MARKETING MEMBER INVOLVEMENT --
The American Experience
By Ann Hoyt
One of the most perplexing questions in cooperative business is directly tied to growth and success. Success can turn a cooperative gathering place where members all know each other into a large, less personal store where few customers recognize each other. Members who associate "small" and "convivial" with "cooperative" are certain that large impersonal stores are no longer cooperative. As evidence, they point to the declining percentage of members who vote in cooperative elections in recent years. The challenge is how to achieve sufficient growth to be competitive while maintaining members' involvement in and control of the cooperative business they own.1
Getting members involved in the cooperative is a several step process. First, customers must be attracted to the store. Second, they must decide to become a cooperative member. Third, they must willingly participate in cooperative activities and meet their responsibilities as member-owners. This willingness is a function of the quality of customer service provided, the extent to which the cooperative meets a customer's individual needs, and the benefits offered to customers if they become members.
This article explores how U.S. consumer cooperatives encourage member
involvement. How do they attract customers to the cooperative? How do they
identify member needs? What activities do they provide for members? What
avenues do they provide for member participation? And finally, is there
any evidence that there is a coherent philosophy guiding the approaches
Before all else, consumer cooperatives must provide a valuable good or service at a reasonable cost. Customers are unlikely to patronize, join and capitalize an organization that serves them poorly. Excellent customer service has become a major focus throughout U.S. business, and can provide a major competitive advantage (Desatnick, 1987).
In many ways, focus on excellent customer service is not new to U.S. cooperatives. When owners are the customers, a business tends to focus on honest dealings, good service and quality products.Seiler describes the customer oriented approach as
Put[ting] yourself in your customers' shoes. Think about their objectives, needs and pressures. Think in terms of people buying benefits And always loof for ways to present benefits that make it easier and more valuable for the customer to work with you than with your competitors.3It would be tempting to say constant focus on meeting the customer's needs is inherently part of the user-owned cooperative structure . However, there is no evidence that cooperatives have led U.S. businesses in their "discovery" of the customer. In fact, consumer cooperatives may be following the customer focus of competitive investor-owned firms. For example, Stu Leonard, owner of the self-proclaimed "world's largest dairy store" in Norwalk, Connecticut, and for many years the U.S. guru of effective food retailing has a simple operating policy:
At the same time,6 U.S. consumer cooperatives have not attempted to compete aggressively with large supermarkets on price. Their strategy has been to be recognized as a reliable source of high quality, healthful food sold by knowledgeable staff. This strategy is an integral part of the merchandising policy of the Sacramento Natural Foods Cooperative in California as described in their Co-op Reporter:
Informing our customers through honest and educational merchandising is one of the most important aspects of our merchandising policy. We put signage throughout the store to tell you what we know about the nutritional content, environmental impact and political ramifications of the products we sell. [In addition,] bulletin boards scattered throughout the store support our monthly education themes and often feature recipes as well as nutritional information.Interestingly, creating the expectation of honest, fair and informative dealings may be more important to the future of consumer cooperatives than they have yet realized. A 1994 study by the Gallup poll found that 2/3 of Americans would be more willing to trust a cooperative than an investor-owned business.7 On the other hand, the consumer cooperatives' long time emphasis on natural foods has put them in a leadership position in marketing organic8 foods, particularly organic meats and produce. Recycling containers and selling bulk items in bins has also given them a market edge on environmental issues. They have often been the first stores in their areas to recycle waste from the store, to offer recycling stations in their parking lots, and to purchase environmentally friendly products.
Many of these initiatives were developed in direct response to member
demand. In order to continue to respond to customers with competitive and
excellent customer service and to position themselves as market leaders,
cooperatives are increasingly devoting substantial resources to determining
Converting Customers to Members
When a cooperative has identified and met a customer's needs with quality goods at reasonable prices, it is in a position to encourage that satisfied customer to join the cooperative. In particular, effective, highly capitalized competition in the natural foods industry has reawakened U.S. consumer food cooperatives to the importance of member capital investment. The intense need for capital is indirectly leading cooperatives to reconsideration of their entire membership program. As a result, the natural foods cooperatives have recognized again the critical importance of continually working to attract new members from their customer base.
