Do your web sales make money?

Does your Association Software support sales and if so does it pay?

Marketing Manager:  Just think!  We may sell 500 extra units if we just create the right bundling, pricing, or discount structure!  We increase revenue by $5,000!

Software Developer:  Cost of the software modifications, testing, documentation, implementation will only be $10,000!

After 30 plus years in the business of designing association software, I can’t even count the many times I have heard the above conversation only to have the organization move forward with the software modification.  I’ve also watched software become so complex in trying to figure out all the marketing, pricing, and discounting rules that an association just can’t live without, that the performance of that software becomes terrible and itself discourages sales.  In essence, the order entry system needs to look at every product in the order and compare every combination of those products and quantities to determine what the price should be.

What’s more, I’ve worked with organizations where one department is requesting a process that will determine the mix of requested breakout sessions that will result in the highest revenue (cost to the member) while another part of the same organization will insist that the system always calculate the lowest price all within the same order.

You may think I’m making this up but as a “retired” software developer, I can tell you that some of us try to talk people out of these things and ultimately make money implementing them.  Each time a new rule is added to the old set, the cost of yet another rule escalates both in required testing and client frustration as they try to understand how all the rules ultimately relate.

Add one more thing….  If you look at inexpensive commercial packages and services to sell products, the main things preventing their use are all of these very custom rules.  If the rules were simpler, you could deal with much of your order entry through Amazon or other services and thus outsource a lot of the internal pain.  Simplify the system and save money.  You may save much more than you think you may gain.

What I’m advocating here is a real cost-benefit analysis that includes all the costs of these schemes and not just the perceived increase in revenue.

Think about a couple of issues:

  • You are selling T-Shirts or other branded items.  Do you make much money on them?  Do you want people to wear them as a fashion statement or as free advertising for your organization?  Maybe giving them away for free would ultimately create more revenue for your organization.
  • You want to make membership valuable and not give away your proprietary knowledge for free.  Many inexpensive software packages can restrict sales of members-only products simply by only allowing purchase from members-only pages.  There doesn’t need to be separate pricing rules at all.
  • You sell products to members at a cheaper price than to non-members.  Perhaps you can even do this type of thing without different pricing by offering something else to members.   Rewards programs, coupons for future purchases, or even downright cash refunds to members may be a cheaper way to go.  “Rewards points” like “airline miles” work partially because a member’s  organization may pay the original price while the individual takes personal benefit of the reward.

Many pricing schemes are already supported by standard software but real analysis needs to be done that goes beyond the perceived increase in revenue derived from the structure.  Bottom line is that your organization should benefit from the sale of products and not your software developer!

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