it will entice them to pay to become members. The inherent challenge in this model is that the gap between free and a membership fee is often quite large. It's a big leap to ask people to make.

Associations need to provide some stepping stones in between. This is where I think micropricing comes in. In between the free resources and the all-access, big-fee membership, micropriced content and resources could generate additional revenue among nonmember customers.

But here's the important part: micropricing will only work for associations as one method along a continuum. If you threw away membership and free, it's doubtful that micropriced products would generate sustainable revenue. But, if you offer some resources for free, a lot of resources for small fees, and full access to all of your resources (and the community) via membership, you have a nice three-tiered system that's built to entice people to spend some money.

Think about the three groups of prospects you have:

Group 1: People who are only interested in the products you offer for free.
Group 2: People who pay for some of your products but not for a full membership.
Group 3: People who pay for membership.

With just "free" and "membership," you miss out on Group 2. With micropricing, you can do three things:

  • Generate revenue from Group 2.
  • Push some people in Group 1 toward Group 2.
  • Push some of the people in Group 2 toward Group 3.

These last two are important, because they're a lot easier to do than trying to get people to move all the way from Group 1 to Group 3.

So why aren't many associations trying this? My guess is this: while "free" equals zero dollars and "membership" equals $100 or $500 or $1,000, micropricing is messy. It means you have to do actual trial and error, actual research on your members' and customers' buying habits, and maybe even some actual math. And you have to do it with every individual product or service you offer. The concept of micropricing gets derailed fast when people start asking, "What price is right?" The leader in that situation has to make other people comfortable with, "We won't know for sure until we try."

So to answer the question in the title of the post: no and yes. While micropricing can't be the only method of generating revenue at associations, it could be one method, and it could be one that bridges the gap between the others. If you're familiar of any associations that are trying some form of micropricing, let us know in the comments.

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September 14, 2009

The Road Less Traveled

After traveling and visiting with some of our key prospects and current sponsors/customers, I will now share 2 things. 1) Recap where my travels have positioned us to-date 2) Predictions about the future that I’d like you to argue with me about.

Sales Recap

Here is where my travels and follow up phone calls have placed us:

1) Within 2 weeks, I expect to have secured a little less than 50% of our sponsorship revenue goal, and our next fiscal year hasn’t even begun yet. This allows us to move into a new year with confidence, and gives me more time to focus on the second 50%, which is always harder to sell.

2) We have already sold more booth space this year than at the same time last year, and have secured the majority of the major booths on the floor.

3) We have commitments from most major advertisers and are planning an increase in magazine advertising commitments for 2010 because of our value-added packaging (discounts on advertising/sponsor/exhibiting if they commit to all three early).

The Future

Here are some thoughts as we move into a new economy:

1) Corporations are much better at spending their money wisely than any other entity on the planet. The days where large sponsorships will be dropped with no ROI analysis may be over.

The traditional viewpoint from associations, that large corporations are cash cows, will continue to lose ground and become obsolete.

2) Kiss that Gold/Silver/Bronze model goodbye. Just like any other customers, companies want choices and options, and they want to be able to customize.

3) Partnerships for education. Many companies now have the same basic goal as associations; educate customers ... these corps want to do so in a way that makes them look good; how do we leverage and partner with them in education, without tainting it? How do we make sure that there are opportunities for all partners to participate without exclusion? How do we leverage their resources and knowledge to deliver better quality education?

4) Trade shows are still a strong business model, but I think companies will be smarter about which ones they attend moving forward, and may reduce some of these lavish booths we’ve seen in the last ten years.

5) Packaging is the key. We need to position our sales efforts to create value year-round for them. We should be a one-stop-shop for getting a product or service message out via email, web, print, and in-person. We should increase their sales or at the very least increase their opportunity to sell.

6) Sponsors need respect. I get really frustrated when a company supports a program (makes it possible even), and members barely even register that they exist. How do we educate our members and help them appreciate sponsors, and not ignore them or see them as just a way to get a free dinner?

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September 9, 2009

On the Road Part 2

-664 miles (one way)
-4 cheeseburgers
-3 snickers bars
-1 rains storm
-1 giant locust stuck to my leg
-1 construction delay
-Got lost in the middle-of-nowhere

Meeting 1: Meeting with one of our core exhibitor/sponsor companies, this company has been with the association basically from Day 1. Overall, the relationship is strong, but in the recent past, a program we were putting on created an unforeseen, non-favorable situation for this company. I know they aren’t happy with the circumstance, but I also know that had a great experience overall at our recent annual symposium.

Good Things: The meeting was very comfortable and relaxed, the relationship is in good shape, allowing us to move past the negative issue –addressing it directly, then moving on --- and maintaining the level of sponsorship and exhibiting for the next year.

Things Learned: I found out that this company is going through a fairly significant business-model change, and are investing in some equipment to diversify their business. Unsure of how this will apply to us/our industry, in some ways it is a divergence from the industry, but I know there must be a way to align their new model with some marketing concepts through us and our magazine.