Many current member recruitment programs are built on a three part strategy:
provide attractive member benefits; provide opportunities for members to
interact with each other through member activities; and offer opportunities
for members to provide input into corporate planning. Examples of specific
programs for each strategy are presented in Table 1.
Member benefits vary widely from cooperative to cooperative. They may include a variety of discounts and rebates, subscription to the cooperative newsletter, opportunities to participate in other cooperative businesses, group-rate insurance programs, qualification for membership in a credit union, discounts on purchases made at other community businesses and free or reduced admission to cooperative sponsored events.
Recreational Equipment Inc., the largest consumer cooperative in the U.S., is a leading retailer for outdoor and "muscle-powered" recreational equipment. REI maintains an aggressive, carefully designed member benefits program based on expansion from catalogue sales to retail stores when warranted by sales, internal product development and quality control, and staff that are knowledgeable, experienced users of products they sell. The staff share their knowledge with members through sales assistance, clinics, demonstrations and projects. Extensive written information is also provided. Last, but certainly not least, REI has paid a patronage dividend each of its 56 years.
Benefits traditionally offered by retail food cooperatives have stressed
patronage refunds or discounts at the point of sale, consumer protection,
bulk sales, natural and nonadditive foods, and member participation. Industry
innovations introduced by cooperatives include nutritional labeling, open
dating, unit pricing, informative advertising and consumer education.9
U.S. consumer cooperatives have also been extremely creative in developing
additional benefits to provide an incentive for customers to become co-op
members. These include in store child care service, eligibility for cooperative
credit union membership, health insurance, member discount days, and senior
discount days. During its heyday, the Consumers Cooperative of Berkeley
employed a full time home economist who provided a wide variety of consumer
education and testing opportunities for members.
Joel Welty, a popular American writer on membership and board topics, explains some of the philosophy underlying the "member activities" strategy:
Democratic control starts with interpersonal communication among the members on a regular, face-to-face basis. By talking with each other, people get to know one another, share experiences and opinions, build a consensus and establish a [common] level of expectations.10Member activities are especially effective for increased member involvement if board and staff members are present so that members can speak with them in an informal setting. This strategy is consistent with findings of a 1982 study of seven agricultural cooperatives conducted by Purdue University. The level of control members felt they had was directly related to the amount of information they had received and their perception of how effective were the means they had to effect cooperative policy. Two-way channels of communication among members, board and management also appeared to be a critical component of member control.11
A unique benefit consumer food cooperatives offer their members is to work in the cooperative in exchange for a discount on food. The Sacramento Natural Foods Cooperative offers many opportunities for this "member labor" as described below:
The program offers hands on tasks such as bagging, cheese cutting, stocking and office work, and also offers a variety of special projects such helping to create events, working in the food demonstration department, writing for the Co-op Reporter and teaching classes. Members have [also] given out samples at health fairs, worked on committees, done shopper surveys, performed carpentry and maintenance, and in one case, clowned for the store on special children's days.Member labor began when there was insufficient volume or cash to pay staff.12 When carefully designed it can reduce staffing costs, improve productivity and increase member understanding of and loyalty to the cooperative. However, as life styles have changed, the average age of cooperative members has increased, and most cooperatives have broadened their membership base, most members no longer have time for member labor. In addition, the federal government has raised questions about the cooperative's liability for taxes, minimum wages and workmens' compensation for volunteer member laborers.
For example, the Puget Consumers Cooperative in Seattle, Washington uses shopper's surveys to determine who their customers are and how the cooperative can improve the shopping experience and product line. Sevanada Natural Foods Cooperative in Atlanta, Georgia recently conducted a member survey designed to provide more general information identify characteristics of members, including age, gender, family status, education level, and dietary preferences. Sacramento Natural Foods in California uses member surveys to identify members' social, cultural, and educational needs, children's interests, and members' positions on major policy issues. Their surveys also explore why present members have become and remain members, what features of the institution attracted them and what features encourage them to stay.
