Digital maturity

The cost of being behind the curve

Laurent Goffin, managing partner, Belly & Brain and Colm Clarke, partner, consultancy, Exempla consider the impact, financial and otherwise, for associations who are stuck in analogue…

After almost 18 months of crisis, the rough forecast for the association business model during the remainder of 2021 and 2022 can probably be summarised as ‘volatile’.

 With Europe gradually emerging from lockdown, we have hit peak ‘absence makes the heart grow fonder’. We remember how good it is to meet in person but have forgotten about the bit before and after – airport security, cramped plane travel, jetlag, and those occasions when the travel lasts longer than the meeting. How much will the efficiency gain or energy boost of meeting in person compensate for the impact this has on our ‘everything is a just click away’ schedules? Will there always be two audiences now - the “on-liners” and the “on-siters”? Are both too valuable to ignore?

Anecdotal evidence suggests a strong interest in meeting in-person, and this may well combine with a backlash against Zoom fatigue and a rejection of online events, but while in-person meetings are returning, international gatherings are still being postponed. Eventually we should settle into a more stable mix of on and off-line activity driven by customer choice, not travel restrictions.

All this uncertainty has removed any lingering doubt that associations must get their digital act together. Let us explore what the impact is of being behind the curve digitally – looking at both operational perspectives and business model/revenue generation perspectives.

Late adopters

The easiest issue to spot is where associations are later than they should be in adopting certain digital channels, setting up new digital touchpoints, developing digital experience or digital services.

For example: not having a member only extranet to manage their membership, access to collaborative environments, documents, etc. or relying on offline events or print magazines.

Here, digital usually offers a cost reduction business case through productivity improvement, and a lack of offerings suggests an organisation that is not moving with the times.

Digital literacy

Alternatively, associations can be very advanced in having a broad range of digital channels and experience set up but lacking ability to steer them effectively.

Those associations are generally early adopters of new technology. They can be ahead of the curve in adopting solutions but behind in steering those new solutions - it is not because you buy a Ferrari that you can drive it well!

"Advanced solutions only provide value if you have the knowledge and in-house resources to use them to their potential."

This leads to inefficiency and overspending, or an inability to reach results and translate investments and spending into value.

Choosing the right solutions is hard if you are driven to get the latest thing on offer. The risk is either cheap solutions which will not reach objectives, or oversized solutions at a higher cost than expected. Advanced solutions only provide value if you have the knowledge and in-house resources to use them to their potential.

It is easy to visualise digital impact at the unveiling of a new tool or graphically appealing virtual event but the actual ROI calculation we refer to with ‘digital literacy’ means being able to analyse return by consolidating all digital metrics and transforming them into key performance indicators. This is how to be sure investment leads to value creation. For example – what is your true acquisition cost per contact, per reader, or per event participant (including staff time involved, not just the tools deployed)? Testing and evaluating the efficacy of your strategy needs structure and measurement to provide usable insights.

These issues may be buried in association budgets and inefficient processes – much harder to spot than slow adoption but potentially even more damaging in budget terms.

Product portfolio

Switching perspectives to the value equation - developing digital services or digital experiences can maintain or add value to membership packages or reduce the cost to operate them (cost of customer service).

Offering digital channels, self-servicing and on-demand can also open organisations to new business models or consumption models. Members can tailor or personalise their experience without creating additional staff burden. Associations can think of how digital addresses member desires on payment frequency, mixing subscription-based vs action-based models and offering more options for communications or interaction.

"You cannot just sell the same offering in a different way. You have to take a fresh look at your products—and be willing to "burn the boats,” so to speak.”
Dan Cohen, Adobe

Adobe provides a success story from the software world. Starting in 2013 they moved from selling one-off licences (often in a physical package) to a monthly subscription model and have since trebled the company’s revenue. Dan Cohen, in his role of vice president of business operations and strategy, stated: “For any company moving to a subscription model, you need to deliver ongoing value to the customer and create new sources of value that didn’t exist with the old model. You cannot just sell the same offering in a different way. You have to take a fresh look at your products—and be willing to "burn the boats,” so to speak.”

Thinking profitability is key when considering the scalability of such digital services - this is often referred to as the Zero Marginal Cost tendency. Why do you think GAFA (Google, Amazon, Facebook, Apple) giants have some of the highest revenue per employee ratio?

