Chambers: Survival in the Internet Age
Historically, chambers of commerce have provided a great deal of value to their members with a focus on networking and education. In return, chamber members have been willing to pay membership fees to maintain chamber organizations. However, over the last 10 years, I have seen perception of value for chamber services provided by chambers shift radically. Much in the same it way it has reshaped many markets, the internet is placing a great deal of pressure on the core value statements for chamber organizations. This white paper describes the challenges, and also strategies which chamber organizations can use to not only survive but thrive in the internet age.
The Chamber History:
Since the formation of the Chamber of Commerce organizations, the mission has been to promote the advancement of the business community in two ways. First, the chamber organizations have represented the views of the business community to the political leadership at various levels of government (city, county, state, federal). Second, the chamber organizations have provided various mechanisms for networking (local, regional, international) to facilitate commerce.
In the past, from a paying member’s point-of-view, the chamber membership fee provided value in a number of concrete ways:
1. Credibility: A membership with the Chamber showed some level of credibility for the business. The association with the chamber was displayed through physical decals and plaques within the place of business as well as through relationships/partnerships formed with other businesses. Consumers, through their interactions with businesses, had come to recognize a correlation between credibility and the memberships with the Chamber.
2. Education: Traditionally, a small business had difficulty in staying current on a broad range of topics ranging from international markets to tax policy. Thus, chambers provided co-marketing and facilitation functions to help small businesses.
3. Networking and Exposure: A distinctive function the Chambers have provided is the ability to network with other local businesses. Through various events designed to bring the community of businesses together, members have had the opportunity to gain exposure and awareness. These networking events were physical in context, requiring face-to-face interactions between business owners.
The Internet Shift
In the last thirty years, the internet has transformed many industries. In fact, the changes involved are so profound that leading edge venture capital firms have term the shift as a “re-imagining of everything.” A fuller presentation of their thoughts can be found at: http://www.businessinsider.com/mary-meeker-2012-internet-trends-year-end-update-2012-12.
Figure one: shift in consumer behavior
From the point-of-view of chambers, three critical shifts driven by the internet are impacting their core value statement:
- As shown in figure one, the consumer is increasingly shifting research to the internet (google, bing, etc). With these changes, chamber business directories are of decreasing value over time.
- The consumer increasingly uses crowd based reputation sites as a mechanism for building enough credibility for making a buying decision (yelp, google, angie’s list). Without this shift in behavior, the chamber seal is of decreasing value relative to reputation building.
- In terms of business-to-business networking, while there is no direct solution, Internet search (google, bing, etc) and sites such as linkedin are significantly hollowing out the Chamber value statement because members can reach out to other businesses easily outside the chamber structure.
The end result of these trends is that chamber members are increasingly finding the value statement around their member fees to be cloudy.
Call to Action:
As noted earlier, the internet has had a disruptive effect on many industries. Those who do not react to the change often do not survive the shift. Alternatively, those who embrace the change put themselves on a path to success. Below, we show case studies of two iconic brands: Polaroid and Yellow Pages. One embraced the change and the other is out of business.
Polaroid was the leader in instant photography and will always be remembered for their signature cameras. Though a global brand in the photography industry, the company lost its way when they neglected to understand the importance of peripheral vision on their core value statement. When digital photography technology started to raise its head in the 1980s, Polaroid was said to be too stuck in its core technology to consider a change that would completely change their most popular product. As a result, the company failed to position themselves as a player in the digital photography industry and quickly lost ground developing the technology. As the popularity of digital photography grew into what we know today, Polaroid was unable to compete and forced to file for Chapter 11.
*IBS Case Development Center, Co-Authored by Vandana Singh & Amy Sonpal, 2007
Case: The Yellow Pages: Move to YP.com
We can all remember a day when you needed to find a mechanic and you pulled out the 5lbs book and started to flip through it. It was not surprising that technology would take its toll on the Yellow Pages business model, the book was heavy, hard to use, and out-of-date the second it hit your doorstep. But AT&T adapted the Yellow Pages and created YP.com. They recognized the mission of the Yellow Pages was not to supply a physical directory but to help consumers find the information they needed to connect with local businesses and neighbors. Moving the historically print directory online has proven successful for AT&T. And they took it even further with their mobile application that allows users to search the directory from their mobile phone or tablet.
“As a standalone company, YP had $3.3 billion in revenues in 2011. Approximately 30%, or nearly $1 billion, of YP's 2011 revenues derived from its digital and mobile platforms, making YP the ninth-largest digital media company of any type in the U.S.” – YP News, YP Launches Today as North America's Leading Local Search, Media and Advertising Company
Reimagining the Chamber Of Commerce
While the core value statements of the chamber are certainly under stress from the internet, the disruptive changes caused by the internet are impacting chambers members with equal ferocity. Specifically, small businesses face a world where they must engage with the internet to be successful, but managing this process is exceedingly difficult. The details of the challenges for small business providers are detailed in the following white paper (http://ocoos.com/ocoos/public/SmallServiceProvidersAndTheDigitalAge.pdf).
How can chambers reimagine themselves and become valuable to their members ? Simply speaking, they must become the key enabler for their customers in reinventing small business. Critical pieces of this solution are:
- Embrace of platforms such as Ocoos (www.ocoos.com), Linkedin(www.linkedin.com), Intuit, etc.. which form the foundations of a small business solution.
- Train Chamber Staff to be certified in the core platforms and offer deeper training vehicles to the small business community.
- With the embrace of the platforms and training, chambers can build a high quality valuable relationship with their members.
Leading edge chambers have already embarked on this journey. A couple of examples of such a journey is from Lakeland( http://www.lakelandchamber.com/businessresource/reinventing_small_business.aspx) and Marion County (http://www.ocalacc.com/).
Figure 2 shows the potential transformation of chambers to the internet age.
Figure two: Chamber Transformation