The Neuroscience Of Member Loyalty Sept 2012


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What drives people to join and stay active in associations?

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The Neuroscience Of Member Loyalty Sept 2012

  1. 1. WHITE PAPER The Neuroscience of Member Loyalty Executive Summary The lifeblood of any association is its membership. The healthier and stronger an organization’s membership is, the greater its ability to fulfill its mission. Effective recruitment and retention strategies are critical components for membership growth and development. Retention strategies are especially key as more resources (time and money) are needed to recruit members than to retain them. Members that choose to renew each year obviously come back because they understand the value of the organization in their lives and /or professions and are loyal customers and evangelists. What separates these individuals from the others? In some ways, membership retention is more of a science than an art. Associations are made up of people with different motivations for their actions. The field of neuroscience gives association executives a better understanding of how people make their decisions. Neuroscience research helps executives understand how associations can develop programs that will form deeper relationships, stronger connections and ensure member loyalty. One such type of program is a loyalty rewards program. Rewards, or points, programs exploit the four principles of neuroscience—rewards, emotion, memories and social interaction—to achieve higher results in member renewal rates. They engage members on a regular basis, building on the desire by people to stay connected and be rewarded for the right behaviors. This strengthens the relationships—beyond attending conferences or meetings— tapping into everyday life. In addition these programs can bring in new revenue and associations can easily implement and manage them. @2012 Affinity Center International LLC, All Rights Reserved.
  2. 2. Membership Retention dominate executives’ top five areas of concern for the comingChallenges year: membership retention, value Top Five of investments, membership Membership Concerns:After spending 20 years as executive recruitment, annual meeting/director of Society of Marketing conference attendance andProfessional Services (SMPS), one sponsorship revenue.1would expect Ron Worth has seen In fact, the same studya few things change. And he has, reported that 33% ofthough perhaps nothing as big as association CEOs said theyhow challenging it has become to get are more concerned aboutmembers to renew. member retention in 2012“It used to be members joined and than they were in 2011.stayed with it because it was what A fresh perspective onyou did as part of your career,” Worth membership retentionexplained. “It was automatic.” is to view it as moreNow Worth and his team are of a science thanconstantly challenged to figure out an art. Associationnew ways to keep members engaged members all join forso that when renewal time comes different reasons. The SOURCE: Associations in Uncertain Economy: Attitudes and Behaviors Among CEOs andaround, members recognize the field of neuroscience gives Members Impact Study, ASAE Foundationvalue they get from the association association executives a betterand respond by renewing. SMPS understanding of how people makeorchestrates a series of touches their decisions. Neuroscience researchthroughout the year either in-person, can help executives understand howon the phone, via email and direct associations can develop programsmail or through the Chapters. They’ve that will form deeper relationships,run contests, built an in-house social stronger connections and ensuremedia platform and conducted survey member loyalty.after survey to anticipate what themembers will want next. Where Member RetentionThe ultimate goal is for members tothink, “I can’t give up my membership, Stands Industry-widebecause I can’t find this value It’s getting harder to keep members.anywhere else.” While statistics show that, ultimately,If Worth’s story sounds familiar, it’s most members renew, associationsbecause it’s a common reality many are spending more to keep them. Association Average More associations are increasing theassociations face today. Retention number of contacts they make with Expenditure on Renewalsefforts continue to demand moreof an association’s resources, and their members, be it email, direct mailmany associations already work or other, regarding renewals. In 2012,within limited means. This growing 23 percent of associations sent sevenallocation of resources specifically to nine renewal contacts, up fromto membership retention efforts is 18 percent in 2011.2severely impeding associations’ Associations also spent an averageabilities to advance their missions of $40,358 on renewals in 2012,overall. compared to $24,943 in 2011 and SOURCE: 2012 Membership Marketing BenchmarkingAccording to the American Society $27,520 in 2010.2 Study, Marketing General Incorporatedof Association Executives (ASAE),membership issues continue to@2012 Affinity Center International LLC, All Rights Reserved. | 2
