Obi Wan Kenobi might have uttered, ‘There’s a positive change in The Force’ these days in Newington. It’s no secret that the ARRL has been suffering from the transition of a career long Chief Officer (Dave Sumner) to a new CEO who can effectively lead the non-profit corporation, also a public charity, which declared a $20.5M net asset figure to the IRS for 2017. The failed interim CEO, Mr. Gallagher, tried to execute an executive style which he perhaps found successful in the financial world but a flop at a non-profit like the ARRL. His retirement after only a brief period in Newington was perhaps best for all involved. I wish him well as a fellow amateur radio operator. He just proved to not be a good fit as CEO of the League.
You’re Our Only Hope!
The realization by President Roderick and the changing Board of Directors that this executive style could not bring success to this transition in executive leadership at the headquarters in Newington CT resulted in the hiring of Howard Michel WB2ITX. He had been at the similar, but the far larger IEEE organization, which operates sort of like the ARRL for engineers and other technologists in the United States. It’s net asset declaration to the IRS in 2017, by comparison, was $415M! But he has shown in the brief time he’s been CEO in Newington that he understands the difference between management and executives in the non-profit world. More to come in a future blog post on that distinction.
At the recent ARRL Board Meeting, Mr. Michel was able to get approval for what seems to me to be a fundamental change in the organizational structure and, hopefully, the culture which drives the some 100 employees of the American Radio Relay League. While I may write more about these fundamental changes that the new CEO has put into action on February 11, 2019, here is synopsis from the League’s website:
‘The Board received the report of ARRL CEO Howard Michel, WB2ITX, who outlined plans to reorganize and refocus the activities at ARRL Headquarters. Michel said providing better value to membership is a top priority, and he sees value creation and value delivery as key components to long-term membership retention and growth.’
Better value to membership? Now, that is a mouthful to us members! The operational details of that value proposition will be what members, including former and potential members, will consider and remember. That is, what is the ARRL actually going to do in order for members to see a greater value in their annual dues? They could be convinced with a quick strategic example: offering free shipping & handling on purchases from the ARRL Store to current League members!
Let’s look at this small but important thing of free shipping and handling. As I discussed with Dan Romanchik KB6NU on the ICQ Podcast this week, he and I both are Amazon Prime members. Our British colleague, Martin Rothwell M0SGL, smiled at this recognition during our recording as he works for Amazon across the Pond. Dan and I both stated that we tend to not buy books and related items directly from the ARRL website because of the stiff shipping and handling fees. Instead, Amazon Prime members get free shipping on most items which Dan and I take advantage of with these purchases. So Amazon realizes the retailer’s profit margin from the sale of ARRL products through the Amazon.com website. The League, however, only reaps the wholesaler’s margin.
To be fair, the League does give a few Members Only discounts of, say, $3, off of a $27 book—if the League publishes the book. (Note that the League also resells RSGB publications so they probably have those price arrangements locked in without much margin to discount.) And, there are periodic discounts sent out to members via postcard or email advertisements. I’ve found that they only amount to relieving me of the net shipping charge. I cannot use any other additional discounts such as the annual Birthday Discount that I get during my birthday month. As a certified ARRL Instructor, I get a discount on some purchases but I cannot use any of these other discounts. All of this complexity adds up to the member just using Amazon Prime or just not buying a book or other product on impulse. The moment of excitement passes.
I’m a retired Editor-in-Chief for Springer Media, a very large scientific publisher based in The Netherlands. I ordered all the textbooks in my college bookstore as a student worker back in the early 1970s. In between, I launched two peer-reviewed scientific journals, edited others, and negotiated publication relationships with several major publishers. I’ve been an editorial consultant to a dozen or more textbook publishing houses. So I come at this from decades of experience in the publishing industry, not just the consumer side of publishing. So let’s look at typical publisher (wholesaler) and book reseller (retailer) relationships. Many hams may not realize the pricing structures in place worldwide on book publishing.
But the ARRL will ‘lose’ money by offering free shipping and handling to members, right? I can certainly hear Marketing Manager Bob Interbitzen NQ1R saying that upon hearing this idea. Perhaps not. They may actually make more money. Amazon is a major bookseller (an understatement if there ever was one). The typical wholesale discount to a retail book seller is 55%. Large retailers might get 60% while the independents buying them for 40% of the stated retail price. Thus, the ARRL sells Amazon and perhaps others these books at a greatly reduced wholesale price but not when the point-of-sale is through the ARRL Store on their website.
“The typical wholesale discount to a retail book seller is 55%.”
I do not know what the ARRL’s financial terms with Amazon or other retailers is. But it is highly unlikely that it differs substantially from these industry norms. After all, amateur radio operators are hardly a significant market for Amazon to break with their acquisition norms for retailing. I wish it were different but it’s not. The actual financial relationship that the League has with it’s retailer on books and other items could be something very, very different. I want to acknowledge that. But, if it is, that’s another issue. Moreover, shouldn’t that information be made known to the membership?
So, if the ARRL could do something to stimulate more direct sales to members from their website, they would recoup the wholesale discount to Amazon on each of those sales, right? What could drive more members away from Amazon (especially Prime members) and back to the League’s Store?
If CEO Howard Michel’s intention is to increase value to League members, giving them free shipping and handling because they are members would do that. And, it would do that in a tangible and visible way to the entire membership of some 150,000 out of the 750,000 or so license holders in the U.S. Trading out the typical 55% wholesale discount to Amazon (and other retailers) to increase the value of membership would actually result in a higher profit margin to the League, all things being equal. Mr. Michel would indeed qualify as the Obi Wan Kenobi of the ARRL should he bring this about. The League should, at least, run honest numbers on this change to see what the financial impact might be on current revenue.
“The business of increasing the value of membership in the American Radio Relay League: that would be a good deal. And a good deal for both members and the League itself!”
But it would also be like a lightning strike to ensure that the membership sees and believes that this reorganization of the ARRL Headquarters means business. The business of increasing the value of membership in the American Radio Relay League: that would be a good deal. And a good deal for both members and the League itself!
Will they do this? I don’t know. But your telling CEO Michel and your Division Director that it’s what you want would help get it on their minds. And having the CEO and Board of Directors listening to you hams, whether you’re a current member or not, is definitely a good deal!