Customers at the Core

By Jay Younger and Wes Trochlil
Originally published in Association Management, December 2004

Do you have a company that you love to do business with? What about a favorite sales representative or account manager? Have you been frequenting the same barbershop for decades? If you answered yes to any of these questions, then you likely know organizations and individuals that in one way or another have put you, the customer, at the center of their operations. Such customer-centric organizations succeed by making sure that each time you arrive on the scene, your needs are always met and your expectations exceeded.

Now think about your members and customers. Do they love doing business with your association? One might think that associations are naturally customer-centric organizations by virtue of their dues-paying members. However, few associations fully embrace a customer-or member-centric business philosophy.

So what is a customer-centric association? We asked participants in our session at this year’s ASAE Annual Meeting and Exposition in Minneapolis the same question. The audience told us that a customer-centric association

• gives customers what they want and anticipates their needs;
• provides customer value as its primary motivation;
• sees staff as customer service agents;
• makes the buying experience the best it can be;
• operates with a budget driven by member needs; and
• personalizes all communication.

Certainly, all of these responses are appropriate definitions of an organization that treats its customers with kid gloves. However, a clearer vision of how to create the customer-centric association takes shape when you look at the subtle connections that exist within these responses.

The interplay of five elements

Customer-centric organizations realize that building the capacity to consistently exceed expectations depends on the interplay of various elements. Sadly, many associations focus on a few components to the exclusion of others. For example, consider the many associations that assume that building a customer-friendly environment requires only an investment in customer relationship management software. Indeed, as we posit later, technology is an important part of a customer-centric association, and customer relationship management software is a tremendously helpful tool. However, technology alone does not a customer-centric association make. Creating a customer-centric association requires investment in five key elements:

1. Culture. A well-documented, shared understanding among all staff that defines how the association interacts with the customer.

2. Metrics. Tracking, measuring, and responding to data that defines success through the eyes of the customer.

3. Knowledge. Embracing an association-wide discipline of gathering and responding to information about the challenges, needs, and expectations of customers.

4. Technology. Building, managing, and refining the tools necessary to deliver the right information to the right people at the right time.

5. Segmentation. Developing effective profiles of different customer groups to improve service and garner higher return on marketing investments.

As we have witnessed time and again, associations that fail to see the interplay of these five elements and invest in their development across time often wind up feeling as if they are rowing a boat with one oar–and ultimately travel in circles. Following are examples of how organizations are getting it right by focusing on these five core elements.

Culture

The role of culture in the customer-centric association cannot be overstated: Creating passionate customer loyalty is nearly impossible without the appropriate atmosphere or work environment. While culture is difficult to express explicitly, it is something that your members and customers sense from the first time they interact with your organization. In essence, it can be viewed as the personality of the organization.

One of the best examples of a culture that captures and keeps customers is that of The Ritz-Carlton hotel group, which began developing its Gold Standards, a written set of guidelines for employee behavior as it relates to its customers, in 1983. Key elements of the Gold Standards include the following:

1. The Ritz-Carlton credo and motto. The credo consists of three statements:

• The Ritz-Carlton Hotel is a place where genuine care and comfort of our guests is our highest mission.
• We pledge to provide the finest personal service and facilities for our guests, who will always enjoy a warm, relaxed, yet refined ambiance.
• The Ritz-Carlton experience enlivens the senses, instills well being, and fulfills even the unexpressed wishes and needs of our guests.

The credo is coupled with the hotel’s motto: “We are ladies and gentlemen serving ladies and gentlemen.”

2. Three steps of service. The three expected actions of all Ritz-Carlton staff are as follows:

• Give a warm and sincere greeting. Use the guest’s name, if and when possible.
• Anticipate and comply with guest needs.
• Bid a fond farewell. Give guests a warm good-bye and use their names, if and when possible.

3. The basics. The Ritz-Carlton’s “20 Basics” document includes a more definitive list of behavioral guidelines that provide employees with clear advice. For example, number 15 states: “Be an ambassador of your hotel in and outside of the workplace. Always talk positively. Communicate any concerns to the appropriate person.”

4. The employee promise. The Ritz-Carlton considers its staff the most important resource in providing service to its guests. Promises it makes to its staff include the following:

• By applying the principles of trust, honesty, respect, integrity, and commitment, we nurture and maximize talent to the benefit of each individual and the company.
• The Ritz-Carlton fosters a work environment where diversity is valued, quality of life is enhanced, individual aspirations are fulfilled, and The Ritz-Carlton mystique is strengthened.

Each element of the Gold Standards guides employees in their interactions with customers. Simple, easily understood guidelines such as these help The Ritz-Carlton teach employees exactly how they should behave in and respond to every customer interaction.

The Ritz-Carlton ensures that employees understand and implement the Gold Standards and all of its other customer-centric tools through its training program, in which a typical employee receives more than 120 hours of customer service training in his or her first year alone. “We take pride in carrying a Ritz-Carlton credo card on our person whenever we are on duty,” says Bonnie Crail, director of public relations, The Ritz-Carlton, Lake Las Vegas, Henderson, Nevada. “And we discuss one of our Gold Standards in depth each day during the daily line-up that every employee participates in, every day, in every hotel department, at every Ritz-Carlton property in the world.”

How customer-centric is The Ritz-Carlton’s culture? Since its inception in 1988, only 58 companies have been awarded the Malcolm Baldrige National Quality Award, which recognizes outstanding achievements in performance and excellence in many areas, including customer service. In 1999, Ritz-Carlton won this award for the second time.

