Rewarding Loyal Members

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Rewarding Loyal Members

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Rewarding is a neuroscientific principle that plays into human decision making. Rewards lead to positive memories and emotions associated with a particular relationship. As opposed to discounting,......

Rewarding is a neuroscientific principle that plays into human decision making. Rewards lead to positive memories and emotions associated with a particular relationship. As opposed to discounting, which has a
short lifespan of memory impact and can erode a brand’s value, creating a method for conditioning members for positive behaviors will generate long-term positive impressions and preserve the association brand’s value.

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  • 1. www.AffinityCenter.com @2013 Affinity Center International LLC, All Rights Reserved. WHITEPAPERRewarding Loyal Members Executive Summary If you had to create a profile of a loyal member in your association, what would he or she look like? Now, what would it take to get this member to increase his or her support and advocacy for your association to an even higher level? That’s the question this white paper attempts to answer, by introducing a philosophy of rewarding members for preferred behaviors. Rewarding is a neuroscientific principle that plays into human decision making. Rewards lead to positive memories and emotions associated with a particular relationship. As opposed to discounting, which has a short lifespan of memory impact and can erode a brand’s value, creating a method for conditioning members for positive behaviors will generate long-term positive impressions and preserve the association brand’s value. While there is a place for discounting in the membership value mix, it should not be the only member benefit. Answers to key questions give associations a clear understanding of what their members want and need from their membership. Armed with this information, associations can build a rewards program that members appreciate. One that increases member loyalty. Many styles of reward programs exist—points, miles, upfront VIP services, gamification—to reward any number of behaviors within the association or the members’ daily lives. Associations can select the style that works for their members and then choose rewards that are meaningful, memorable and easy to achieve. In addition to the increase in loyal members, one final benefit of a rewards program is the increased attention paid to association communication. Loyalty-program communications are more widely-read than other messages and therefore offer opportunities for other association messages to piggyback on them.
  • 2. Rewarding Loyal Members Do your association members understand the value of their membership? If you had to create a profile of a loyal member in your association, what would he or she look like? Is she a casual supporter or an association advocate? Does he have a positive emotional connection with the organization? Do her actions support loyalty through automatic renewals, purchases, engagement and involvement in programs and committees? Associations face numerous membership challenges, such as competition from multiple associations within a particular industry, access to free internet resources and diminishing funds for member participation. Therefore, loyal members are the lifeblood of an association. Loyal members can be counted on to financially support the association through dues and purchases as well as to champion its causes or importance to other potential members. All associations grapple with creating value and building loyal members. This long-term concern has become a tipping point in the industry, one between relevance and diminishing relationships. It’s time to turn the traditional member engagement model on its head and go from asking members to support the association through dues or time to rewarding them for their contributions, participation or even their presence. Through rewards, an association can build a larger group of loyal members. Member/Association Affinity Score While defining the “perfect member” it’s key to realize that not every member for every association looks or responds the same way. There are a few criteria to use to begin to define what this elusive creature might be, such as: • How long have they been members? • Do they pay dues on time? • Have there been lapses in membership? • Do they attend the yearly conference? • Are they active in local chapters? • Have they been on any committees? • Have they volunteered to help in anyway? • Have they attended any training or certification classes? • Have they bought from the association bookstore? • Have they looked for a job or posted a position on your website? • Have they done anything with the association’s social media? @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 2
  • 3. The answers to these questions indicate how active and involved a member is. These questions could change based on your organization and your type of members. For example, do they support industry lobbying? Do they volunteer for membership drives? Have they referred a friend? These and many other questions can determine the member’s affinity level to your association. Why Reward: The Neuroscience In “The Neuroscience of Member Loyalty” white paper, Affinity Center International described how loyalty occurs within the brain: In order to become loyal to a brand the brain must make a decision to select brand A over brand B—a process which relies on the brain to make predictions based upon an expected reward and then evaluate the results to learn loyalty. The brain is required to remember both positive and negative outcomes of previous brand choices in order to make accurate predictions regarding the expected outcome of future brand decisions.1 The “rewards” principle is one of four neuroscientific principles that play into the human decision making process. A reward is the positive value someone assigns to an object or behavior that makes it memorable. Association members’ memories of and emotions they feel about the rewards they gain from the relationship with their association