  3. 3. An Association’s Success Is Based members outside their role within theon the Engagement of its Members association, and take into account things like their job demands and theirWhile there are a myriad of reasons personal needs, and then developfor members not to renew their programs to reward membership andmembership, active members drive loyalty. Neuroscience can help,are more loyal and renew their by providing an understanding of howmemberships at higher rates than people’s brains process informationless active members.3 Therefore, to make buying decisions or becomemember engagement is a critical loyal joiners.factor in strong member retention andachieving association goals. Member MinuteOrganizational psychologist Rensis How the Brain WorksLikert said, “The greater the loyalty ofa group toward the group, the greater toward Loyalty Jack has been in his job for 15 years and loves what heis the motivation among the members To describe loyalty we have lookedto achieve the goals of the group, and does. He used to belong to at four principles from the field ofthe greater the probability that the neuroscience—rewards, emotions, four industry associations butgroup will achieve its goals.” memories and social interaction. with budget cuts this year he is narrowing it down toMember engagement takes on a A study of MRI scans of loyal andvariety of forms ranging from very the two that matter most to less loyal customers found that incommitted and time-consuming to him—one for his current job the case of loyal customers theminor, daily interactions. It could be presence of a particular brand serves and one for his future career• Volunteering on a board as a reward during choice tasks, moves. Which two should he but less loyal customers do not choose? Which would bring• Attending a conference exhibit the same reward pathway. him the most value, beyond• Joining a Chapter It also found that loyal customers the monthly publication and• Purchasing a product had greater activation in the brain annual conference? areas concerned with emotion and• Calling an 800 number for memory retrieval suggesting that loyal assistance customers develop an affective bond• Downloading research or other with a particular brand, which serves resources as the primary motivation for repeat• Purchasing from an affinity partner purchases.5 or sponsor company In order to become loyal to a brand the brain must make a decision ofASAE and the Center’s “Decision brand A over brand B, a processto Join” report shows there is very which relies on the brain to makelittle statistical difference between predictions based upon expectednon-engaged members and reward and then evaluate the resultslapsed members. “Those who are to learn loyalty. The brain is required tonot involved lie perilously close to remember both positive and negativeformer members in their overarching outcomes of previous brand choicesassessments of the value they derive in order to make accurate predictionsfrom associations. If former members regarding the expected outcome ofare thought of as being dead, the future brand decisions. For example, auninvolved are close to comatose.”4 helpful salesman or a points program may serve as a reward to encourageTo bring non-engaged members future customer loyalty.6back to life and improve memberretention, associations must look at@2012 Affinity Center International LLC, All Rights Reserved. | 3
  4. 4. Rewards Communication Through the Lens ofA reward is the positive value Neuroscience”:someone assigns to an object or Because dopamine greatly aidsbehavior. Primary rewards include memory and information processing,those that are necessary for the you could say the Post- It note readssurvival of species, such as food, ‘Remember this!’ Getting the brain to put a chemical Post-It note on asexual contact, or successful given piece of information meansaggression.7 Secondary rewards that information is going to be morederive their value from primary robustly processed.12rewards. Money is a good example.They can be produced experimentally Brain systems work in parallel, mixingby pairing a neutral stimulus with a emotional and rational functionsknown reward. in various ratios. Unconsciously, Member Minute emotions color how the associationNeuroscience portrays a conflict and programs are viewed, and Leah sits at her desk thinkingin the brain between the desire whether people feel motivated to of all she has to do—atfor immediate gratification from buy more, advocate for, work harder, work, home and for the tripa small reward versus delayed bond with others ... or join thegratification from a greater reward. disengaged who simply “bear with” to see her mother—while atThe limbic system causes people the organization. the same time needing to getto be temporarily inclined towards the quarterly reports done.the immediate gratification, but the In