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The LAB: Innovating a Membership Club with S.I.T. (April 2012)

How do you attract new customers while retaining current ones? For many categories, you attract new customers by showing high satisfaction with current customers. Put the current customer first and you will increase your appeal to new customers.

The challenge is when you have to change your product to meet the different demands of new customers at the risk of alienating existing customers. For example, imagine you owned a prestigious, members-only dinner club with a strong following of older, traditional patrons. They are fiercely loyal and attached to the various details such as the glassware and the color of the table cloths. Any changes are seen with suspicion. You want to bring in new members, but need to change the club to appeal to younger potential members. Too much change will drive away current members.

For this month’s LAB, we will apply Systematic Inventive Thinking to address this apparent conundrum.

To begin, we frame the problem as a contradiction:

As the club becomes more trendy, the appeal to younger members increases.
As the club becomes more trendy, the appeal to older members decreases.

The key is to innovate in a way that breaks the contradiction. Don’t settle for just a compromise solution. A compromise is a re-design of the club with just enough trendy features and just enough old features to appeal to both groups. Seeking a compromise is certainly possible, but it is more creative if you can break the contradiction entirely.

Consider these three techniques to do that: Division, Task Unification, and Attribute Dependency.

The Division Technique is taking a product’s component and dividing it one of three ways: physically, functionally, or by preserving (where each smaller unit retains the characteristics of the larger whole). To use the technique, we start with a component list. In this example, we will use the components of the club itself. We could also start with a specific process within the club such as dinner service or new member orientation if we wanted to.

Bar
Restaurant
Dance floor
Rooms for private dinners
Food service
Bar service
Kudos of being a member
The decor
The club’s name
Current Members
New Members
Staff
Suppliers
Pricing

We take each component and imagine dividing it out of the club and re-arranging it back somewhere else (within the club). The trick here is to rearrange in both space and time. For example, take ‘private dinner rooms’ and imagine “dividing” them out by time slots. How would it work? Older members use the rooms at certain times where there is a more traditional feel, while new members use them with the more trendy ambiance. Each component could be similarly divided. This is a simple “accommodation through separation.” A more exotic example is to use the “preserving” type of Division. Take the component, “Kudos of being a member.” Imagine dividing” this into smaller “kudos.” How would it work? Perhaps the club creates smaller categories of memberships, each with their own particular theme and value proposition. Some memberships do this in a subtle way by promoting memberships duration – “Member Since 1963” – for example.

Next, I would apply the Task Unification Technique. To use it, we imagine each component taking on an additional task or job. In this example, we create a phrase like this: “Component X has the additional job of making new members feel more trendy.” This approach purposely creates some very odd combinations that could lead to new insights about the club’s business model. For example, “The Current Members have the additional job of making New Members feel trendy.” Some clubs do this already by requiring old members to be sponsors of new members. Now, the club takes it further by instilling a sense of pride and duty in the older members to take responsibility for attracting new members.

Finally, I would apply the Attribute Dependency Technique. It uses variables of the product or service instead of components:

Age of members
Types of drinks
Types of events
Types of music
Types of food
Quality of service
Loyalty of member
Frequency of use
Degree of prestige
Other memberships
Price
Time

We make combinations of attributes to create phrases like: “As variable X changes, so does variable Y.” We are looking for interesting new dependencies that could help break the contradiction and lead to a club offering that appeals to both old and new members. For example:

As time changes, service changes
As price changes, prestige changes
As age changes, music changes
As other memberships change, quality changes
As food changes, loyalty changes
As loyalty changes, price changes
As price changes, time changes
As age of members changes, quality changes

In each case, we imagine this having some yet-to-be-defined benefit, and we test the statement against our contradiction to look for ways to break it.

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