Much of the member input gained through surveys is put into practice through cooperatives' merchandising policies. Sacramento 13 has a philosophy of "interactive merchandising." As described in a recent issue of the cooperative's member newsletter Co-op Reporter, Sacramento's merchandising policy is a
living document under continual scrutiny by members and staff alike. Although much discussed, there have been surprisingly few changes [in the policy] over the past twenty years. Probably most noticeable is the decision to carry fresh fish and poultry. Currently, the cooperative is debating whether to carry genetically engineered foods.One of the liveliest methods cooperatives use to receive input from members (and to educate them) is the suggestion box. Members are encouraged to write questions, request products, and express opinions and drop them off in suggestion boxes located in the store. Answers and responses from staff are posted on a bulletin board in the store and, in many cases, published in a regular column in the member newsletter. The wide variety of topics addressed is illustrated in Box 1.
Cooperatives have also devised opportunities for members to talk with each other about issues that concern them. The most common are member positions on committees. Hyde Park Consumer's Cooperative, for example, maintains three committees: membership and education; consumer information; and environmental concerns. In addition, when voting in board elections, Hyde Park members elect a nominating committee for the next year's election. People's Food Cooperative in La Crosse, Wisconsin recently established an Ad Hoc Member Involvement Committee to make recommendations on how to encourage member participation in the cooperative.
Sacramento offers several events for member interaction. They sponsor
evening Town Meetings to give members an opportunity to participate in
the planning process. Sacramento has also sponsored a Sunday brunch seminar
on member involvement. These special meetings and member involvement committees
offer boards and management direct information from members on what involvement
they want and in what form.
Setting the Mission
As owners, members have the right and the responsibility to make fundamental decisions regarding the activities of the business and to elect representatives to assure that the cooperative its goals. Members decide the broad goals of the organization by enacting articles, bylaws and major policy decisions.
For example, in the mission statement of People's Food Cooperative of La Crosse, Wisconsin, the members commit the cooperative to selling whole, natural food. The strategy statement specifies a preference for natural and organic foods that incorporate "freshness, quality, competitive price, value, and a wide variety of dietary alternatives." Thus the membership determines the guidelines for product mix and pricing. The Sacramento Cooperative prominently publishes its mission in every issue of the Co-op Reporter (see Box 2). The headlines vary in every issue, but the mission statement remains identical.
Ideally, all cooperative members would take full advantage of their
right to influence their business's mission and goals. Of course, as owners,
they could even vie for a position on the board and thereby have a direct
impact on these matters. However, whenever a group of people select a few
to represent their interests, the few should ensure they are adequately
representing the entire electorate.
Ensuring a Representative Board
In a recent article written for rural electric cooperatives, Sharon O'Malley14 describes how rural electric cooperatives diversify their boards to ensure that all members are being represented. These include term limits for directors and conducting elections by mail (in consumer cooperatives ballots are often printed in the member newsletter).
These methods, however, have not been entirely successful in getting non-farmer members nominated for board positions.15 According to O'Malley, the Jackson EMC in Jefferson, Georgia, has instituted changes in its nominating procedures to solve this problem. There,
each vacancy on the board is treated as seriously as the recruitment of a new co-op manager....The board president forms a director search committee ... which scours the service area for potential replacements. The committee looks for people that understand management, board responsibilities and the business environment and are team players. The process sometimes takes as long as three months but identifies as many as 30 candidates.In another rural electric cooperative, all members can nominate director candidates by mail. The two people who receive the highest number of nominations in each district are placed on the ballot. In this system, neither the board nor the manager has any direct input into who gets elected. In the most recent election, fourteen percent of the members participated in the nominating process, and 48 percent cast ballots. This process unseats the incumbent about 30 percent of the time.
U.S. consumer cooperatives tend to focus their educational activities on consumer and food related issues. They understand we are in an information age and take seriously their responsibility to provide valuable information to their members. For example, members of the People's Food Cooperative of La Crosse, Wisconsin are committed (through their mission and strategy statements) to educate both themselves and other customers about "nutrition, products, and broader food issues...[including] origins as well as ingredients and practices involved in food production. Education will be integral to [product] promotion.17 At the Hanover Consumer Cooperative in New Hampshire, the member education staff are charged with providing members accurate and unbiased information on products and services sold by the cooperative, the business itself, cooperation in general, community issues and concerns, and general consumer information.