addition, people’s emotions, How is she going to get it allreasoning cortex of the brain can attitudes and moods impact others and their social group as a whole.13 done and still have time forovercome this inclination by reminders This phenomenon of “emotional herself? She feels like withof the better delayed reward.8,9 contagion” goes beyond face-to-face each promotion she losesIn loyalty programs, this conflict is interaction. As several studies have some of her spark and nowdiminished by creating a balance shown, emotions, including happiness she asks “How do I movebetween the immediate gratification and loneliness, can be spread through forward with what I wasthat can occur when points are social networks.14 meant to do with my life?themselves framed as mini-rewardswith the delayed gratification of the Memories How can I afford to do whatsizable reward that can only be had I want to do?” For humans, it is highly pleasurableby a considerable accumulation to remember past enjoyment. People Is she thinking of herof points. In short, adding the respond to current experiences“earn” experience to the “burn” associations as a resource to and make decisions based uponexperience allows the member to help create a path forward? remembered past experiences.have their cake and eat it too. Memory is a critical factor in determining behavior and attitudes.Emotions People remember better what is“When it comes to shaping decisions charged with emotion.15and actions, feeling counts every bitas much—and often more—than When a person perceives an object,thought.”10 The brain chooses what groups of neurons in different parts ofdata to store and to retrieve based, in the brain process the information aboutpart, upon emotion.11 its shape, color, smell, sound and so on. The brain then draws connectionsWhen the brain detects an emotionally among these different groups ofcharged event, the amygdale neurons, and these relationshipsreleases dopamine in to the system. constitute perception of the object.Jill Eichwald quotes John Medina Subsequently, whenever someonein the Maritz Institute white paper, wants to remember the object, they“The Dynamics of Effective Business reconstruct these relationships.@2012 Affinity Center International LLC, All Rights Reserved. | 4
  5. 5. Neuroscientist Jeff Hawkins points given register, our key relationshipsout, “The brain doesn’t remember or can gradually mold certain neuralrecall things with complete fidelity— circuitry.17not because the cortex and its People pay enormous attention toneurons are sloppy or error-prone, what other people think, feel, say andbut because the brain remembers the do. There are many influencers thatimportant relationships in the world, drive people’s behavior and choices.independent of details.”16 People, for the most part, do not make decisions independently. Rather,In addition, isolated pieces of they are influenced by the behaviorinformation are memorized less of others.18 And by those they vieweffectively than those associated as credible, reliable, well-intentionedwith existing knowledge. The more or well-informed, and by peopleassociations between the new they identify with in some way.19information and things that someonealready knows, the better he or she Cooperation and social acceptancewill learn it. are so important to people that when excluded it is physically painful.Creating meaningful experiences thatform positive memories will contributeto an association’s success. If peopleenjoyed interactions with a brand, and Applying thefelt good about themselves during Neuroscience Researchthe experience; these feelings will beremembered and triggered in future Why People Join Associationsinteractions, and will prompt people to Associations exist because peoplewant to continue to do business with are wired to be social. To understandthe brand. what causes members to be loyal to an association, one can look to theSocial Interaction research of neuroscientists about howNeuroscientist Daniel Goleman the brain processes information. Theexplains: field’s findings show that memberThe social brain is the sum of the loyalty, or the need to join, is tied toneural mechanisms that orchestrate the member’s level of engagementour interactions as well as our with the group.thoughts and feelings about peopleand our relationships. The most telling People make decisions rationally andnews here may be that the social emotionally at the same time withoutbrain represents the only biological even knowing it. Matthew Lieberman,system in our bodies that continually a neuroscientist at UCLA, says weattunes us to, and in turn becomes are aware of rational processes. Theyinfluenced by, the internal state of require effort and conscious intent.people we’re with. All other biological Rational processes are experiencedsystems, from our lymphatic glands as self-generated thoughts. But,to our spleen, mainly regulatetheir activity in response to signals automatic processes, or emotionalemerging from within the body, processes, operate outside of ournot beyond our skin… Our social awareness and conscious intention.interactions even play a role in They require very little effort and arereshaping our brain, through usually experienced as perceptions“neuroplasticity,” which means that or feelings.20 While members searchrepeated experiences sculpt the rationally for the value an associationshape, size, and number of neurons brings to their lives, they also needand their synaptic connections. By to have positive feelings toward therepeatedly driving our brain into a@2012 Affinity Center International LLC, All Rights Reserved. | 5
