White Paper: The Neuroscience of Member Loyalty


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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.

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White Paper: The Neuroscience of Member Loyalty

  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. www.affinitycenter.com @2012 Affinity Center International LLC, All Rights Reserved.
  2. 2. Membership Retention Challenges After spending 20 years as executive director of Society of Marketing Professional Services (SMPS), one would expect Ron Worth has seen a few things change. And he has, though perhaps nothing as big as how challenging it has become to get members to renew. “It used to be members joined and stayed with it because it was what you did as part of your career,” Worth explained. “It was automatic.” Now Worth and his team are constantly challenged to figure out new ways to keep members engaged so that when renewal time comes around, members recognize the value they get from the association and respond by renewing. SMPS orchestrates a series of touches throughout the year either in-person, on the phone, via email and direct mail or through the Chapters. They’ve run contests, built an in-house social media platform and conducted survey after survey to anticipate what the members will want next. The ultimate goal is for members to think, “I can’t give up my membership, because I can’t find this value anywhere else.” If Worth’s story sounds familiar, it’s because it’s a common reality many associations face today. Retention efforts continue to demand more of an association’s resources, and many associations already work within limited means. This growing allocation of resources specifically to membership retention efforts is severely impeding associations’ abilities to advance their missions overall. According to the American Society of Association Executives (ASAE), membership issues continue to @2012 Affinity Center International LLC, All Rights Reserved. dominate executives’ top five areas of concern for the coming year: membership retention, value of investments, membership recruitment, annual meeting/ conference attendance and sponsorship revenue.1 In fact, the same study reported that 33% of association CEOs said they are more concerned about member retention in 2012 than they were in 2011. A fresh perspective on membership retention is to view it as more of a science than an art. Association members all join for different reasons. The field of neuroscience gives association executives a better understanding of how people make their decisions. Neuroscience research can help executives understand how associations can develop programs that will form deeper relationships, stronger connections and ensure member loyalty. Top Five Membership Concerns: SOURCE: Associations in Uncertain Economy: Attitudes and Behaviors Among CEOs and Members Impact Study, ASAE Foundation Where Member Retention Stands Industry-wide It’s getting harder to keep members. While statistics show that, ultimately, most members renew, associations are spending more to keep them. More associations are increasing the number of contacts they make with their members, be it email, direct mail or other, regarding renewals. In 2012, 23 percent of associations sent seven to nine renewal contacts, up from 18 percent in 2011.2 Associations also spent an average of $40,358 on renewals in 2012, compared to $24,943 in 2011 and $27,520 in 2010.2 Association Average Expenditure on Renewals SOURCE: 2012 Membership Marketing Benchmarking Study, Marketing General Incorporated www.affinitycenter.com | 2
  3. 3. An Association’s Success Is Based on the Engagement of its Members While there are a myriad of reasons for members not to renew their membership, active members are more loyal and renew their memberships at higher rates than less active members.3 Therefore, member engagement is a critical factor in strong member retention and achieving association goals. members outside their role within the association, and take into account things like their job demands and their personal needs, and then develop programs to reward membership and drive loyalty. Neuroscience can help, by providing an understanding of how people’s brains process information to make buying decisions or become loyal joiners. Organizational psychologist Rensis Likert said, “The greater the loyalty of a group toward the group, the greater is the motivation among the members to achieve the goals of the group, and the greater the probability that the group will achieve its goals.” How the Brain Works toward Loyalty Member engagement takes on a variety of forms ranging from very committed and time-consuming to minor, daily interactions. It could be A study of MRI scans of loyal and less loyal customers found that in the case of loyal customers the presence of a particular brand serves as a reward during choice tasks, but less loyal customers do not exhibit the same reward pathway. It also found that loyal customers had greater activation in the brain areas concerned with emotion and memory retrieval suggesting that loyal customers develop an affective bond with a particular brand, which serves as the primary motivation for repeat purchases.5 • Volunteering on a board • Attending a conference • Joining a Chapter • Purchasing a product • Calling an 800 number for assistance • Downloading research