are a major factor in their decision to renew. The positive impact and memory of rewards starts with the first action taken to earn a reward, and continues to the last reward earned. The impact carries throughout the cycle of choosing the reward, receiving it and its ongoing use or display. Every step is a chance to build on the positive emotions and feelings associated with the organization that provided access to the reward opportunity. Are Discounts Effective Rewards? Associations sometimes tout discounted products and services as a primary membership benefit; but, how effective are discounts in retaining or engaging members or for selling products and services? While discounts are a popular tactic, an association needs to evaluate how effective they are for generating long-term revenue. In addition, an association should consider the message that discounts indirectly communicate about its overall brand and the value of its products and services. Offering a member benefit that only plays to one element, discounting can create a one-dimensional view of member value and what drives member behavior. “The moment people in an organization are recognized, they will act to get recognition. The moment they realize that the organization rewards for the right behavior, they will accept it.” Peter Drucker, WSJ @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 3
  • 4. Discounts versus Rewards Short term gratification Gratification Delayed/long-term gratification Erode brand value Brand Value Preserve brand value No opportunities for member interaction Opportunities New opportunities for member interaction Limited transactional nature Life Span 365 days a year, ongoing and growing Neuroscience portrays a conflict in the brain between a person’s desire for immediate gratification from a small reward versus delayed gratification from a greater reward. The limbic system causes people to be temporarily inclined towards the immediate gratification, but the reasoning cortex of the brain can overcome this inclination by reminders of the better, delayed reward. Many associations utilize discounting as a quick fix marketing tactic when sales are not meeting forecasted projections for events, membership or any other association specific product or service. While it may help move items off the shelf in the short-term, discounting can present some long-term ramifications with perceived value. When the economic downturn hit in 2009, many associations froze pricing on membership, event registrations and other products and services. While the economy is not robust, it is anticipated that there will continue to be slow upward momentum. How likely is it that members will pay more for products and services when the perceived worth of these items for many years was greatly reduced? Before discounting, the association should be sure to consider members’ likelihood and willingness to pay full price when any crisis has ended.2 Discounting can corrode the value of the brand and of the offer, and create expectations that the lower price is the correct price. A better long-term revenue strategy for an association is to create a plan for incentivizing desired behaviors through rewards and recognition. The for-profit sector has long understood the correlation between rewards and loyalty, and associations can look to many companies that they interact with every day for inspiration to develop creative rewards for their members. @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 4
  • 5. Get Started with the Key Questions Before implementing any rewards program, it is important for an association to have a clear understanding of its members’ wants and needs in order to offer rewards that they will be interested in pursuing. Creating a unique way to thank loyal and engaged members starts with asking a few questions: 1. Are we rewarding our members? If yes, how? Something as simple as expressing gratitude and showing appreciation for their commitment goes a long way in creating positive memories and building loyalty. 2. Is the value we provide to members beyond their expectations? It is no longer enough to touch members once or twice a year. Associations must have answers to: “What is unique about our membership benefits?” “What do members get from us that is essential to their careers or lives?” and “What do we provide that they can’t get elsewhere?” Providing value within their daily business and personal lives is essential. 3. Is the value obvious or is it hard to experience and see? Members have to get it immediately. Just as we only spend a few seconds on a website to determine its relevance, the benefits of membership must be clear instantly. 4. Are we getting input from members about what is valuable to them? Associations must evaluate the source of their benefits. Are they based on what the members request for their accomplishments or are benefits based on what has always been offered? 5. What we are asking for from members? Look at the association’s programs from the outside perspective. What exactly do members need to do to be engaged and involved and does it make sense for them? Is it easy to become an engaged (and then loyal) member? 6. Are we being creative or are we just restating what has been done before? It’s important to focus energy on creative ideas that deliver new solutions to members. Is the association leading the industry or cause and doing what has never been done? Are we creating novelty or just boring our members? 7. Do we truly understand our members’ needs? An association must take the time to discover, and not assume, what members need from their membership. Members have intense business, family and personal pressures. This multi-dimensional person must be examined and understood. 8. Are we creating positive memories for our members? Loyalty and member engagement programs are successful when they arouse positive emotions in members and cause them to find the relationship to be rewarding. Those positive emotions help transition memories from temporary to long-term memory storage. The goal is @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 5