  6. 6. association to actually renew their When people encounter new Four Principles ofmembership. information, it’s the working memory that takes it in and matches it Neuroscience against old information stored, orDon’t Leave Member memorized, in a different part of theEngagement to Chance brain. The greater the number ofWhen it comes to the active related associations between newparticipation of new members, and existing information over time,associations must start with the end in the stronger the memory will be.21mind and decide what they are driving Similarly, people can remember a new piece of information better if they cantowards and then create an image of associate it with previously acquiredwhat true member engagement looks knowledge that is already firmlylike and drive towards that vision. anchored in their memory.22 And the more meaningful the association isTo build member engagement and personally, the more effectively it willin turn member loyalty, associations be remembered.should ask themselves:• Are we bringing value to the What is a Loyalty Program? members beyond the expected? Many options are available to• Is the value obvious or is it hard to associations seeking new programs experience and see? that engage members. One such type of program is a loyalty rewards• Are we determining what members program. Rewards, or points, value or are we getting input from programs exploit some of the research them? of neuroscience to achieve higher• What we are asking from members? results in member renewal rates.• Are we being truly creative or are we By definition, loyalty programs are just restating what has been done? structured marketing efforts that• Do we understand our members? reward, and therefore encourage,• Are we creating positive memories loyal buying behavior—behavior, for our members? which is potentially beneficial to the organization.Loyalty is Based on Loyalty programs are common in theMembers’ Memories retail, travel, and financial sectors. Most people have come into contactLoyalty and member engagement with one and may participate in many.programs are successful when They either offer discounts upfrontthey arouse positive emotions in or a collection of points for coupons,members and cause them to find free products or services, andthe relationship to be rewarding. other rewards. Retailers use loyaltyThose positive emotions help programs to engage customers andtransition memories from temporary prompt them to associate a positiveto long-term memory storage. emotion with the organization.The goal is to attain members’long term storage of positive To date, the association industryinteractions with the association so as a whole hasn’t utilized loyaltythat renewal becomes automatic. programs to improve member retention, but there is no clear reasonEichwald quoted research that why. Consumers love them. Smartdescribes the brain’s process of Money reports, “In the aggregate, U.S.converting memories: consumers now hold about 2.1 billion memberships, up 60% since 2007.”23@2012 Affinity Center International LLC, All Rights Reserved. | 6
  7. 7. Mike Spellecy is a vice president • Let association executivesat Maritz who has worked with collect detailed member profilesloyalty and reward programs for and member segmentation soover 30 years. He translates this they association executives canconcept from a business and understand more about theirretail perspective to associations: segments of members and can“Loyalty programs should be seen treat them according to theirby association executives as a long needs and wants. For example,term vehicle for driving members communicating with members into consider the association first the ways or frequency they want,when they need a product or or even creating the type of contentservice the association offers.” or events they’re interested in. • Allow members to connect and Member MinuteEnhancing Member Engagementand Association Membership socially engage with others who Carolyn had forgotten that share a similar interest and wish toAs Spellecy explains, associations share information and insights. she joined an associationare created when a collection of last year. She paid herindividuals come together around a dues and then life got busy.common interest or problem. But, Cutting through the Clutter Recently, the association wasmembers’ needs are divided. First, Like other programs, a loyalty rewardsthere are the people who sign up to asking