The major education and communication tool of U.S. consumer cooperatives is the member newsletter. While the length, quality, format and editorial policies of these newsletters varies greatly, all are used to provide information designed to help members in their role as consumers, and to provide information needed to give them more effective control of their cooperative.
One of the most innovative member education projects in the country was unveiled last July with the first issue of Co-op Consumer News. The News is a publication of the Metro Co-op Grocers Association in Minnesota. Six cooperatives have pooled their education resources to produce one newsletter which provides information to their members and customers about food, nutrition and issues relating directly to them. The News also carries information about the cooperative movement and the members of MCGA.
In addition to its newsletter, the Sacramento cooperative uses a unique
method to provide product and store information for the members. They conduct
"theme tours" of the store. A new member orientation tour includes the
entire retail floor, the back rooms, walk-in coolers, offices and loading
dock. At the end of the tour members are given a $25 gift certificate for
items in the store. Another tour focuses on diet for a healthy heart. It
identifies low fat products on the shelves, shows consumers how to read
ingredient labels, demonstrates and distributes recipes, and gives samples.
Contributing to Community Well Being
In 1988 Philip Kotler described and popularized a new approach to marketing, "social marketing." Its goal is to pursue business objectives "in a way that preserves or enhances the consumer's and the society's well-being." (emphasis added)18 Because "socially conscious" consumers are a growing segment of the population19, Kotler questioned whether any business today could afford to be satisfied with meeting its own profit motive, or even with meeting the needs its customers. In addition to business and consumer needs, it is increasingly important for businesses to serve the public interest.20
Ketilson argues that cooperatives "are the most appropriate advocates
of the societal marketing orientation...By virtue of their unique nature,
the cooperative sector potentially can provide the ultimate in consumer
satisfaction, with social and economic considerations being given equal
importance." 21 Interestingly, socially conscious
consumers are the market segment that food cooperatives have traditionally
served. In fact, many cooperatives have found non-commercial projects,
such as community-building activities, environmentally oriented operations,
or consumer action programs attract customers and new members.
Many U.S. consumer cooperatives participate in activities that meet specific social goals of the cooperative. REI works to keep members informed of outdoor conservation issues through Environmental Centers located in each REI retail store. These centers provide material about a variety of outdoor conservation and recreational issues. REI also actively involves members in conservation activities. Each REI store team organizes and conducts an annual community service project, which offers area members the opportunity to work with staff to improvise recreational and natural resources.
The Hanover Consumer Cooperative recently won a regional Outstanding
Service Award from the American Legion post for its members and staff efforts
to distribute food to those in need. Coop volunteers deliver produce and
bread to local assistance agencies through the Country Harvest Program
and members support a food shelf with contribution throughout the year
and during an annual food drive. Cooperative volunteers contribute 400
hours of labor per year..and donate 3500 pounds of food during the food
While consumer cooperatives have been aware of the environmental impacts of consumption, the investor-owned business community has only recently acknowledged this issue, primarily in response to widespread concern about the environment. Among retailers, U.S. consumer food cooperatives stand out in their strong efforts to insure that their members' consumption minimizes its negative effect on the community around them. By carefully choosing the product mix, a food cooperative can limit choices of products to those that best enhance consumer and societal well-being. Boycotts of products that cause social or environmental harm can also be worked into the marketing program. (This action however can be controversial. See the first letter in Box 1.) Products can be chosen based on who produced them (local farmers, Third World peoples), or how they were produced (organically grown, cooperatively produced).
Extending the Cooperative Idea
U.S. consumer cooperatives often succeeded in meeting their members' concerns through their operating and merchandising policies and are often exemplary corporate citizens of their communities. However, they have not been as successful at offering the cooperative model itself as a possible solution to many community and national problems. Given the extent of modern challenges to the United States as a country, this may well be the time for consumer cooperatives to encourage discussion among their members of such questions as follow. Again, the author is indebted to Sid Pobihuschy for these questions.22
Why, then, the dissatisfaction with member involvement in cooperatives? Perhaps these cooperators are evaluating the success of their member involvement programs solely in terms of the number of people who attend the annual meeting or the number of votes that were cast in the last election. It is clear cooperative members are shopping, attending store tours, participating in member surveys and focus groups, contributing thousands of hours of member labor, serving on committees, and attending cooperative sponsored classes. Is this not member involvement?
