What a pleasure it was last week to speak with Dr. Michael Tatonetti. If you have not had an opportunity to watch his conversation with us on 6 Degrees of Associations, check it out here. If you have a pulse right now, you likely have a pivot, pricing, innovation, value proposition challenge in front of you. As we have talked through reducing the reliance on cost cutting and increasing value from other parts of your organization outside of a cornerstone event, many organizations may still be struggling with how to make sense of pricing these things appropriately given that everyone is undergoing the same challenge.
Tatonetti shared some great insights on the show, as well as through multiple blogs and videos of his own and we wanted to take a minute to reiterate and break down some of his key points. As he said on the show, “you can’t just pick a price, you have to do a lot of research” and that research will potentially be more far reaching than you might expect.
Discounting: Ahh, the area of diminishing returns. Often seen as the easy go-to trigger to pull when the market gets competitive or lean, Tatonetti clearly demonstrates in this video how jumping in too quickly on discounting can surely lead to diminishing returns. You may be able to close sales more easily but, in the end, you create more work for yourself because of the volume you would need to make up to retain the same profitability. We would argue you may even incur additional costs further muddying the waters on profitability because to reach a wider audience to make up for volume will ultimately cost your organization something, be it man hours to pursue additional leads or an increase in marketing spend to broaden your appeal.
Innovation: We loved Tatonetti’s message in this blog about the word and concept of innovation. Blue sky thinking has become a buzz phrase and ideology in business, but it often doesn’t provide immediate results and can even stifle real creative disruption. Tatonetti argues that looking for small ways to innovate on the margins can often provide a return on the investment quicker and more impactfully then say creating an entirely new service offering. Look at what you are doing now, drill down on the minutiae of feedback from your members, and then take small actions to improve. Rather than reducing your expenses through death by a thousand paper cuts, maybe find ways to build upon your offerings with a thousand tiny improvements.
Pricing: As Tatonetti pointed out, pricing strategies require a ton of research. Many membership organizations may be weary of increasing pricing for fear that it will be too difficult to convince people to pay up. However, especially as it relates to the cornerstone events crisis most associations have been wading through, there is more than just what your members will bear to consider. You are not pulling off these events on your own, there are vendors to be paid, sunk costs to absorb, and new services to enlist to create the best experience. Engaging with a pricing professional can really help to uncover the hidden cost of the transitions your events are going through and to take a broader look across the association industry and beyond to put the right intelligence against the perceived obstacles to maintaining your price position or even pushing prices higher. Research is critical to making the right pricing decisions, luckily there are professionals out there that have the built-in resources and knowledge to help, allowing your team to focus on more important things such as innovating in the margins and proving out your organization’s value.
How have you seen these ideas play out in your organization? What analog examples can you look to in order to gain a fresh perspective on how you are pricing, better put, valuing your contribution to your members’ business. As the saying goes, hindsight is 2020 and in January this phrase will be right on target, take the time to learn from the events of this year to better prepare your organization for the next transition to come, it surely awaits all of just around the corner.