November 30, 2005

Giving It Away

Posted by Kevin | Print This Article

At the ASAE conference last summer, speaker Scott McKain made the point that members want “reciprocal loyalty” but often what they get is “endless prospecting.” In other words, many associations spend most of their effort deluging prospective members (and, if they aren’t careful with their lists, current members) with special offers and discount deals on dues.

We act like cellphone companies (”Act now and save XX!” “Special 14-month plan if you join by December 31″ etc.) by expending all our energy on new enrollments — and, tell me, who *loves* their cellphone service provider? I’m guilty as well as I’ve also done, on rare occasions, discount first-year dues offers, and cringe every time I do.

Now, Scott’s point was that we should refocus most of our efforts on retention by rewarding those who stay with us (not just monetarily) and not those who are new. I agree, but hesitate slightly, because honestly don’t we need to prospect as well?

Via Nick Senzee, I discovered this post from Garr Reynolds, where he argues that discounting is bad, but “giving it away” for free can be valuable when done right. He’s talking about professional service providers, but raises an interesting question for organizations as well:

“My thinking is that discounting my services, say, to an investment firm, may indeed cheapen my brand. So I don’t do that. However, I do not think doing some (sometimes more) work 100% free of charge cheapens what you have to offer, depending on the circumstance. Discounts cheapen, but free is free — and some of the best things in life are free. (They don’t say, ‘Some of the best things in life are…discounted 50%’). Selling yourself (too) ‘cheap’ is different from ‘giving it away.’ For example, Starbucks is not going to discount their drinks, but maybe they’ll give free hot chocolates on Christmas Eve evening in certain stores for tired, procrastinating shoppers.”

However, as one commenter to Reynolds’ post wrote, “Free stuff seems to be attractive to a market only when it’s perceived to be good enough to pay for.” If you have an association brand and service package that is worth a lot of money, then there may be value in a highly targeted, controlled and tracked free offer to get people over that initial joining hump.

(The harder part is giving something away for free without that brand, buzz or track record. It’s like the dot-coms in the 90s — “we’ll give it away now and figure out how to make money later.” You see something similar happening with Web 2.0 startups now, a primary difference being that dot-coms aimed for IPOs, which require profits to happen sooner or later, and Web 2.0 folks seem more interested in acquisition. I can’t think of one Web 2.0 startup that started out giving it away that has successfully monetized their product, though please let me know if I’m wrong.)

Imagine that you have that valuable brand, and did what Scott McKain talked about and created an aggressive package of valuable services, and focused pretty much all your attention on the care and nurturing of existing members so that they continue to renew. In that case, wouldn’t it make financial sense to give that first year away for free to never-before-members? What if we were to throw “member acquisition” out the window altogether?

Just a few thoughts as I lay here in bed.

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