Meeting 2: Hooked up with another staff member and drove to a meeting that is about 2 years in the making. This particular set of contacts used to be involved and supportive of the association, until several years ago some actions were taken by the association, and specifically a member of the board, that pushed this company away. The past 2 years have been a ‘toe in the water’ atmosphere as we feel each other out again; it was helpful that I was not in a leadership position during the time the incident occurred, and all involved parties on our side are not on the board/staff rosters anymore. Giving these folks plenty of space the last few years helped I think.

Things Learned: This contact, the decision-maker, is a very interesting and sharp entrepreneur. My sense is that he makes many decisions based on trust, and by us traveling many miles to go see him and his colleague, it has really helped re-establish a trust that was damaged years ago. We didn’t ask for the sale, we didn’t present any numbers, we just talked to them and set the next meeting...that’s the point of a sales meeting, to either close the deal, or set the next meeting, right?

Overall, these two meetings simply reinforce the philosophy that the basic foundation of strong, sustained sales is the quality of the relationship...not just in the good times, but in the bad times too.

Please feel free to share any experiences you’ve had where major sponsors/fundraising supporters were upset, and how you handled it!

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September 2, 2009

On the Road, Day 1

My road warrior tally so far is:

-490 miles
-2 cheeseburgers
-1 Snickers bar
-1 rain storm

Road Warriors:

-Me
-Sales Manager of our outsourced national publication

Meeting 1: Meeting with a very large, diverse company that has exhibited for years at our annual show, with a small 10x10 booth only

Good Things: Met the marketing manager for a key division. Got some great face time with 3 key contacts, and helped them learn more about our association, magazine, and programs.

Things Learned: We did not establish a clear goal for this meeting, and accordingly the meeting was not very focused. It was informational-based, I did not learn anything about how they feel about key industry issues. How could I have broken through the wall?

We rushed the pitch, as the feeling from the clients was reactive, they were waiting for us to provide information and guidance. This placed us in control, but we did not know where we wanted to steer the ship. Our sponsorship/advertising packages, which add savings between advertising with the magazine and sponsoring with the association, may really help us salvage.

Meeting 2: Meeting with a major sponsor from the last 2 years, who is cutting back due to budgets/cost issues.

Good Things: The meeting was very relaxed and friendly. The two individuals were comfortable with us, and we learned about a number of frustrations and challenges they face.

Things Learned: Learned that they are going back to their core business model, as over the past two years they have expanded outside their core business. Learned that a key influencer/decision-maker does not like print ads, and is more interested in driving targeted contacts to a specialized website. Learned that they have several large-dollar pieces of equipment that they want to sell.

Meeting 3:
Meeting with a major manufacturer. Unfortunately, 2 key decision-makers did not participate as planned, forcing us to deliver our message to an influencer. We are aware that this client is not happy with some charges from our trade show through the decorating company, leading them to significantly reduce booth space next year.

Things Learned: Working hard to resolve the decorator situation put us in a decent position, if not strong. However, very disappointing that decision-makers are not in attendance, having trouble figuring it out, don’t want to over-interpret it, but it is a rejection to some degree. After some probing questions, confirmed my suspicion that the key decision maker does not see the value in both a booth and sponsorship at the show. Having trouble finding my ground in terms of next steps with this client; I know that reducing their booth size will impact them ultimately more than us (although I regret the loss in revenue and need to create a plan to replace it), but not sure putting the full court press at this time would be adding value for them or the relationship long-term.

Please share your sales stories, successes and failures, here!

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August 31, 2009

Death of a Salesman?

Over the next two weeks, you will see 3 posts from me journaling a road trip I undertook this summer, meeting with some of the key exhibitor/sponsors of our association, and a few prospects whom we’ve identified as potential strategic partners. My goal is to share some real stories about the challenges and opportunities that I have encountered when trying to build strong, lasting partnerships with key supporters. I hope also to get feedback from many of you.

It is my firm belief that many associations do not focus on the sales process enough. I also believe that no matter what type or kind of association you work in, and really no matter what your position is, a focus on the principles that guide the sales process can help you in your work. These principles include:

- Friendly, open communication, always looking for added value
- Qualification--is it a good fit for you, and you for them?
- Identifying a need
- Proposing a solution
- Follow up and consensus-building
- Closing the "sale"
- Deliver what you promised, maintain and grow the relationship

I have to admit, it’s a little frustrating when I post blog entries and get no feedback; let's try and break the record of the last 3 months, I'd like to see if we can reach 15 replies, answering any of these questions:

- Why do I hear association professionals talk a lot about marketing, but less about sales?
- Who is the best salesperson you know, and why?
- How are fundraising and sales similar? How are they different?
- Why do some people hate being asked to 'sell' something to someone else? What first comes into your mind when you are asked to sell something?
- Why do we always focus on new ideas for non-dues revenue, and less on upselling or increasing the investment from current players?
- Can the sales process apply to volunteer recruitment?

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