her to renew and pay program cannot be successful ifgain access to a particular seminar people don’t know about it. The white her dues. She asked herself,and are never heard from again paper “Understanding What Makes “Why renew? I didn’t utilizebecause they have fulfilled their People Tick” applies neuroscience the benefits when I belongedspecific need. The second group has research to human’s capacity for the first time.” What is thea vested interest in the goals of the attention. It points out two important value of the membership toassociation and returns to discuss all facts: “people can’t pay attentionissues facing the members. her? She didn’t feel that the to everything at once and people need help breaking through the association offered anythingThe loyalty program is an association communications clutter.”24 that enhanced her life or herbenefit that all members consider career. She was going tohighly valuable. It is the glue that Associations often implement a pass this year.helps members stick with the number of programs that end upassociation. Through regular, even competing for members’ attention,daily, interactions with the loyalty and worry about adding one more.rewards program, members keep Loyalty programs can align with andtheir associations on the top of their complement other existing programs.minds. In addition, they link a positiveexperience with their associations In addition, message delivery iseach time they earn a reward. critical. By using a combination of existing communications channelsLoyalty programs can help member that members are used to applyingengagement because they: attention to, and unexpected• Offer a platform that tracks, communications techniques that can monitors and evaluates members’ grab attention just by virtue of their activities, allowing associations to novelty, associations can effectively quickly modify programs to keep cut through the clutter. Regardless of members engaged at higher levels how communications are delivered, and reduce attrition or disengaged ensuring that messaging design is members. personally relevant, motivating and honest, with a clear call to action, can drive attention.@2012 Affinity Center International LLC, All Rights Reserved. | 7
  8. 8. Three Ways to Improve the Bond Associations that implement programswith Members Right Away based on neuroscience research canWhile loyalty programs should be form deeper relationships, strongerviewed as a long term retention connections, and ensure memberstrategy, there are ways to jump start loyalty. Loyalty rewards programsmember engagement. help associations connect with their members in different ways and• Talk, treat and reward. Based on more often. They provide regular, the insights gained from loyalty positive interactions within the normal program activities, associations stream of business and life, and are can recognize members differently opportunities to remind members and provide relevant discussions, of the value of their membership. according to how they want to be It reminds them of why they chose treated. Member Minute this particular association over the others. Each little interaction makes Ella’s association recently• Through loyalty programs, a member more likely to renew. associations can create a dialogue added a loyalty program or strengthen their member that rewarded her for community. Many associations participation. She was eager already ask for input and feedback, Loyalty is the End to get more value from poll members on areas of content/ Result of Effective her membership dues and information, or conduct surveys for member satisfaction, but the Retention Strategies while she hadn’t been an most critical step is to take action Members are not one dimensional, nor active member previously, based on results and input. are the behaviors they demonstrate she became involved in the or the ways they make decisions. program. She found that• Test new and unique engagement Members connect from self to not only was the loyalty tactics that are built on industry, from career today to career program itself engaging; understanding the neuroscience of tomorrow. The need to motivate, and people’s behaviors. Make engaging but there were a lot of other drive behavior at these different levels with the association interesting association benefits she’d is key to moving a member from an and fun. Loyalty programs been missing—things that occasional supporter to an advocate can add a new, and perhaps for the association; and from a yearly could help her with her life unexpected, dynamic to the typical member to a lifetime supporter. and career. interaction with associations that members are used to. For Ron Worth and the SMPS team, She was getting value implementing a loyalty rewardsLoyalty programs can exploit these everyday, making her program brings hope that theyfour principles of neuroscience to will be able to offer a new value to association membershipachieve higher results in member their members and the firms with indispensable to her lifestyle.renewal rates. They engage members which they work. The regular, evenon a regular basis, building on people’s daily, engagement a loyalty rewardsdesire to stay connected and be program can offer the association’srewarded for the right behaviors. This 6,000 members helps take thestrengthens the relationship—beyond pressure off of the team to provideattending conferences or meetings— constant interaction. They canby tapping into everyday life. In focus instead on their mission andaddition, these programs can bring member services such as helpingin new revenue and associations can firms develop marketing programseasily implement and manage them. that help them stand out and aiding members searching for jobs.