  • 6. to attain members’ long-term storage of positive interactions with the association so that renewal becomes automatic. Rewards require examining member demographics to ensure that the reward choices fit who they are, will generate true excitement and have great meaning to the individual members. Rewards that have no value to the person are not rewards. The answers to these questions will lead each association to create powerful engagement opportunities that cater to their members. The more challenging the question, the stronger an association’s bond with its members will become when it discovers the right answers. How to Implement a Rewards Program After exploring the answers to the above questions, an association should first create an exhaustive list of member behaviors it might reward. For example, it can reward participation in meetings and events or other engagement such as being a regular volunteer, committee member or leader. Perhaps most importantly, it can reward members for building loyalty—rewarding this behavior so that the association becomes not just an important, but an essential part of a successful business or career. From there, the list can be edited to provide rewards for the most desired behaviors. Once the behaviors are determined, the association can get creative with ways to offer rewards. A reward doesn’t have to be monetary. It needs to leave a positive memory with the member receiving it (and cash does not necessarily do that). New-Hire or Low Performing Core Develop & Grow 60% Move the Middle High Performer Retain & Grow • Retain the best,engage the rest. • Recognize top performers. • Offer meaningful rewards for the middle tiers. A 5% sales increase from the middle 60% yields over 70% more revenue than the same increase from the top 10%. Reward and Recognize Performance Source: http://www.maritzmotivation.com/maritzmotivationsolutionsblog/sales_incentives/sales-incentive-program/ @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 6
  • 7. Start with the end in mind. What is it the association wants to do? Build a positive, ongoing, 365-days-a-year experience with members? Thank them and reward their loyalty? Help them not just succeed in business and personally but have a positive, creative experience with the organization? What would this motivated, driven member look like and expect? Determine where the association wants to be and then offer the rewards mix to drive this type of outcome. Rewards could include recognizing long-term members in a special way; providing a gift to volunteers; implementing an affinity or loyalty program that gets the entire membership active; or hosting a free “fun” event. The association could also reward activities like participating at meetings or tradeshows, and could include unique on-site benefits such as “VIP” benefits for long-time attendees or exhibitors or sending a thank you note to first time attendees. The association could reward members who’ve engaged in professional development by providing them with training certification or other forms of recognition that they can display in their office. Rewarding Ideas When selecting the right type of rewards program, an association doesn’t need to reinvent the wheel. Corporations and small businesses have been using rewards and loyalty programs for years. In the article “7 Customer Loyalty Programs that Actually Add Value,” Kendal Peiguss shares examples of how large companies are using several styles of loyalty programs. Many of those styles would translate effectively for associations as outlined below:3 Point Systems – Many companies use point systems. A good example is tradeshow exhibitor priority points. Think of creative possibilities for incentivizing repeat sales of memberships, event registrations and training classes. The more members participate and/or purchase, the more points they earn. Points can then be redeemed for meaningful rewards that satisfy their wants and needs from the association. This can be especially effective when the reward supports members’ daily lives or careers. It becomes a benefit they perceive that they can’t live without. Another advantage of points programs is that they can be laced with motivators when necessary. Offering bonus points, time-based point promotions and multiplying points can all be incentives to encourage specific behavior.4 Finally, points are also the best way to track member engagement and loyalty. The more points a member is accruing, the more active they are in the behaviors the association has defined as critical. Tiered Systems to Reward Initial Loyalty – Commonly seen on airlines, this approach can also translate well to associations. With this concept, small rewards are bestowed for signing on with a program and then larger rewards are provided based on the tiered system. REWARD THINKING • Start with the end result in mind • What behavior do you seek • Rewards are not one size fits all @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 7
  • 8. Establish partnership levels such as Bronze, Silver, Gold and Platinum and criteria for inclusion in each level, such as membership longevity or active engagement. Assign specific member benefits to each level to encourage desired behavior. For example, long-term members could get a deeper discount on conference registration, or members who purchase a lot of products could receive a gift at the end of the year. Work with sponsors on the rewards. There may be industry companies willing to donate a service or product in return for brand awareness. Upfront Fee for VIP Treatment – This is a very interesting concept to apply to associations. The key to designing a program based on this concept is identifying existing member inconveniences and offering them some relief for a price. An association can review surveys to understand member pain points and then remove those pain points for VIP members for a small fee. Coalition Reward Programs – Many companies have strategic partnerships with corporate suppliers that offer special purchasing opportunities for members. These strategic partnerships—designed to develop loyalty— are also referred to as coalition programs. As with the previous concepts, developing coalition reward programs requires a deep understanding of members’ wants and needs. Expanding this type of program can be easy. Identify