Associations that Increase Efficiency

There is no better way to reach a focused market of like- minded customers than through an association. Association marketing is so much more cost-effective for reaching likely buyers than the shotgun approach (e.g., buying an ad during the Super Bowl). Association marketing, as coined by Qualitative Marketing, is the process of working with an association to reach new customers. Incorporated as an important part of a complete marketing campaign, association marketing efforts have proven to achieve more than 22 percent of sales with three percent of a client's launch budget.

The cycle for new product introductions is getting shorter and shorter, driven by the technology that makes it possible and the competition that makes it necessary. High-tech companies must spend an increasingly larger percentage of their resources to get new products to market faster and get them accepted more quickly. Additionally, they need to be more efficient in their selling and demand-creation processes. Association marketing can be an important part of facilitating this efficiency.

The many components required to increase demand for a new technology include:

  • Visibility: Do people know about the technology and what it can do for them?
  • Value: Will the technology meet their needs? Does the perceived value outweigh the cost?
  • Credibility: Are people confident that the company can deliver what is needed and continue to support it?
  • Cost/Complexity: Is the customer buying model adequately addressed to deal with the complexity of the technology?1
  • Partnerships: Are the partnerships in place that enable customers to select and implement the technology?

One way to gain efficiency is to focus on a specific type of market. Effective war strategy to concentrate forces uses this same principle: target and conquer the most accessible or the weakest territory, establish a position of dominance and then move on to the next.
This principle applies to marketing as well as IT to increase use of a new technology within the company. First, identify the market where the greatest opportunity exists and competition is the weakest, establish dominance and then move to the next market.

Associations provide a powerful vehicle for focusing on a niche market or a group of people with specific technology needs. There isn't a sizable market that exists where there isn't some form of association for that market. Sizeable is defined as more than 1,000 people or more than 100 companies. If an association can't be found, then the market probably is not defined correctly.

Associations are integral to the market ecosystem to build acceptance for your products and services. Associations touch every fabric of American life, influencing individuals, corporations and governments. In Democracy In America, Volume 2, Alexis de Toqueville, an early American author, said, "Wherever, at the head of some new undertaking, you see the government in France, or a man of rank in England, in the United States you will be sure to find an association."

Following are some statistics highlighting the influence of associations:

  • There are more than 130,000 associations in the United States.
  • Seven out of ten adult Americans belong to an association. Five of those adult Americans belong to three or more associations.2
  • Members look to associations for assistance with technology buying decisions.

Associations provide many vehicles to increase visibility, demonstrate the value the technology provides and answer questions customers have about the technology ­ questions that usually can't be answered through traditional marketing vehicles. Everything you can think of in marketing, from seminars to advertising and direct mail, can be set up in conjunction with an association. Associations provide visibility and credibility through their existing relationships with your target customers. Associations provide a level of comfort by association (pun intended) with a respected and trusted advisor. This is the level of credibility that is needed to facilitate its adoption.
You can reduce the cost of entering a new market by leveraging the resources of an association and double user retention because of their credibility. Top Producer, a small Canadian company that targets the real estate industry, illustrates how associations provide market ecosystem partnerships that win the war. Top Producer has developed solid relationships with the delivery- side partners of its market ecosystem. The company was an early entrant in the market in the early nineties, when Qualitative Marketing started working with them to identify, recruit and train new partners.

Top Producer unseated its competitors who, at the time, had solid market share and a dominant position. While many companies, including some with deeper pockets and arguably better technology, have tried to compete with Top Producer since, no one has been able to unseat the company's now dominant position. For example, in 1995, an aggressive competitor entered the market. It developed a more sophisticated product with more advanced features not available in Top Producer. The competitor developed

its own in-house seminar series to educate the market, hired a dynamic speaker, filled the rooms and enjoyed good close rates. It provided the high-touch education needed to address the customer buying model and create demand.

However, this competitor's efforts proved to be neither sustainable nor scalable ­ because it did not build the partnerships (market ecosystem) with and through associations like Top Producer did. While the competitor spent more money creating demand than Top Producer, it did not get the same level of sales, visibility or customer mind share in the market.

Top Producer achieved its leadership position by developing relationships with instructors and trainers who influenced the market's technology buying decisions. These people offered presales seminars through relevant associations to create demand. Many of them also sold Top Producer and installed it. They taught the real estate agents how to use it. Based on these relationships, the national association built Top Producer's product into its certification courses. Even with a better product, the competitor could not unseat Top Producer. Top Producer, on the other hand, through its association partnerships, did unseat its entrenched competition fairly quickly.

Associations are crucial to building and supporting the market ecosystem, whether you are focused on data warehousing, business intelligence or e-business. Next month's column will be about how to work with associations when the category is not yet defined.

1 The Customer Buying Model is the ten-step process customers go through to select, buy and use technology.
2 Washington Business Journal, September 26, 1997.

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