Discounts on case lots
Member discount day
Percent of purchases given at the cash register
Member only coupons
Discounts to senior citizens
Parties associated with quarterly and annual meetings
Cash rebates when fully capitalized
Discounts at neighborhood merchants
Group rate insurance programs
Membership in a credit union or health insurance plan
Special interest evening teas
Children's activities on Saturday
Workshops on aging parents
Feature film matinee
Tea and muffin social
Salad Saturday - 2-5 - sample salads
Sampling days with recipes
In-store theme tours
Safe driving course for seniors
Ballots in the newsletter
Member labor programs
Suggestion boxes; answers posted in store
Shoppers column in co-op newsletter
Member and shopper surveys
Establish a Member Involvement Committee
Participation on board committees
The forum is a sample of letters and suggestions from co-op members. Your suggestions are always welcome; they are read and answered by the appropriate staff person.Of Politics and Oranges
A.Z., Quechee, VT: The National Organization of Women and other women's organizations have requested a boycott of products produced by the Florida Citrus Commission because of their sponsorship of Rush Limbaugh. I would like to see you feature orange juice from California or elsewhere in the USA.REPLY: Because our members have widely differing views, we do not boycott products on the basis of individual members' requests. Instead, each member is free to make his or her own product choices. The produce department at the Co-op sells California Valencia oranges in three different sizes and Florida Juice oranges. Product signs list the state of origin. The only orange drink or juice which does not contain Florida oranges is Ocean Spray Orange Juice....
Loaves and Wishes
D.B., Norwich, VT: I would love it if the special Klinger's bread came in small, small loaves.REPLY: Ed Klingbel, dentist and owner of Klinger's Bread Company in Burlington, is licensed to use the recipes and baking methods owned by Michael and Wendy London of Rockhill Bakehouse in Greenwich, New York. As part of the licensing agreement, Klinger's cannot alter in any way the recipes for the bread they bake. One option for those who would like smaller loaves is to freeze half a loaf for use at a later time.
R. F., Grantham, NH: I would like to suggest that prices on bulk items like sesame, et.al. be placed where short people with bifocals can see and read them.REPLY: Those of us who are "vertically challenged" will be happy to know that new bulk signs with the price, nutrition information, and ingredients are being developed. The signs will meet the newly enacted labeling laws, and the BIN numbers will be much larger and positioned for all to read....
Register to the Rescue
B.R., Lyme, NH: Many customers don't start writing checks until the amount has been totaled on the register. Most of the writing could have been done ahead of time, while the customer waited in line, with the brain in neutral. If a writing shelf was provided at the entry end of the conveyor belt, this might save considerable waiting time.REPLY: Grocery shopping has been known to induce somnambulism in weary shoppers, which can be frustrating to those who don't have the time for a snooze. Have no fear, our new cash registers can now print the face of the check with the date, Co-op name, and amount (numerical and written). Shoppers need only review and sign the check to complete the transaction.
Source: Co-op News, Hanover Consumer Cooperative Society, Inc., Hanover, NH, July-August, 1994.
At Sacramento Natural Foods Co-op our goal is to help you make healthy food choices by stocking our store with the highest quality food and products available. We take pride in our consumer education program, which provides shoppers with information, classes, recipes and resources that support a healthy life-style. Our staff is committed to creating a friendly, service-oriented environment when you shop. Discover the difference at Sacramento's only natural foods supermarket.
2. .Because there has not been a concentrated focus on membership issues by U.S. consumer cooperatives, answers to these questions must necessarily be based primarily on anecdotal evidence.
3. G.R. Seiler "Customer-Oriented Marketing-A Cure for Confusion" Management Review, June, (1988), p. 54.
4. S. Leonard, "Love that Customer," Management Review," October (1987), p. 37.
5. Not all coops have introduced all of these products.
6. With the exception of the few large "full line" cooperative supermarkets (Hyde Park, Eau Claire, Greenbelt, Hanover).
7. The Gallup Organization, "Awareness and Image of Business Cooperatives: A Survey of the American Public." July, 1994. Lincoln, NE.
