When more is less
January 19th, 2007I recently had a chat with the CEO of an industry association who showed a great understanding of brand value. Traditionally, membership organisations like this rely on subscription revenue to grow, so it would be logical to simply flog as many memberships as you can.
The problem is that the key value of this brand is that membership represents a higher quality, offering an automatic “seal of approval” to buyers. That is the core value of the membership and of the brand. So what did this guy do to grow?
Firstly, the organisation rejects about 30% of applications, strictly adhering to their standards.(Something the Universities here could take a look at) Secondly, he developed a range of services for members that enhances their professionalism as well as creating a separate and sustainable revenue stream, accounting for the lion share of revenue. Now only 40% of revenue comes from memberships, so he can afford to reject 30% of applications.
It takes hard work and persistence but what would have happened if he had simply lowered the admission standard? It would have killed the brand. Lazy CEO’s would have simply lowered the admission standard, increased the membership in year two and left year three…
How many customers do you reject to protect your brand?
