Are they members or customers?

I quit the Naval & Military Club when they decided that members should have a minimum spend at the Club each quarter, or simply be billed it anyway. This completely brainless revenue-raising scheme accelerated the downfall of the Club, which went into liquidation in 2009.

Since that time though I had been thinking about how membership based organisations worked. I felt that they were somehow different from normal business in how they offered value, but a business partner of mine, ex-McKinsey said, “Members are just customers by another name”. “Not true” I thought, but I didn’t get a chance to really explore the concept until last week when the Churchill Club ran a panel session entitled Member Value Management.

The panel consisted of representatives of a sporting club with 70,00 members, a not-for-profit environment group with 20,000 members and a for profit arts organisation with 7,000 members. Note: this is the number of fee-paying members, not “Facebook friends”.

For me, the biggest takeaway from the evening was that is all too easy to confuse the revenue model of “fee paying member” with the way your organisation engages with its customers. Members are passionate and/or involved, regardless of what revenue model you use.

• Consider Foxtel. It has a huge subscriber base that pays monthly fees, but they would never call their customers a membership base. Their customers aren’t passionate about the Foxtel brand, nor do they want to engage with other subscribers. Foxtel is not a membership-based organisation, but it charges membership fees.

• Consider Holden Racing team. It has a huge supporter base, most of whom act like customers, purchasing branded products and hospitality packages. This is a membership-based organisation, but doesn’t charge membership fees.

So why do I pass this on? I realised that if your customers aren’t engaging with you and passionate about what you do, they are just customers, regardless of the label you use. It saddens me to say that this is probably the case with the Churchill Club, as our members just aren’t overly passionate about the club, nor want to get involved in putting on events. On the bright side though, it’s the next opportunity for us that I want to address.

In regards to Naval & Military Club – they had passionate and engaged members, in fact 4,000 of them in the 1960’s. But unfortunately, the Club failed to change with the times and continue to provide value and preferred ways to engage. By the time the club closed in 2009 they had turned their 4,000 members into 1,100 customers, who weren’t passionate or engaged, and didn’t want to wear a major cost increase.

Brendan Lewis is a serial technology entrepreneur having founded: Ideas Lighting, Carradale Media, Edion, Verve IT, The Churchill Club and Flinders Pacific. He has set up businesses for others in Romania, Indonesia, Hong Kong and Vietnam and is the sole Australian representative of the City of London for Foreign Direct Investment. Qualified in IT and Accounting, he has also spent time running an Advertising agency and as a Cavalry Officer with the Australian Army Reserve.