8. Free of herbicides, pesticides and additives.
9. Veraska, Don, "Co-ops pay attention to marketing", Advertising Age, April 18, 1985, p. 19.
10. [need source for Welty quotation]
11. __________"Communications Vitally Linked to Member Feelings of Control," Land o' Lakes Mirror, September, 1982, p. 28.
12. Interestingly, in the debates over member involvement in the states, many members are convinced that volunteer member labor is one of the fundamental principles of cooperation and without out it "our co-op would be just like any other grocery store.".
13. Sacramento is the largest single store natural foods cooperative in the U.S. and is winner of the 1994 Retailer of the Year award from the Consumer Cooperative Management Association.
14. O'Malley, Sharon, "A Voice for Every Member," Rural Electrification, Jan, 1994, pp. 18-21.
15. This is a serious problem for the rural electrics. Recent studies indicate only 12 percent of rural electric customers are full time farmers.
16. Henehan, Brian, "Cooperatives Well Suited to Serve in New Customer Oriented Climate," Farmer Cooperatives, February, 1993, pp. 8-9
17. People's Food Cooperative, "Mission Statement," La Crosse, WI., 1991.
18. P. Kotler, (1988). Marketing Management: Analysis, Planning, Implementation and Control, Englewood Cliffs, N.J.: Prentice Hall, p.28.
19. Rozyne, Michael, (1986). "Human Values for Sales," Cooperative Grocer, February-March 1988, pp. 9-10.
20. L. H. Ketilson, (1990) "Marketing Member Commitment: Potentials and Pitfalls," Cooperative Organizations and Canadian Society: Popular Institutions and the Dilemmas of Change, ed. M. Fulton, Toronto, University of Toronto. p. 119.
21. R. Briscoe, "Member involvement - it can't be bad for business," The Atlantic Cooperator, April (1986), p. 5.
22. Sacramento - distributes its profits in the form of member discount at the register - 3.3% of sales. $280,000 in 1993. Also invest profits back into the business to improve the services we offer to our community. - store remodel; adding product lines, expanding departments; redesigning layout, general face lift.
D. Bramhall, "Taking Stock of your Customer Service Level," Cooperative Grocer , December-January (1988), pp. 10-11
R. Briscoe, "Member involvement - it can't be bad for business," The Atlantic Cooperator , April (1986), p. 5
R. Cotterill, Consumer Food Cooperatives , (Danville, IL The Interstate Printers and Publishers, 1982)
R. Desatnick, "Service: A CEO's Perspective," Management Review , October (1987), pp. 41-45
V. Elsinger, "Methods of Maintaining Contacts with Members," American Cooperation , The American Institute of Cooperation, (1929), pp. 375-381.
B. Henehan, "Cooperatives Well Suited to Serve in New Customer Oriented Climate," Farmer Cooperatives , February (1993), pp. 8-9
L. H. Ketilson, "Marketing Member Commitment: Potentials and Pitfalls," Cooperative Organizations and Canadian Society: Popular Institutions and the Dilemmas of Change , (ed. M. Fulton, Toronto, University of Toronto Press 1990), pp. 115-128
P. Kottler, Marketing Management: Analysis, Planning, Implementation and Control , (Englewood Cliffs, N.J.: Prentice Hall, 1988)
S. Leonard, "Love that Customer," Management Review, October (1987), pp. 36-39.
S. O'Malley, "A Voice for Every Member" Rural Electrification , January (1994), pp. 1821.
M. Rozyne, "Human Values for Sale," Cooperative Grocer , April-May (1986), pp. 6-7
G.R. Seiler "Customer-Oriented Marketing-A Cure for Confusion" Management Review , June, (1988), pp. 50-54.
D. Veraska, "Co-ops pay attention to marketing," Advertising Age (19)
Source: The World of Cooperative Enterprise can be ordered
from the Plunkett Foundation at 23 Hanborough Business
Hanborough, Oxford, UK OX8LH