or other resources • Purchasing from an affinity partner or sponsor company ASAE and the Center’s “Decision to Join” report shows there is very little statistical difference between non-engaged members and lapsed members. “Those who are not involved lie perilously close to former members in their overarching assessments of the value they derive from associations. If former members are thought of as being dead, the uninvolved are close to comatose.”4 To bring non-engaged members back to life and improve member retention, associations must look at @2012 Affinity Center International LLC, All Rights Reserved. To describe loyalty we have looked at four principles from the field of neuroscience—rewards, emotions, memories and social interaction. Member Minute Jack has been in his job for 15 years and loves what he does. He used to belong to four industry associations but with budget cuts this year he is narrowing it down to the two that matter most to him—one for his current job and one for his future career moves. Which two should he choose? Which would bring him the most value, beyond the monthly publication and annual conference? In order to become loyal to a brand the brain must make a decision of brand A over brand B, a process which relies on the brain to make predictions based upon 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. For example, a helpful salesman or a points program may serve as a reward to encourage future customer loyalty.6 www.affinitycenter.com | 3
  4. 4. Rewards A reward is the positive value someone assigns to an object or behavior. Primary rewards include those that are necessary for the survival of species, such as food, sexual contact, or successful aggression.7 Secondary rewards derive their value from primary rewards. Money is a good example. They can be produced experimentally by pairing a neutral stimulus with a known reward. Neuroscience portrays a conflict in the brain between the 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.8,9 In loyalty programs, this conflict is diminished by creating a balance between the immediate gratification that can occur when points are themselves framed as mini-rewards with the delayed gratification of the sizable reward that can only be had by a considerable accumulation of points. In short, adding the “earn” experience to the “burn” experience allows the member to have their cake and eat it too. Emotions “When it comes to shaping decisions and actions, feeling counts every bit as much—and often more—than thought.”10 The brain chooses what data to store and to retrieve based, in part, upon emotion.11 When the brain detects an emotionally charged event, the amygdale releases dopamine in to the system. Jill Eichwald quotes John Medina in the Maritz Institute white paper, “The Dynamics of Effective Business @2012 Affinity Center International LLC, All Rights Reserved. Communication Through the Lens of Neuroscience”: Because dopamine greatly aids memory and information processing, you could say the Post- It note reads ‘Remember this!’ Getting the brain to put a chemical Post-It note on a given piece of information means that information is going to be more robustly processed.12 Brain systems work in parallel, mixing emotional and rational functions in various ratios. Unconsciously, emotions color how the association and programs are viewed, and whether people feel motivated to buy more, advocate for, work harder, bond with others ... or join the disengaged who simply “bear with” the organization. In addition, people’s emotions, attitudes and moods impact others and their social group as a whole.13 This phenomenon of “emotional contagion” goes beyond face-to-face interaction. As several studies have shown, emotions, including happiness and loneliness, can be spread through social networks.14 Memories For humans, it is highly pleasurable to remember past enjoyment. People respond to current experiences and make decisions based upon remembered past experiences. Memory is a critical factor in determining behavior and attitudes. People remember better what is charged with emotion.15 Member Minute Leah sits at her desk thinking of all she has to do—at work, home and for the trip to see her mother—while at the same time needing to get the quarterly reports done. How is she going to get it all done and still have time for herself? She feels like with each promotion she loses some of her spark and now she asks “How do I move forward with what I was meant to do with my life? How can I afford to do what I want to do?” Is she thinking of her associations as a resource to help create a path forward? When a person perceives an object, groups of neurons in different parts of the brain process the information about its shape, color, smell, sound and so on. The brain then draws connections among these different groups of neurons, and these relationships constitute perception of the object. Subsequently, whenever someone wants to remember the object, they reconstruct these relationships. www.affinitycenter.com | 4
