Building commitment
Sharpening your co-op communications can build
member commitment and better reach select groups
By David Trechter
and Robert P King
Editor's Note: Trechter is a professor of agricultural economics at
the University of Wisconsin-River Falls. King a professor of applied
economics at the University of Minnesota. They received funding
from USDA Rural Development's Rural Business-Cooperative
Service to look into the communication practices of cooperatives in
Minnesota and Wisconsin. Based on their survey of 37 cooperatives
and 759 members, they have gained new insights into the impact of
communications on member loyalty and the preferences of members
for different types of communications. Highlights from a talk
Trechter gave on this subject were also included in the Sept.-Oct.
2001 issue of "Rural Cooperatives. "
ost businesses actively try to enhance the commitment or loyalty of customers to their products. Airlines offer frequent flyer programs, Amazon.com develops a sophisticated customer profile that helps customers find other books they are likely to enjoy, and motel chains offer discounts and special privileges to repeat customers.
Cooperatives, too, expend a good deal of effort trying to increase their members' commitment. Indeed, cooperatives probably have an advantage in this regard. Cooperatives are member-owned, meaning that their customers have an investment in the business. Thus, because a portion of a member's wealth is linked to the on-going well-being of the cooperative, they may be more committed to it. In addition, the democratic nature of cooperatives (one person-one vote) and the voice that members have in the running of the business (through the board of directors) are likely to lead to greater patron commitment.
Committed cooperative patrons are likely to be important for a variety of reasons. First, members who are committed to the cooperative are more likely to stick with the cooperative during difficult times. They are also more likely to elect a strong board of directors to help guide the cooperative. Committed members are more likely to be demanding. Demanding members are beneficial to cooperatives because they push the business to constantly improve on goods, services and pricing. In short, demanding members help keep cooperatives on the cutting edge.
Finally, agriculture is an industry in the midst of massive restructuring. We see this in terms of the ever increasing farm size and in the wave of mergers and consolidations that have created large-scale supply chains. Committed members are more likely to understand these trends and the implications for their cooperative.
This article identifies how cooperatives can use com-munications to build member commitment and the factors that influence preferences for some key communication options.
The study
Table 1 summarizes some of the key financial characteristics over the 1997-1999 time period for the 37 cooperatives that participated in this study. The sample included roughly equal numbers of cooperatives that attained relatively high standards of financial performance (determined by local return on investment (ROE) greater than 10 percent, debt-to-equity ratio of less than 0.25, revolving equity in less than 15 years, and issuing more than 40 percent of patronage refunds as cash) and low levels of performance (negative ROE, debt-to-equity of
greater than 1, equity revolvement greater than 75 years,
and less than 20 percent cash patronage refunds).
Table 2 provides a breakdown of characteristics of the 759 cooperative members who participated in this study. The table shows that, typical of the farm population as a whole, the respondents were primarily middle aged or older. The members in this sample did have a relatively high level of education, with 50 percent having at least some college education.
In the survey, co-op members were asked to indicate on a scale of 0 to 100 (0 = totally uncommitted, 100 = totally committed) their level of commitment to a specific cooperative to which they belonged. Table 2 shows that the majority of members in this sample reported a relatively high level of commitment to their cooperative (in excess of 60 percent). However, nearly 20 percent of the sample indicated they were 40 percent or less committed to their cooperative. In short, there was a widely varying level of commitment to their cooperative expressed by these members. Members can get information about their cooperative in a wide variety of ways. Some communication channels are informal, such as conversations with the manager, employees, board members or other members. Other communication channels are more formal: newsletters, cooperative Web sites, or press releases. Still other channels, while not necessarily explicitly designed as communication vehicles, may play an important communications role. For example, the annual
meeting, focus groups with members, and member surveys have varying amounts of communications imbedded in them.
Members were asked to rate ten channels by which they might receive information about their cooperative. The results of this evaluation are summarized in Table 3. The most important sources of information about the cooperative, as indicated by this survey, were informal conversations with employees and with the manager. Only two other communication channels, newsletters and news articles were rated as important or very important by more than half of the members in the sample.
