Aptify's CEO Blog

At times, I like to intentionally oversimplify a complex issue in order to break it down into manageable pieces. Understanding why members choose not to renew is a complex problem that requires deep analysis. There are many reasons why a member may not renew and they vary considerably from one group to another. They also vary based on economic trends, organization type, demographic cycles, among other factors. While there is a high degree of complexity to this problem, there are some simple ways to break it down. One method is to categorize the reasons that people don’t renew into "good" and "bad" reasons or put otherwise, things that are hard to address and things that should be easy to fix.

Here is a great example: several studies have shown over the years that a significant percentage of non-renewals in individual member organizations because the member forgot to renew. A similar category of responses are those who say they intended to renew but the process was cumbersome and they gave up.

The flip side is those members who question the core value of their membership in an organization. Those who are wondering if the content, products and services being delivered are relevant, up-to-date, and still aligned with their professional goals. These issues are often challenging to address. In contrast, when you think about helping a member renew without them having to remember or making it easy to do so – those are situations that should never result in a dropped member.

So, what do we do about it? It is critical that business processes focus on the customer’s ease of use. I am a member of a number of organizations where I plan to continue membership as far out as I can forecast. However, in several cases, the organizations require me to manually renew every year. I would much rather give them my credit card to store(securely) and have them notify me once a year that they are about to renew me, let me opt out, but if I take no action, renew.

Alternatively if I didn’t wish to auto-renew, why not make it easy on the member to renew on the web? Most web sites require a member to login. The problem is this – if I’m a highly engaged member that uses a web site all the time, I probably saved my credentials or know them. BUT, if I’m one of these members on the fringe that doesn’t go to the site much – I probably don’t even know if I have an account. Making me figure out my account login, etc, before I can renew creates a barrier. There are highly secure ways of allowing an individual to renew without forcing a login. The goal – make it easy for the member to renew.

Engage your members, provide relevant and timely content, ensure member value far outstrips dues, and then, make it EASY for them to stay members. I’ll be writing a couple of follow-up entries to this post that focus on what we consider to be best practices for auto-renewal and e-renewal. There are plenty of good ways to do these things, but remember – put the onus on the association, not the member, to stay a member! Stay tuned…

Full disclosure: Aptify provides a membership software solution. While our product has great functionality for handing all of these concepts there are many ways of implementing the ideas and achieving the business goals described here.

I recently visited Aptify’s India operations. I had an interesting experience one evening that I found relevant to the subject of Customer Relationship Management. A fundamental goal of CRM is to maximize relationship value for your customer. One of the principles is to know the customer and their preferences well so that you can personalize offerings.

During my trip, I was enjoying dinner one evening and one of the people I was with realized that he needed to get some medication that had run out. It was around 9:30 at night. He dialed a number on his cell phone. He didn’t say his name, address, or anything else, just spoke a couple of words. Within 5 minutes, there was a knock on his door and he had the medication in his hand. This was fascinating from my viewpoint on a couple of levels. This medicine delivery man probably has hundreds of customers, but he knew who had called and where to go and which medications to bring. Perhaps the guy has an advanced database system at his office, but I doubt it. The point here is that the customer experience (and loyalty) is a huge factor that makes this model effective. The vast supply of labor in a country such as India can help make such a service possible where it might be cost prohibitive elsewhere. But, I think we can still learn from this and keep in mind that improving customer value isn’t something that is driven entirely by automation. Technology can help scale a good concept and in some cases make it more effective. However, the value to the customer is created by knowing the customer well and finding a way to deliver what they want, when and where they need it.

I am fortunate to have studied at Cal Poly, San Luis Obispo. Cal Poly is a great university and one of its defining characteristics is a motto called “Learn by Doing”. The idea is to ensure that students are engaged in the real world trying out ideas. Everything that is done across all disciplines at the university in some way relates to this philosophy. I found it to be very compelling while studying, and I’ve since found Learn By Doing to be even more powerful in the business world.

One of the things I often hear from executives is that they feel they can’t change a process due to risk. It is true that changing processes always carries risk, and in some cases the risks are intolerable without a huge amount of due diligence. An often overlooked concept is the idea of rapid prototyping. In the software world, rapid prototyping is widely used. In many business processes, it is possible to carve out a small sample set that would be statistically relevant, and try out a new process in a limited way before rolling it out on a widespread basis. Many executives do not consider this option and focus purely on information they can gather on “Best Practices” from other organizations. There are certainly lessons to be learned from “Best Practices” and we  actively encourage our clients to adopt them in many cases. But, by definition if you only follow “Best Practices” you’ll end up squarely placed in the wide band of “Average”. If you want to really drive innovation, you have to try new things before they are adopted as “Best Practices” and I’ve found that the Cal Poly motto of Learn By Doing can be applied quite effectively to try out different ideas.