  5. 5. Neuroscientist Jeff Hawkins points out, “The brain doesn’t remember or recall things with complete fidelity— not because the cortex and its neurons are sloppy or error-prone, but because the brain remembers the important relationships in the world, independent of details.”16 In addition, isolated pieces of information are memorized less effectively than those associated with existing knowledge. The more associations between the new information and things that someone already knows, the better he or she will learn it. Creating meaningful experiences that form positive memories will contribute to an association’s success. If people enjoyed interactions with a brand, and felt good about themselves during the experience; these feelings will be remembered and triggered in future interactions, and will prompt people to want to continue to do business with the brand. Social Interaction Neuroscientist Daniel Goleman explains: The social brain is the sum of the neural mechanisms that orchestrate our interactions as well as our thoughts and feelings about people and our relationships. The most telling news here may be that the social brain represents the only biological system in our bodies that continually attunes us to, and in turn becomes influenced by, the internal state of people we’re with. All other biological systems, from our lymphatic glands to our spleen, mainly regulate their activity in response to signals emerging from within the body, not beyond our skin… Our social interactions even play a role in reshaping our brain, through “neuroplasticity,” which means that repeated experiences sculpt the shape, size, and number of neurons and their synaptic connections. By repeatedly driving our brain into a @2012 Affinity Center International LLC, All Rights Reserved. given register, our key relationships can gradually mold certain neural circuitry.17 People pay enormous attention to what other people think, feel, say and do. There are many influencers that drive people’s behavior and choices. People, for the most part, do not make decisions independently. Rather, they are influenced by the behavior of others.18 And by those they view as credible, reliable, well-intentioned or well-informed, and by people they identify with in some way.19 Cooperation and social acceptance are so important to people that when excluded it is physically painful. Applying the Neuroscience Research Why People Join Associations Associations exist because people are wired to be social. To understand what causes members to be loyal to an association, one can look to the research of neuroscientists about how the brain processes information. The field’s findings show that member loyalty, or the need to join, is tied to the member’s level of engagement with the group. People make decisions rationally and emotionally at the same time without even knowing it. Matthew Lieberman, a neuroscientist at UCLA, says we are aware of rational processes. They require effort and conscious intent. Rational processes are experienced as self-generated thoughts. But, automatic processes, or emotional processes, operate outside of our awareness and conscious intention. They require very little effort and are usually experienced as perceptions or feelings.20 While members search rationally for the value an association brings to their lives, they also need to have positive feelings toward the www.affinitycenter.com | 5
  6. 6. association to actually renew their membership. Don’t Leave Member Engagement to Chance When it comes to the active participation of new members, associations must start with the end in mind and decide what they are driving towards and then create an image of what true member engagement looks like and drive towards that vision. To build member engagement and in turn member loyalty, associations should ask themselves: • Are we bringing value to the members beyond the expected? • Is the value obvious or is it hard to experience and see? • Are we determining what members value or are we getting input from them? • What we are asking from members? • Are we being truly creative or are we just restating what has been done? • Do we understand our members? • Are we creating positive memories for our members? Loyalty is Based on Members’ Memories 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 to attain members’ long term storage of positive interactions with the association so that renewal becomes automatic. Eichwald quoted research that describes the brain’s process of converting memories: @2012 Affinity Center International LLC, All Rights Reserved. When people encounter new information, it’s the working memory that takes it in and matches it against old information stored, or memorized, in a different part of the brain. The greater the number of related associations between new and existing information over time, the stronger the memory will be.21 Similarly, people can remember a new piece of information better if they can associate it with previously acquired knowledge that is already firmly anchored in their memory.22 And the more meaningful the association is personally, the more effectively it will be remembered. Four Principles of Neuroscience What is a Loyalty Program? Many options are available to associations seeking new programs that engage members. One such type of program is a loyalty rewards program. Rewards, or points, programs exploit some of the research of neuroscience to achieve higher results in member renewal rates. By definition, loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior—behavior, which is potentially beneficial to the organization. Loyalty programs are common in the retail, travel, and financial sectors. Most people have come into contact with one and may participate in many. They either offer discounts upfront or a collection of points for coupons, free products or services, and other rewards. Retailers use loyalty programs to engage customers and prompt them to associate a positive emotion with the organization. To date, the association industry as a whole hasn’t utilized loyalty programs to improve member retention, but there is no clear reason why. Consumers love them. Smart Money reports, “In the aggregate, U.S. consumers now hold about 2.1 billion memberships, up 60% since 2007.”23 www.affinitycenter.com | 6
