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by Olivia Holcombe, CAE, KCSAE Director

I recently read an article that stated the Groupon model is unsustainable.* Written in 2011, it predicted that in spite of the excitement and investment in this business space, Groupon and other group-buying apps would not lead to sustainable growth for the participants.

The point of the article is that the Groupon model is basically unsustainable because some people would never go to a restaurant (or use a service) without a Groupon – these are the price-sensitive customers – and the company is giving a discount to others who take advantage of the offer even though they would visit regardless of the discount. Either way, the company offering the Groupon loses, as the Groupon – in most instances – doesn’t build repeat business. Or, they are discounting where it isn’t called for.

I’ve been in the association business a long time. And, when having membership discussions, invariably someone on the committee will come up with the brilliant “new” idea to offer a price-incentive for joining. At the risk of sounding like the naysayers and proverbial “we’ve tried it before” crowd, let’s go back to the Groupon model.

1) Offering a discount to committed members and those who would automatically renew anyway is certainly a nice gesture. Necessary? No way. A good idea? I don’t think so.
2) Offering a discount to interested prospects – or, as I like to call them “those who haven’t joined YET” – may get them in the door, but if they are “price sensitive,” when the renewal comes at regular price, the likelihood of retaining them is slim. And, if a like discount isn’t offered to current members, it can result in disappointment with your loyal, long-term members.

Offering value and benefits they “can’t live without” is the best way to lure and retain members. What does a member get that a prospect doesn’t? Access to invaluable industry information, tips and tricks, and other “must haves” for industry insiders is much better than a discount.

In the words of Sir Henry Royce, "The quality is remembered long after the price is forgotten." Sell your association based on the quality you provide – not as the low-price alternative.

And, while we’re on the subject of offering quality, your KCSAE is offering another great education program in June, “Strategic Decision-Making: Leadership Models for a Modern Multigenerational Workforce.” Plan to attend on June 6, 4:00 p.m., at Top Golf.

One thing I love about Association management is that I learn something new every day – even after decades in the business. If your membership management experiences have been different, I’d like to hear about them.

* “How Sustainable is Groupon’s Business Model?” Interview with David Reibstein, Wharton Marketing Professor, Knowledge@Wharton, May 25, 2011.

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