Associations locked into offering their services in the same sales “packages” as pre-digital (e.g. one size fits all membership) risk missing opportunities – principally diversifying revenue streams and by alienating new customers who are used to a 'try before you buy' offer from digital service providers.

Content and community  

Association value is commonly captured in a combination of content and community. Digital tools provide greater reach, accessibility, and connectivity than ever – however, to generate value, those tools are completely dependent on humans feeding good information and ideas into them.

Here lies the great association advantage in having an existing community of content creators amongst members and other stakeholders.

"This transitional time is the moment to ensure that your online content and community is the place for on-demand information and peer-to-peer dialogue."

Moreover, most of those content creators are not charging you for their contributions. Compare that to the $17bn Netflix is expected to invest in content production in 2021 – 68 per cent of their $25bn revenue.

The other side of the coin is that much of this content is not owned or exclusively contracted by the association – there is nothing stopping someone (perhaps a for-profit business) from creating another, better, more engaging platform where that community migrates to.

This transitional time is the moment to ensure that your online content and community is the place for on-demand information and peer-to-peer dialogue. This will also open the potential for additional revenue through effective online sponsorship packages – meaning those based on engaging content and gathering insights, not pointless 'virtual booths'.

The risk equation

Like every strategic decision, we must weigh investment against opportunity and speed to market against accuracy. In digital, playing too safe is slow and that creates risk by falling behind the curve, leaving you exposed when a crisis occurs, or a new form of competition emerges.

At the same time, rushing to throw money at the latest and greatest tool creates a never-ending cycle of expenditure and training (users and customers), and does not address the fundamental issue - the core product and core value remains your content and community. Digital facilitates routes to market and more convenient delivery, but it does not create value by itself!

Achieving digital maturity can be summarised in three main points:

  • Having the required technical competence to assess, select and implement tools.
  • Continuously creating products and services adapted to your audience needs and optimised for your delivery tools.
  • Being set-up to create, adapt, organise, and deliver in a sufficiently agile way to support the pace of the digital environment.

This last point should not be underestimated in the association space – as it touches directly on governance and effective volunteer leader/staff collaboration.

In launching or driving forward those discussions, it is essential that associations do not give themselves false comfort by saying “we can’t…” if the truth is “we don’t really want to (change)…”

Laurent Goffin, managing partner, Belly & Brain and Colm Clarke, partner, consultancy, Exempla consider the impact, financial and otherwise, for associations who are stuck in analogue…

After almost 18 months of crisis, the rough forecast for the association business model during the remainder of 2021 and 2022 can probably be summarised as ‘volatile’.

 With Europe gradually emerging from lockdown, we have hit peak ‘absence makes the heart grow fonder’. We remember how good it is to meet in person but have forgotten about the bit before and after – airport security, cramped plane travel, jetlag, and those occasions when the travel lasts longer than the meeting. How much will the efficiency gain or energy boost of meeting in person compensate for the impact this has on our ‘everything is a just click away’ schedules? Will there always be two audiences now - the “on-liners” and the “on-siters”? Are both too valuable to ignore?

Anecdotal evidence suggests a strong interest in meeting in-person, and this may well combine with a backlash against Zoom fatigue and a rejection of online events, but while in-person meetings are returning, international gatherings are still being postponed. Eventually we should settle into a more stable mix of on and off-line activity driven by customer choice, not travel restrictions.

All this uncertainty has removed any lingering doubt that associations must get their digital act together. Let us explore what the impact is of being behind the curve digitally – looking at both operational perspectives and business model/revenue generation perspectives.

Late adopters

The easiest issue to spot is where associations are later than they should be in adopting certain digital channels, setting up new digital touchpoints, developing digital experience or digital services.

For example: not having a member only extranet to manage their membership, access to collaborative environments, documents, etc. or relying on offline events or print magazines.

Here, digital usually offers a cost reduction business case through productivity improvement, and a lack of offerings suggests an organisation that is not moving with the times.

Digital literacy

Alternatively, associations can be very advanced in having a broad range of digital channels and experience set up but lacking ability to steer them effectively.

Those associations are generally early adopters of new technology. They can be ahead of the curve in adopting solutions but behind in steering those new solutions - it is not because you buy a Ferrari that you can drive it well!

"Advanced solutions only provide value if you have the knowledge and in-house resources to use them to their potential."

This leads to inefficiency and overspending, or an inability to reach results and translate investments and spending into value.