@2012 Affinity Center International LLC, All Rights Reserved. | 8
  9. 9. References:1. “Associations in Uncertain Economy: Attitudes and 15. Joseph LeDoux, Emotional Brain: The Mysterious Behaviors Among CEOs and Members,” Impact Study, ASAE Underpinnings of Emotional Life, New York, 1996. Foundation, Washington, Winter 2012, p. 8. 16. Jeff Hawkins, On Intelligence, New York, 2004.2. Erik Schonher et al. “2012 Membership Marketing Benchmarking Study,” Marketing General Incorporated, 17. Daniel Goleman, Social Intelligence: The Revolutionary New Alexandria, 2012, p. 9. Science of Human Relationships, New York, 2006.3. “Member Retention Strategies,” ASAE Associapedia, http:// 18. Matthew J. Salganik, “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market,” Science, 311, Strategies 2006.4. “Decision to Join: How Individuals Determine Value and How 19. E.J. Wilson & D.L. Sherrell, “Source Effects in Communication They Choose to Belong,” ASAE Press, Washington, 2007, p. and Persuasion Research: A Meta-Analysis of Effect Size,” 4. Journal of the Academy of Marketing Science, 21, (2), 1993. pp. 101-112.5. Hillke Plassmann et al.“What can advertisers learn from neuroscience?,” International Journal of Advertising, 2007; 20. Matthew Lieberman, “Reflexive and Reflective Judgment 26(2): pp. 151-175. Processes: A social cognitive neuroscience approach” in J. P. Forgas, K. D. Williams & W. von Hippel (Eds.), Social6. Peter Kenning and Hillke Plassmann, “How Neuroscience Can judgments: Implicit and Explicit Processes, New York, 2003. Inform Consumer Research,” IEEE Transactions on Neural Systems and Rehabilitation Engineering, Friedrichshafen, 21. Helene Hembrooke, & Geri Gay, “The lecture and the laptop: Germany, Dec 2008; 16(6), pp. 532-538. Multitasking in wireless learning environments,” Journal of Computing in Higher Education, 15 (1), 2003, p. 46–657. Tim Ambler et al. “Brands on the Brain: Neuroimages quoted by Jill Eichwald et al. “The Dynamics of Effective of Advertising,” Business Strategy Review, September Business Communication Through the Lens of Neuroscience,” 2000;11(3), pp. 17–30. Maritz Institute White Paper, St. Louis, 2011, p. 8.8. George Ainslie & John Monterosso, “Behavior: A Marketplace 22. C. Dzubak, “Multitasking: The good, the bad and the in the Brain?” Science 306 (5695), 2004, pp. 421–423 quoted unknown,” Synergy: The online journal of the Association of by Jill Eichwald et al. “The Dynamics of Effective Business the Tutoring Profession, (2), 2008 retrieved from http://www. Communication Through the Lens of Neuroscience,” Maritz by Jill Eichwald et al. “The Dynamics Institute White Paper, St. Louis, 2011, p. 13. of Effective Business Communication Through the Lens of Neuroscience,” Maritz Institute White Paper, St. Louis, 2011,9. Kacey Ballard & Brian Knutson, “Dissociable neural p. 8. representations of future reward magnitude and delay during temporal discounting,” NeuroImage, 2009, pp. 45, 143–150 23. “6 Rewards Programs Worth Your Loyalty,” Smart Money quoted by Jill Eichwald et al. “The Dynamics of Effective Magazine, March 22, 2011. Business Communication Through the Lens of Neuroscience,” Maritz Institute White Paper, St. Louis, 2011, p. 13. 24. Giulietta Versiglia, “Understanding What Makes People Tick: Applying Discoveries in Neuroscience to Optimize the10. Daniel Goleman, Emotional intelligence. New York, 1995. Potential of People,” Maritz Institute White Paper, St. Louis, 2009, p. 11.11. Antoine Bechara et al. “Double dissociation of conditioning and declarative knowledge relative to the amygdala and hippocampus in humans,” Science, 269 (5227), 1995, pp. 1115–1118.12. John Medina, “Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School,” Seattle, 2008, p. 1118 quoted by Jill Eichwald et al. “The Dynamics of Effective Business Communication Through the Lens of Neuroscience,” Maritz Institute White Paper, St. Louis, 2011, p. 9.13. Sigal Barsade, “The Ripple Effect: Emotional Contagion and its Influence on Group Behavior,” Administrative Science Quarterly, 47, 2002, pp. 644-675.14. Jill H. Fowler & Nicholas A. Christakis, “Dynamic Spread of Happiness in a Large Social network: Longitudinal Analysis over 20 Years in the Framingham Heart Study,” BMJ, 2008, 337:a2338@2012 Affinity Center International LLC, All Rights Reserved. | 9