Metrics
Associations are crazy about metrics. Most of us are quite comfortable with monitoring member retention rates, analyzing the cost of adding new members, calculating lifetime value, comparing operating expense to that of other organizations, and employing a host of other success measurements. But how many of our traditional metrics are focused on assessing the quality of the members’ interaction with the association and the level of satisfaction with products, services, or other offerings?

In truth, most association success measurements are focused on tracking the organization’s financial progress rather than how well the organization is delivering what members want, need, and expect from the group.

Sheri L. Jacobs, CAE, director, membership and marketing at the Association Forum of Chicagoland, admits that her association recently had an epiphany of sorts about customer-centric measurements. She says, “We recognized that we needed a new way of looking at how well our products and services were meeting the needs of our members.”

This realization, and an ongoing audit of programs and services, led to a new way of defining success for the forum and a goal stating that each year at least 10 percent of the organization’s operating budget should be derived from a source of revenue that did not exist the year before. This metric has an added bonus: It constantly reinforces the importance of adding new sources of nondues income. However, the philosophy that led to the metric is also critically important.

According to Jacobs, the forum arrived at the goal after committing to building revenue streams that flow directly from member needs. Therefore, existing programs that do not add value to membership are being trimmed to allow the association to develop new initiatives that hold more promise to deliver value to the membership. “We think that if we stay focused on providing value and develop an effective business model, the income will be a natural by-product of our work,” she says.

The forum has begun experimenting with a variety of new program options to help achieve its goal, and early results are encouraging. For example, Jacobs says that the association is planning to create an opportunity for members to license its popular Forum Rewards loyalty program. All told, setting the goal has had a significant impact on the way the group thinks about success. As Jacobs says, “We know it’s no longer good enough to just keep doing what we’ve been doing. The customer expects more from us, and it is our responsibility to deliver.”

Knowledge

Establishing metrics that help track how well we deliver what customers want and need implies that we actually know what these desires are. However, statistics from ASAE’s Policies and Procedures in Association Management, Volume 2 (2001, ASAE) paint a rather disturbing picture of this capability. Sixty percent of associations surveyed for the report indicated that they conduct no formal market research. The paradox is troubling: How can associations become more customer-centric if they have no way of accurately determining exactly what the customers want?

Associations that invest in building effective market research disciplines are bucking this trend. Sarah Slater, director of the American Speech-Language-Hearing Association, Rockville, Maryland, explains that listening to what customers are saying is now a central component of ASHA’s culture. “We thrive on the data-driven decision around here,” she says. “Research has really helped us understand our marketplace and align the organization to meet the needs of our constituents.”

ASHA, which conducts more than 70 individual research initiatives on an annual basis, employs a well-honed approach to gathering data and places a tremendous amount of importance on the customer’s role in research. Consequently, ASHA has taken a number of steps to improve the customer’s experience, including an “Omnibus Survey” that streamlines data collection, as well as providing a consistent focus for acting on the data it collects. These practices have led to a more effective research program, more actionable data, and a better experience for the customer. “Members now expect us to be asking for their feedback and understand the value in providing it,” says Slater.

Technology

Most discussions about creating an organization that is focused on the customer soon turn to technology. Recently, many associations have begun exploring the capabilities of their association management systems (AMS) to better deliver customized service to members. For example, the National Association of College and University Business Officers, Washington, D.C., now allows members to view and update large portions of their database records. In addition to updating standard demographics information (name, address, etc.), members can now refresh their job responsibilities and view all of their past interactions with NACUBO, including meeting attendance, committee participation, and other interactions.

This move has saved the association countless hours of staff time, explains Michael Connor, senior manager of member services. “We used to mail out a paper survey once per year to all of our members, scan the responses, and upload them into our database.” However, by integrating the survey into its AMS and deploying it online, NACUBO saves more than $9,000 annually on postage and allows members to update their records year-round. As Connor says, “Members appreciate being able to update their record on their [own] timetable.”

Extensible markup language (XML) and Web services are other examples of technologies that streamline the member experience. These tools, which enable the seamless exchange of data among disparate databases, help associations integrate third-party sources of data with the primary AMS. For example, associations that outsource registration for their annual meetings can now use XML and Web services to provide the outsourcing company with access to data from the association’s AMS (e.g., for verification of member prices) and receive information back from the outsourcing company (e.g., record of registration), all in real time. To the customer, the process is seamless. And for the association, managing third-party services is easier, less costly, and less time intensive.

Segmentation

Most people identify segmentation with reducing marketing costs. The theory goes that by applying a laser focus to association marketing, we can avoid the shotgun approach and spend less to market our programs, products, and services. However, the benefits of effective segmentation extend far past this traditional definition, well into the experience you create for customers.

For example, because NACUBO uses its AMS to track and update members’ job responsibilities, it is able to segment its population of 25,000 member representatives into more than 220 different job responsibilities. Within these segments, the association can focus communication and marketing efforts to those individuals who will be most interested in the information, based on their job responsibilities.

Recently, NACUBO’s leadership realized that a change in regulations announced by the U.S. Department of Labor would be of major importance to the segment of its membership with job responsibilities related to human resources, so the association quickly produced a Web-based educational program on the issue. Using its job-responsibilities data, NACUBO promoted the program to 2,000 of its member representatives. As a result of its efforts, NACUBO ultimately delivered the program to 400 institutions. Using an estimate of five attendees per site, NACUBO estimates that roughly 2,000 of its customers participated. All of this occurred–from conception to marketing to presentation–in a little less than six weeks.

Clearly, NACUBO addressed a key need of its members with human resources oversight responsibilities. However, the association also served its 23,000 other members by not including them in a promotion that would have been meaningless to them, proving that in some cases you can be a more customer-centric association by saying nothing at all.