  7. 7. Mike Spellecy is a vice president at Maritz who has worked with loyalty and reward programs for over 30 years. He translates this concept from a business and retail perspective to associations: “Loyalty programs should be seen by association executives as a long term vehicle for driving members to consider the association first when they need a product or service the association offers.” • Let association executives collect detailed member profiles and member segmentation so they association executives can understand more about their segments of members and can treat them according to their needs and wants. For example, communicating with members in the ways or frequency they want, or even creating the type of content or events they’re interested in. Enhancing Member Engagement and Association Membership • Allow members to connect and socially engage with others who share a similar interest and wish to share information and insights. As Spellecy explains, associations are created when a collection of individuals come together around a common interest or problem. But, members’ needs are divided. First, there are the people who sign up to gain access to a particular seminar and are never heard from again because they have fulfilled their specific need. The second group has a vested interest in the goals of the association and returns to discuss all issues facing the members. The loyalty program is an association benefit that all members consider highly valuable. It is the glue that helps members stick with the association. Through regular, even daily, interactions with the loyalty rewards program, members keep their associations on the top of their minds. In addition, they link a positive experience with their associations each time they earn a reward. Loyalty programs can help member engagement because they: • Offer a platform that tracks, monitors and evaluates members’ activities, allowing associations to quickly modify programs to keep members engaged at higher levels and reduce attrition or disengaged members. @2012 Affinity Center International LLC, All Rights Reserved. Cutting through the Clutter Like other programs, a loyalty rewards program cannot be successful if people don’t know about it. The white paper “Understanding What Makes People Tick” applies neuroscience research to human’s capacity for attention. It points out two important facts: “people can’t pay attention to everything at once and people need help breaking through the communications clutter.”24 Associations often implement a number of programs that end up competing for members’ attention, and worry about adding one more. Loyalty programs can align with and complement other existing programs. Member Minute Carolyn had forgotten that she joined an association last year. She paid her dues and then life got busy. Recently, the association was asking her to renew and pay her dues. She asked herself, “Why renew? I didn’t utilize the benefits when I belonged the first time.” What is the value of the membership to her? She didn’t feel that the association offered anything that enhanced her life or her career. She was going to pass this year. In addition, message delivery is critical. By using a combination of existing communications channels that members are used to applying attention to, and unexpected communications techniques that can grab attention just by virtue of their novelty, associations can effectively cut through the clutter. Regardless of how communications are delivered, ensuring that messaging design is personally relevant, motivating and honest, with a clear call to action, can drive attention. www.affinitycenter.com | 7
  8. 8. Three Ways to Improve the Bond with Members Right Away While loyalty programs should be viewed as a long term retention strategy, there are ways to jump start member engagement. • Talk, treat and reward. Based on the insights gained from loyalty program activities, associations can recognize members differently and provide relevant discussions, according to how they want to be treated. • Through loyalty programs, associations can create a dialogue or strengthen their member community. Many associations already ask for input and feedback, poll members on areas of content/ information, or conduct surveys for member satisfaction, but the most critical step is to take action based on results and input. • Test new and unique engagement tactics that are built on understanding the neuroscience of people’s behaviors. Make engaging with the association interesting and fun. Loyalty programs can add a new, and perhaps unexpected, dynamic to the typical interaction with associations that members are used to. Loyalty programs can exploit these four principles of neuroscience to achieve higher results in member renewal rates. They engage members on a regular basis, building on people’s desire to stay connected