Choosing the right solutions is hard if you are driven to get the latest thing on offer. The risk is either cheap solutions which will not reach objectives, or oversized solutions at a higher cost than expected. Advanced solutions only provide value if you have the knowledge and in-house resources to use them to their potential.

It is easy to visualise digital impact at the unveiling of a new tool or graphically appealing virtual event but the actual ROI calculation we refer to with ‘digital literacy’ means being able to analyse return by consolidating all digital metrics and transforming them into key performance indicators. This is how to be sure investment leads to value creation. For example – what is your true acquisition cost per contact, per reader, or per event participant (including staff time involved, not just the tools deployed)? Testing and evaluating the efficacy of your strategy needs structure and measurement to provide usable insights.

These issues may be buried in association budgets and inefficient processes – much harder to spot than slow adoption but potentially even more damaging in budget terms.

Product portfolio

Switching perspectives to the value equation - developing digital services or digital experiences can maintain or add value to membership packages or reduce the cost to operate them (cost of customer service).

Offering digital channels, self-servicing and on-demand can also open organisations to new business models or consumption models. Members can tailor or personalise their experience without creating additional staff burden. Associations can think of how digital addresses member desires on payment frequency, mixing subscription-based vs action-based models and offering more options for communications or interaction.

"You cannot just sell the same offering in a different way. You have to take a fresh look at your products—and be willing to "burn the boats,” so to speak.”
Dan Cohen, Adobe

Adobe provides a success story from the software world. Starting in 2013 they moved from selling one-off licences (often in a physical package) to a monthly subscription model and have since trebled the company’s revenue. Dan Cohen, in his role of vice president of business operations and strategy, stated: “For any company moving to a subscription model, you need to deliver ongoing value to the customer and create new sources of value that didn’t exist with the old model. You cannot just sell the same offering in a different way. You have to take a fresh look at your products—and be willing to "burn the boats,” so to speak.”

Thinking profitability is key when considering the scalability of such digital services - this is often referred to as the Zero Marginal Cost tendency. Why do you think GAFA (Google, Amazon, Facebook, Apple) giants have some of the highest revenue per employee ratio?

Associations locked into offering their services in the same sales “packages” as pre-digital (e.g. one size fits all membership) risk missing opportunities – principally diversifying revenue streams and by alienating new customers who are used to a 'try before you buy' offer from digital service providers.

Content and community  

Association value is commonly captured in a combination of content and community. Digital tools provide greater reach, accessibility, and connectivity than ever – however, to generate value, those tools are completely dependent on humans feeding good information and ideas into them.

Here lies the great association advantage in having an existing community of content creators amongst members and other stakeholders.

"This transitional time is the moment to ensure that your online content and community is the place for on-demand information and peer-to-peer dialogue."

Moreover, most of those content creators are not charging you for their contributions. Compare that to the $17bn Netflix is expected to invest in content production in 2021 – 68 per cent of their $25bn revenue.

The other side of the coin is that much of this content is not owned or exclusively contracted by the association – there is nothing stopping someone (perhaps a for-profit business) from creating another, better, more engaging platform where that community migrates to.

This transitional time is the moment to ensure that your online content and community is the place for on-demand information and peer-to-peer dialogue. This will also open the potential for additional revenue through effective online sponsorship packages – meaning those based on engaging content and gathering insights, not pointless 'virtual booths'.

The risk equation

Like every strategic decision, we must weigh investment against opportunity and speed to market against accuracy. In digital, playing too safe is slow and that creates risk by falling behind the curve, leaving you exposed when a crisis occurs, or a new form of competition emerges.

At the same time, rushing to throw money at the latest and greatest tool creates a never-ending cycle of expenditure and training (users and customers), and does not address the fundamental issue - the core product and core value remains your content and community. Digital facilitates routes to market and more convenient delivery, but it does not create value by itself!

Achieving digital maturity can be summarised in three main points:

  • Having the required technical competence to assess, select and implement tools.
  • Continuously creating products and services adapted to your audience needs and optimised for your delivery tools.
  • Being set-up to create, adapt, organise, and deliver in a sufficiently agile way to support the pace of the digital environment.

This last point should not be underestimated in the association space – as it touches directly on governance and effective volunteer leader/staff collaboration.

In launching or driving forward those discussions, it is essential that associations do not give themselves false comfort by saying “we can’t…” if the truth is “we don’t really want to (change)…”