Member-Driven Group Purchasing – a Better Approach to Affinity Programs

Affinity programs are a common member benefit that trade and professional associations provide to their members. The idea behind these programs is a good one – help members leverage their combined purchasing power to save money while also providing a non-dues revenue stream back to the association

While the design of affinity programs differ from association-to-association, many are modeled after what I call the “All You Can Eat Buffet.” In the Buffet Model, members typically have access to a large number of mid-quality purchasing programs. The focus is typically on quantity (offering as many programs as possible) and brand recognition (think Hertz, Marriott and Staples).

The Buffet Model works well in associations whose members are a) diverse in the types of business they run, and b) are small and have little purchasing leverage already. Good examples include chambers of commerce and associations of small businesses.

While the Buffet Model can work well for these types of associations, it does not work as well for trade associations whose members are larger and operate within a common industry. There are two primary reasons why.

Reason #1: Use of Non-Strategic Vendors
The Buffet Model tends to focus on very generic types of expenses that apply to as many types of organizations as possible. Examples include discounts on car rentals, hotels and office supplies. While these are certainly common expense categories, they may not mean much to members who don’t spend much money on those types of expenses. As a result, they provide little benefit to members and very little non-dues revenue to the association.

Reason #2: Questionable Discounts
Buffet-style programs also offer only the most basic of discounts. While these may be appealing to very small businesses, they likely won’t to more sophisticated buyers. In fact, organizations who already do some level of negotiation with their existing vendors may find that their current pricing is much better than the pricing offered through these generic affinity programs. In these cases, the affinity program can actually be a problem for the association if enough members find their pricing is better than what they can get through the affinity program.

The good news is that any association can overcome these challenges by taking a more strategic and member-driven approach to their group purchasing program. Here’s how.

Use Data as their Driver

Don’t guess what members really want – just ask them. The first step to creating a member-driven purchasing program is to research the buying needs of members. Understand what they buy and how much they spend to target the types of programs that can make sense economically for them and for you.

Also understand how they buy. Educating members with a centralized purchasing environment will be very different than educating them in a decentralized purchasing environment. Take time to really understand their operations so you can craft a marketing campaign that drives participation.

Create Programs that Address Members Most Important Needs

Avoid generic programs with basic discounts that provide little value. Use the data from your research to focus on the goods and services that are unique and material to your members’ industry.

For example, when we designed group purchasing programs for the Association of Zoos and Aquariums (AZA), we knew that one of the unique components to their operations was that they collectively cared for more than 800,000 animals. So we made sure to include programs that supported animal health and safety. These included purchasing programs for blood diagnostic equipment, medical supplies and nutritionals.

We also focused on other areas that impacted animal health, like paints and coatings the the animals may come into contact with. The programs we created were unique to the members of AZA, and addressed an important and material category of spend.

Make it Easy for Members to Participate

While an association’s members may be similar in what they do, they are all different in how they buy. Some will want to simply begin buying from the program immediately, while others may require a price analysis and proposal before making a change.

Having a central support team that can answer questions from members and guide them through the sign-up process is critical to success. It is the only way to ensure they get the appropriate attention and support they need to evaluate your purchasing programs and participate as quickly and easily as possible.

Taking a more strategic and member-driven approach to developing your association’s affinity program will not only increase participation by your members, but will aid in member-retention and produce a higher level of non-dues revenue to your association.
Tom Rogers
Author:

Job Title: CEO
Organization: Vendor Centric

Tom is the founder and CEO of Vendor Centric, he has been a trusted advisor to nonprofit organizations for 30 years, with a focus on helping them align the right people, processes and systems to mitigate third-party risk and drive more value from third-party contracts and relationships.

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