Why did Caterpillar tractor decide to "unbundle" the price of their tractors? Answers: To illustrate the "value added" of product characteristics and services.
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These days, almost all associations ask their members to rate their offerings. The preponderance of low-cost, electronic survey platforms has made it easy—some might argue too easy—for associations to survey their members about just about everything they do.
You need a firm grasp on the economic environment in your field or industry before considering any changes. In some fields, getting employers to fund events is much easier than membership dues. We’ve seen this often with government employees. This situation helps make the case for bundling dues with events, as opposed to the other way around.
What are the barriers in your field when it comes to full participation? Is travel now difficult? Do junior staffers who need professional development have to request permission from superiors? Is membership considered less important than accreditation or a designation? Knowing where the true obstacles lie will allow you to plan for them and deliver value in spite of them..
What happens to your meeting budget when you bundle registration with dues? What happens to your dues levels when you take away or add new benefits? How do you account for these “swaps” internally and ensure that your overall impact is positive or neutral (depending on your intention)? How will you account for expenses if dues and program receipts are combined? What types of configurations are possible to meet your revenue goals and appeal to your marketplace?.
In addition, many newspapers aspire to shed their scale-intensive printing facilities and rely instead on specialized printers to produce the paper each day. As they move away from product innovation and infrastructure management, the newspapers are able to concentrate on the customer relationship portion of the business—helping to connect readers and advertisers. Papers like the Los Angeles Times, for example, are creating special sections geared to particular regions or interests, which enable advertisers to better target specific sets of readers. The unbundling is making the newspaper business much less capital intensive, allowing more resources to be devoted to building customer relationships.
Because of the need to achieve economies of scope, customer relationship businesses naturally seek to offer a customer as many products and services as possible. It is often in their interests to create highly customized offerings to maximize sales. Their economic imperatives lead to an intently service-oriented culture. When a customer calls, people in these businesses seek to respond to the customer’s needs above all else. They spend a lot of time interacting with customers, and they develop a sophisticated feel for customers’ requirements and preferences, even at the individual level.
Profitability hinges on achieving economies of scope—extending the relationship for as long as possible and generating as much revenue as possible from it. Only by gaining a large share of a customer’s wallet and retaining that share over time can a company earn enough to offset the big up-front investment.
1. The customer relationship business works to find customers and build relationships with them. This is a very service-oriented business, and economies of scope are crucial.
A powerful economic transformation has been taking place for some time, but its full effects are just now being realized. In the 1970s, the open architecture of the Apple II made it possible for scores of small companies to enter the market specializing in specific hardware and software components. Vertically integrated behemoths like IBM and Digital, with their vast scale advantages and huge installed bases, suddenly became vulnerable. The advantages of generalist companies—size, reputation, and integration—began to fade. And the new advantages—creativity, speed, and flexibility—belonged to the specialists.
The advantages of generalist companies—size, reputation, and integration— began to fade. And the new advantages—creativity, speed, and flexibility —belonged to the specialists.
For many companies, streamlining core processes has yielded impressive gains, saving substantial amounts of money and time, and providing customers with more valuable products and services.