Interestingly, the least important source of information, judged by the proportion of respondents who rated it as important or very important, was electronic communications. Clearly, the majority of cooperative members are not yet living in an e-world.
Building member commitment through communications
Member commitment to a cooperative may stem from a broad array of factors. For instance, characteristics of the member (family history with the cooperative), characteristics of the cooperative itself (how big it is) or the cooperative's financial performance may influence member commitment. The cooperative's efforts to communicate with its members might also affect member commitment.
Communication strategies are a particularly interesting factor in terms of building member commitment, both because of the wide variety of mechanisms available for touching base with members and because communications are largely under the control of the cooperative. This contrasts sharply with the other factors (member characteristics, cooperative characteristics and the financial performance of the cooperative) that are likely to influence member commitment, but are wholly or partially outside the control of the cooperative.
The survey results support the proposition that member commitment can be influenced by the cooperative's communication strategy. In terms of specific communication tools that increase member commitment, informal communications with the manager and press releases appear to have the greatest impact. The importance that most members attach to informal communications with the manager and employees indicates that cooperatives would be well served by making sure that employees who interact with members receive
training in public relations and that the cooperative develop message
points they would like these employees to convey to their members.
Co-op communications preference factors
Trechter and King also looked at factors that are associated with greater appreciation of each different type of communication. Their results are summarized in Table 4. These results in the Member Characteristics section of the table suggest that different communication tools appeal to distinctly different types of members. For instance, older members and those with less formal education prefer news articles as a source of information about their cooperative. In contrast, members with more education would rather speak to employees or use electronic communications to get information about the cooperative. Members who have served on the board of directors or on a cooperative committee (whose attachment to the cooperative is, perhaps, the strongest), the annual meeting is an important source of information. Reading down the columns in table 4, the results also suggest means by which the impact of a given communication tool might be increased. Newsletters, for example, appear to have more impact when they are issued more frequently (e.g. monthly newsletters seem to be more effective in building member loyalty than do quarterly publications). Interestingly, newsletters are also enhanced if the cooperative has a Web site (newsletters and Web sites complement each other) or if it issues few press releases per year (newsletters and press releases are substitutes). In contrast, press releases are more influential if they are relatively rare and the existence, or lack of, a Web site seems unrelated to their ability to enhance member commitment.
Finally, the results for electronic communications reported in table 4 present an interesting story. Recall that table 3 indicated that electronic communications were rated as the least important of the ten communications channels considered. The results reported in table 4 are broadly consistent with this result, in that electronic communications are not important to the average cooperative member. However, it is still probably important for local cooperatives to consider having a presence on the Web. Electronic communications appeal to the more highly educated members of the cooperative, a segment that is hostile or neutral to traditional communication methods (annual meeting, newsletter, press releases). Electronic communications also appear to enhance the ability of cooperative
newsletters to influence member commitment and extend the ability of managers to communicate with members (substituting for direct face-to-face contact).
Conclusions
Committed members are important to cooperatives for a variety of reasons. The communication strategy followed by a cooperative in getting information about itself to its members can affect the level of member commitment. Given that the cooperative has much more control over its communication strategy than it does over other factors that would be expected to influence member commitment, this is a very positive conclusion. Specifically, managerial communications with the members and the use of press releases showed a strong statistical relationship with higher levels of member commitment.
This research suggests that different types of members have distinctly different preferences for communication tools. Older, less-educated members seem to like to read about their cooperative in their newspapers. More highly educated members, in contrast, prefer electronic communications and informal discussions with cooperative employees.
Several means were also identified by which different forms of cooperative communications can be strengthened. Of particular interest to this discussion is the role of electronic communications. While electronic communications are not important to the vast majority of cooperative members, they are important to a potentially influential segment (college educated members), complement some traditional communication tools (newsletters), extend the ability of managers to communicate with members, and substitute for communication channels that are somewhat problematic for cooperatives (press releases).
Cooperatives should, it appears, take a buffet approach to communications: use a wide array of communication tools to appeal to different segments of the membership. Cooperatives should not overlook the importance of informal channels of communication, particularly the interactions between members and the general manager and other cooperative employees.