Since I run a company that provides enterprise software technology, the subject of this blog post may seem odd. Certainly, enterprise business applications have provided organizations with tremendous value over many years. While that is true, the question I am asking has more to do with the long term lifecycle of a business application. Markets and customer demands change over time. Therefore, businesses must change over time. Processes must change over time. People must change over time. And, to support all of this, business applications must change over time. I have heard countless times from executives that the reason they perform a process a certain way is because their technology forces them to do it in that manner. In some instances, a system imposed process can be a good thing, helping a company adopt best practices that are known to be assets in other organizations. In some cases, such system-mandated processes are neutral in their impact. But, in many cases, being locked into an antiquated method of doing business can be devastating.

The rate of change in business today is seemingly greater than at any point in time in recent memory. Businesses and consumers demand nearly instant adjustment to evolving preferences. The winners in many markets are those companies that are most nimble. Most business applications promote some efficiency gains when they are initially built. Over a period of time, however, they might be making a very bad process very efficient. Inflexible technology is often the culprit but the issue also has to do with organizational structure and culture. Many groups provide their internal IT departments with complete control over all aspects of their applications. In order to change any system process, IT has to bless the idea and then figure out a way to implement it. There are many other examples of similar challenges in other departments too. A typical result is that the business needs in support of innovation are often not met. There are many dimensions to this discussion and I’m not suggesting that IT should let business owners run rampant in changing anything they want at will. The point I’m making is that technology and business have to go hand in hand, both supporting rapid innovation and the idea of experiential learning.

The Agile methodology has become increasingly prevalent in software development. We believe that techniques from this method of software development can be effectively put to use in implementing software. In our experience, organizations that use a phased, iterative approach to implementing a complex system can see significant benefits. Organizations, like individuals, learn and mature over time. Recognizing that an organization (or individual) doesn’t know everything they possibly need to know on the front end of a project strengthens the argument for rapid iterations. Organizations can (and in many cases should) change rapidly. Agile approaches a complex problem by breaking it down into many small parts that can be incrementally solved and brought back into a cohesive picture. This approach allows changes to be more easily incorporated. It is, of course, still important to hold the line on unnecessary changes during any project. However, in some cases, business fundamentals shift in front of your eyes and there is no sense in pursuing a set of requirements that no longer solve the current business problem.

While there are many benefits to a rapid and iterative model, some organizations must have a large initial phase to get a base system in place. We agree that it is necessary to do this in many instances where the legacy system being replaced has roots in multiple operational areas. However, even within that first large phase, the idea of rapid iterative sub-phases can be applied. For example, each functional area can be broken out as a sub-phase that has its own iteration cycle, repeatedly testing integration with the larger project at key milestones.

In our particular case, we are able to take advantage of the Aptify Application Lifecycle Platform to help with these concepts, but the idea is not product or technology specific. For more on Agile, take a look a this Wikipedia article. Keep in mind that many of the concepts described in the article will have to be interpreted a bit differently in the context of implementation rather than development, but they largely apply.

I recently participated in an interview with Wes to discuss the state of the AMS software industry, current economic conditions, social networking and more. Click here to listen to the interview on Wes' blog site.

Whether or not to allow self-service on the web for refund and credit processing is a frequent debate. Proponents argue that self-service will enable a customer/member to more easily transact business with an organization, and build loyalty. Detractors often say that making it so easy to cancel something would encourage that behavior. In our experience, enabling self-service for "negative" transactions - situations where someone is returning a product, cancelling a membership or registration, etc - is a very positive thing. We have not seen objective evidence that would lead us to believe that making it easy to conduct such transactions has any impact on their frequency. Rather, when a cancellation or refund is going to be processed - it will likely happen one way or another. If it is made easy and seamless for the customer, the customer values it and is more likely to use that vendor in the future.

Great examples abound on the web including the web site for Southwest Airlines and Amazon.com. In each of these instances, the sites make it very easy to cancel existing transactions(when appropriate), and to apply prior credits to new transactions. All types of organizations, particularly member-based associations, should seriously consider enabling more of these transaction types on their web sites. This will improve processing efficiency and lower operating costs. Moreover, the improvement in customer service will have intangible, yet very meaningful value over the long run.

For years, organizations have attempted to integrate disparate data sources. While challenging in nature, this is achievable and many success stories have been written about groups that have moved to a consolidated information architecture. Once your data is in the same place and effectively organized, what's next?

Many groups end up treating their information systems simply as an electronic filing cabinet - destined to be a modern cousin to the old fashioned version. People input all sorts of data and pull reports, but the "system" doesn't automate a great deal of the process. In our opinion, the missing link is having the ability for the system to easily adapt to changes in business processes over time. Just as critical is the ability to automate those steps of a process that call out for automation. Our approach to this at Aptify is to provide an intuitive, graphical and business-oriented workflow modeling tool within our platform. This technology allows a business user to visualize a process and to change it over time, in many cases with limited or no IT support due to the graphical nature of the tools.

While the tools exist in our platform to automate a wide array of processes, it is important that an organization stay focused on leveraging these capabilities to align systems with their overarching strategy. Doing this right will result in the system enabling efficiency and rapid change, not simply storing and reporting on data.