and be rewarded for the right behaviors. This strengthens the relationship—beyond attending conferences or meetings— by 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. Associations that implement programs based on neuroscience research can form deeper relationships, stronger connections, and ensure member loyalty. Loyalty rewards programs help associations connect with their members in different ways and more often. They provide regular, positive interactions within the normal stream of business and life, and are opportunities to remind members of the value of their membership. It reminds them of why they chose this particular association over the others. Each little interaction makes a member more likely to renew. Loyalty is the End Result of Effective Retention Strategies Members are not one dimensional, nor are the behaviors they demonstrate or the ways they make decisions. Members connect from self to industry, from career today to career tomorrow. The need to motivate, and drive behavior at these different levels is key to moving a member from an occasional supporter to an advocate for the association; and from a yearly member to a lifetime supporter. For Ron Worth and the SMPS team, implementing a loyalty rewards program brings hope that they will be able to offer a new value to their members and the firms with which they work. The regular, even daily, engagement a loyalty rewards program can offer the association’s 6,000 members helps take the pressure off of the team to provide constant interaction. They can focus instead on their mission and member services such as helping firms develop marketing programs that help them stand out and aiding members searching for jobs. Member Minute Ella’s association recently added a loyalty program that rewarded her for participation. She was eager to get more value from her membership dues and while she hadn’t been an active member previously, she became involved in the program. She found that not only was the loyalty program itself engaging; but there were a lot of other association benefits she’d been missing—things that could help her with her life and career. She was getting value everyday, making her association membership indispensable to her lifestyle. www.affinitycenter.com | 8
  9. 9. References: 1. “Associations in Uncertain Economy: Attitudes and Behaviors Among CEOs and Members,” Impact Study, ASAE Foundation, Washington, Winter 2012, p. 8. 2. Erik Schonher et al. “2012 Membership Marketing Benchmarking Study,” Marketing General Incorporated, Alexandria, 2012, p. 9. 17. Daniel Goleman, Social Intelligence: The Revolutionary New Science of Human Relationships, New York, 2006. 3. “Member Retention Strategies,” ASAE Associapedia, http:// www.asaecenter.org/wiki/?page=Member%20Retention%20 Strategies 18. Matthew J. Salganik, “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market,” Science, 311, 2006. 4. “Decision to Join: How Individuals Determine Value and How They Choose to Belong,” ASAE Press, Washington, 2007, p. 4. 19. E.J. Wilson & D.L. Sherrell, “Source Effects in Communication and Persuasion Research: A Meta-Analysis of Effect Size,” 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; 26(2): pp. 151-175. 6. Peter Kenning and Hillke Plassmann, “How Neuroscience Can Inform Consumer Research,” IEEE Transactions on Neural Systems and Rehabilitation Engineering, Friedrichshafen, Germany, Dec 2008; 16(6), pp. 532-538. 7. Tim Ambler et al. “Brands on the Brain: Neuroimages of Advertising,” Business Strategy Review, September 2000;11(3), pp. 17–30. 8. George Ainslie & John Monterosso, “Behavior: A Marketplace in the Brain?” Science 306 (5695), 2004, pp. 421–423 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. 13. 9. Kacey Ballard & Brian Knutson, “Dissociable neural representations of future reward magnitude and delay during temporal discounting,” NeuroImage, 2009, pp. 45, 143–150 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. 13. 10. Daniel Goleman, Emotional intelligence. New York, 1995. 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. 15. Joseph LeDoux, Emotional Brain: The Mysterious Underpinnings of Emotional Life, New York, 1996. 16. Jeff Hawkins, On Intelligence, New York, 2004. 20. Matthew Lieberman, “Reflexive and Reflective Judgment Processes: A social cognitive neuroscience approach” in J. P. Forgas, K. D. Williams & W. von Hippel (Eds.), Social judgments: Implicit and Explicit Processes, New York, 2003. 21. Helene Hembrooke, & Geri Gay, “The lecture and the laptop: Multitasking in wireless learning environments,” Journal of Computing in Higher Education, 15 (1), 2003, p. 46–65 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. 8. 22. C. Dzubak, “Multitasking: The good, the bad and the unknown,” Synergy: The online journal of the Association of the Tutoring Profession, (2), 2008 retrieved from http://www. myatp.org/ejournal.htm by Jill Eichwald et al. “The Dynamics of Effective Business Communication Through the Lens of Neuroscience,” Maritz Institute White Paper, St. Louis, 2011, p. 8. 23. “6 Rewards Programs Worth Your Loyalty,” Smart Money Magazine, March 22, 2011. 24. Giulietta Versiglia, “Understanding What Makes People Tick: Applying Discoveries in Neuroscience to Optimize the Potential of People,” Maritz Institute White Paper, St. Louis, 2009, p. 11. 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. www.affinitycenter.com | 9