Customer value, Customer/member centricity, Member/Customer Engagement, Relationships

Service or Sales: A Costly Confusion

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What makes one heating and air-conditioning company great in the eyes of its customers and another a source of angry complaints?

 The service I use, routinely gets 4 and 5 star reviews from its customers.

In Yelp and other consumer review sites, the contrast between this company and its many, poorly rated competitors is startling.

You figure it is their customer service, great management, quality of its mechanics and other such reasonable factors. But I had a practical demonstration of what this means in practice last week, when their technician came to my house for my bi-annual HVAC checkup.

It turned out that our ancient heating system needed a part that was no longer being manufactured. Our technician spent more than an hour calling local manufacturers, dealers and warehouses until he located the part. I was relieved that our heater would live yet another year.

Apparently, this kind of service was the exception in the industry. The technician told me that all his previous employers paid a flat rate of $20 per visit. The only way to earn a decent living was through commissions from the sales of new parts or units. Sales, he explained, was the only performance criterion. Competency and customer satisfaction mattered very little. In fact, technicians were discouraged from spending too much time with customers and advising on repairs rather than encourage sales.

This transactional view of value is out of sync with what customers expect today. Successful companies realize that there is a greater value than pushing short-term sales, such as creating meaningful customer experiences, building long-term relationships, enabling communities, solving pressing problems or offering free content. By experienceing concrete value, the customer will be engaged and want to return to continue experiencing this value. The more mutual trust and understanding is established, the more strategic the relationship and targeted the solutions that emerge to benefit customers. Co-creation and two-way relationships, rather than transactions, increase the strategic value of relationships and their revenue potential.

Case in point. Unlike its competitors whose businesses are struggling, my heating and air conditioning company enjoys such stellar reputation and high retention that it no longer markets or advertises. At times, it must even turn away new customers.

While associations pride themselves for NOT being businesses, they unwittingly reflect this transactional model for member relationships, misreading the value of members by equating it with immediate sales.   In a presentation on the future of membership, Mark Golden, Executive Director at the National Society of Professional Engineers, points out that “all the metrics we use to measure membership performance are all wrong: Aggregate numbers, retention, membership growth, dues revenues…(as an absolute or as a percentage of total revenue). In short: sales metrics.”

It is not that association professionals do not care for their members or are not genuine about wanting to engage them. It is that over time relationships morphed into transactions and the human elements became subordinate to increasingly complex structures, governance systems and processes that distanced organizations from their members as living human beings. The rise of bureaucracy of course was not unique to associations. It became the standard for management in all institutions. While in theory valuing relationships, associations, like most established organizations, have no relationship capabilities or cultures. They are wired for transactions and efficiency rather than relationships and long-term value creation.

In a recent Association Now post, Joe Rominiecki (Oct 26, 2016) urges us to rethink assumptions about membership, including the goal of engaging all members.  He quotes from Sheri Jacobs’ wonderful book, the Art of Membership, to make the point that not all members want to be engaged. Some are satisfied receiving just a few benefits. It follows that it makes no sense to aim at engaging all your members.

I totally agree that not all members are equal and that you cannot have one path of development for everybody. I question, however,  the all too common definition of “engagement” as a prescriptive set of behaviors.

Engagement is not a product or the result of someone’s efforts to persuade. It is the result of a customer’s (not a provider’s) experience and perception of value. If something resonates with what truly matters to you—your ability to find work, meet your potential spouse or carve moments of peace in a hectic life style– you cannot help but engage.

Suppose your only interest in your association is its annual conference. You have no interest in its journals, certificates, volunteer leadership opportunities or activities. If the association tried to “engage you” in the benefits you rejected by persuading you of their merit, it would certainly reflect bad judgment and use of its resources. Except that this would be “sales” rather than engagement.

Suppose, however, that you have a passion for invention but have been unable to gain access to the right investors and write good proposals. And suppose your association has a new forum in which it gathers your dream investors and makes it possible for you to present your proposals to them. In fact it even provides you with technical support and advice for translating your ideas into great proposals. If all these things were to happen, chances are that you would not be insisting that your only interest in the association was its annual conference. Your perception of its value would change dramatically and its role in your life would shift from peripheral to central.  

An organization, of course, must be strategic and selective with regard to which member group or type of need to target. But it is by constantly uncovering new ways to innovate and create value that engages, rather than by pushing sales,  that organizations succeed today.  

  The common view of engagement as a one-way channel to sales transactions is not that different from the unpopular heating and air conditioning companies I learned about last week. 

The issue for me is not whether you are a business or non-profit but whether you see your member/customer as a mere user or your product and vehicle for sales or a partner in value creation. Do you measure customer value through short term revenue generation and direct sales or through the long-term relationship you build and the possibilities that will be uncovered over time? Is your goal to push sales or to make a difference to what most matters to members or customers?

You can’t have it both ways.

Using members as means for short-term revenue generation squanders the greater value of the relationship, ironically, also decreasing its economic value proportionately.