some of your larger corporate supporters and determine what members purchase from them. Find ways to partner with that company in a mutually beneficial way that will provide an incentive to members buy from them, thereby increasing the members’ engagement with the association while increasing the visibility of the corporation to the membership. Gamification – This is a hot trend that associations can use in conjunction with events. An association might develop a program that gives an individual a chance to win a free ride to the following year’s conference if they purchase a full registration, book in the hotel block and set up an appointment to meet with one exhibitor. This is an easy tactic to get creative with and develop an incentive-based game tailored to strategic growth goals. Nix the “Program” Completely! – Reward members with the ability to be the “first.” This idea is best exemplified by Apple. Apple does not offer rewards to anyone and maintains what is arguably one of the most loyal customer bases of any company. What can associations learn from Apple? The main ingredient to creating brand loyalty absent any reward program is to offer the first product or service of its kind or one that is unlike any other. Loyalty is earned simply because members or customers cannot find what they want or need anywhere else. An association maintains a mission unique from any other organization and therefore should be providing unique solutions. Does the association offer research or other resources to its members first or exclusively? Loyalty is earned simply because members cannot find what they want or need anywhere else. REWARDS SHOULD BE: • Fun & Guilt Free • Meaningful • Easy to Achieve • Long-term Memory Value @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 8
  • 9. How to Select the Actual Rewards The rewards offered must be meaningful, memorable and easy to achieve. They cannot be created in a vacuum by the association. They should come about through listening to member needs and desires. In this way, the rewards will be top-of-mind for members, shared/shown off when achieved and remembered more often and more favorably. Does the reward offered justify the action required? It is important to consider what is being asked of the member to ensure it is represented in the value of the reward. Asking for ardent, active, vocal support while offering a five-dollar coupon might not be the right level. Choice is critical. Giving members, who may encompass as many as five different generations currently in the workforce, a wide array of options helps them find a reward that is meaningful to them. A recent white paper by Maritz, Inc. outlines the importance of purposeful choice in making the most memorable rewards: Purposeful choice is important to enable a critical element of motivation—goal- setting. A reward collection with enough choice to enable every individual to select rewards that are meaningful to them and to add those items to their “Wish List” creates psychological advantages over the limitless choice seemingly offered by cash. A study by Dr. Scott A. Jeffrey of the University of Waterloo shows why. Participants in a program with non-cash as the award thought about the awards more frequently than those who were working toward a cash award. They also showed a higher goal commitment. Most significantly, they performed better. Dr. Jeffrey’s findings were strengthened in a recent Maritz study where survey participants said they wanted cash, yet later reported cash wasn’t the most memorable reward (compared to experiential rewards like group and individual travel). Participants also said they received more encouragement—from managers, peers, family and friends—to earn a non-cash reward.5 Communicating the Value of Rewards No matter what style of rewards program an association implements, it must be communicated to members in order to be effective. Loyalty and research expert Rob Daniel writes that “E-mail continues to be the communication channel of preference for loyalty program members, regardless of what is being communicated (offers, updates, account balances, program or brand information).”6 Communications about rewards programs are widely read by participants. For example, emails pertaining to customer loyalty programs have a 40% higher open rate than other emails,7 so there is an opportunity to piggyback other important communications with the rewards program updates. @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 9
  • 10. Here are a few methods for promoting a rewards program: • Articles in regular association publications, e.g. magazine, newsletter, e-newsletter, email digest • Direct mail postcard • Email • Flier in membership materials or renewal packages • Web banner ads placed in prominent locations • Updates to chapter leaders • Champions at face-to-face events • Social media Conclusion Loyalty programs offer a way to increase interactions with more members, more often. They also communicate the value of association membership and ingrain positive memories about the relationship in members’ minds. These regular, rewarding experiences with the association will keep members coming back and make the association stronger. References 1. Affinity Center International. Neuroscience of Member Loyalty white paper. Reston, VA. 2012. 2. Paul Williams. “Can Your Brand Afford to Discount, Marketing Profs: Smart thinking…pass it on.” 12/12/08. http://mpdailyfix.com/can-your-brand-afford-to-discount 3. Kendal Peigss. “7 Customer Loyalty Programs that Actually Add Value.” HubSpot. 4/3/12. http://blog.hubspot.com/blog/tabid/6307/bid/31990/7-Customer-Loyalty-Programs-That- Actually-Add-Value.aspx 4. Justin McCullough. “7 Tips To Start a Customer Reward Programs Using Points.” Americommerce. 4/23/13. http://www.americommerce.com/7-tips-ecommerce-loyalty- program. 5. Maritz, Inc. The What, Why and How of Purposeful Choice white paper. St. Louis. 2012. pg. 1. 6. Rob Daniel. Maritz Insights: The Evolving Loyalty Landscape White Paper. St. Louis. pg. 2. 7. Experian Marketing Services. The 2012 Digital Reporter: Benchmark and Trend Report. Schamburg, IL. 2012. @2013 Affinity Center International LLC, All Rights Reserved. www.AffinityCenter.com | 10