Maximize Customer/Member Value: Integrating the Two Sides of your Organization

How sure are you that the programs and benefits your organization designs are in sync with your members’ real needs? An article in MIT Sloan Review claims that most companies don’t maximize value to their most valuable customers. This is because, according to the authors, most companies suffer from a gap between supply and demand sides --operations and marketing/sales-- and, hence, among silos. This may ring a bell for many associations.

Now, let’s first clarify the end goal of bridging this gap. It is not as if these companies provide no value. It is that they don’t provide the maximum value they are capable of providing.  The key issue here is that it is not enough to provide value. It is to provide the kind of value that is more distinctive, relevant and effective than that of your competitors. To achieve this:

  1. All aspects of your organization must be integrated and work together toward one goal-- that of constantly creating maximum customer value
  2. Forget "one-size-fits-all" – generic products and services to as many customers/members as possible. Instead focus strategically on your most valuable customers. 

Secondly, let’s understand the gap the authors are talking about and how it might apply to associations. A company may have a great sales and marketing team, the article says, but “still deliver the wrong benefits to a customer.”  Sound familiar?  How many associations conduct strategic planning and product development in a vacuum and without the participation of those with direct contact with members? Conversely, how can those in charge of customer relationships—membership, marketing, chapters staff, etc.—increase retention and value without any control over the benefits and experiences that create this value?

Every minute of the day valuable information about customers pours in from numerous sources, for example, front line employees; marketing and membership departments; online community managers; chapters’ staff and chapters’ leaders.  Mind you, this not the same information you get from formal research methods. These are windows into the way people naturally live, talk to each other, articulate and solve problems every day—in a continuum of time rather than one frozen moment in it. How much of this information and experience filters through to strategic planning efforts, decisions about benefits, design of products and services and just the way the organization thinks about its customers?  

In the old product-driven model, functions and departments were independent of and often competitive with each other. In the customer-centric environment of the knowledge age, everything must collaborate seamlessly toward the shared objective of customer value. The article cites a case of integration and lists 5 stages for making it operational that would work well with membership organizations:

  1. Develop a relevant value focus.  This of course is the customer; but stating it is not enough. You need to define what this means and provide specific metrics for evaluating it.  The article argues that the balance scorecard is a “helpful method for translating an organization’s strategy into specific, quantifiable operational goals and metrics that span demand and supply activities in a way that ultimately improves financial performance.”

  2. Share knowledge across the organization

  3. Allocate resources strategically

  4. Learn to walk the talk

  5. Balance capacity and demand—around needs of customer

The last three points are especially critical for associations.

The article describes how one company changed “the way managers think about prioritizing and allocating resources.”  Joint business planning now involves collaboration with its top customers. Marketing/sales and operation/ supply chain teams are involved with planning. Decisions about resource allocation, priorities and product/benefit/service design are no longer determined on the basis of “strategic plans,” departmental priorities or habit.  Cross-functional teams are formed around key customers, while decisions on products and new opportunities are “jointly determined, balancing them with capacity constraints.” 

Can you imagine if, instead of asking membership to increase retention; education to produce relevant programs; and a board committee to set strategic priorities—all along separate tracks—you followed an integrative approach. You charged, for example, a team of membership, marketing, business development and product design employees to understand the causes of attrition of a member group and come up with solutions;  or identify and develop a market opportunity; or develop and engage a group of member companies, etc.

To really achieve integration across silos around shared goal of customer value, however, you have to “walk the talk” through specific measures, responsibilities and incentives. A key tool for alignment is the assignment of responsibilities, especially making individuals accountable not just for their own departments or functions but for the overall organizational performance.

Integration of all pieces of an organization--people, strategy, metrics and operations--is now necessary in order to compete in today's markets and meet the constantly changing needs of knowledge age consumers. 

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