The Loyalty Illusion

Member organisations often assume their members are loyal and that non-members understand their value proposition. Members own the bank, professionals are beneficiaries of their association, policyholders are the mutual. And, the assumption continues, this structural relationship generates something that competitors can't easily replicate - a bond greater than price and convenience.

Over the years working with member organisations, and having asked more than 3,500 Australians on behalf of our clients, I've found this assumption is often challenged by the evidence. What organisations often believe is their differentiating value proposition isn't actually valued by many members, or by the target market they're trying to attract.

For mutual banks, research consistently shows limited understanding of the customer-owned model among the broader market. Ownership terminology confuses rather than clarifies - 'member-owned' can suggest fees and exclusivity rather than benefit. Community positioning is viewed positively but met with scepticism. For professional associations, the pattern looks similar - members hold credentials granting them the right to belong, but when pressed, often struggle to articulate why they should continue paying annual fees.

Members behave like consumers

Members are no different to consumers (they are the same people, after all). Loyalty must be earned continuously, and the value proposition must be easily matched to a need within the organisation's target market. Structural ownership or professional affiliation establishes eligibility, not commitment.

This means being clear on what actually measures loyalty and its drivers over time is critical. It requires actively listening to member and market signals rather than relying on proxies that create a false sense of alignment.

Satisfaction is a case in point. Across the research we've done for projects, we consistently find that satisfaction scores fail to predict actual member behaviour. For example, we have seen that the most dissatisfied segments of the market show the lowest switching rates - inertia, not contentment, keeps them in place. Meanwhile, some segments that say they are satisfied switch at twice the rate. In another example, highly satisfied members report strong preference for their customer-owned bank but still primarily bank elsewhere. They rate the organisation well, they say they would recommend it, and yet their relationship remains shallow because satisfaction doesn't automatically convert to commitment.

This suggests we may be measuring the wrong things or interpreting what we do measure as victory signals when they are anything but. In our work, stated preference consistently overstates action by a factor of two to three. When 30 per cent of respondents express high intent to switch or engage, experience suggests fewer than half will actually follow through. We work with our clients to identify the meaningful calibration factors to test that can then be translated into strategic projections - without this discipline, market performance planning becomes guesswork.

What members actually value

What we have found is that for any member organisation, clarity on the basic value proposition is critical. For member associations, this could lead to disparities between what members believe should be included in membership and what the organisation can afford or has the capability to deliver. For customer-owned banks, this can vary depending on who you talk to - members can value presence or services while target non-members need to see credible signals of the basic banking proposition before differentiators will have any effect.

And of course, this is complicated with further segmentation. For banking, I explored the two markets of net depositors and net borrowers in this article. Understanding what each values is critical to efficient and credible engagement. For example, with one client, their differentiator resonated strongly with one demographic that offered strategic strength in margin-protecting deposits, but little in generating revenue through loans, while the revenue-generating net borrower segment placed lower value on the differentiator. This led to clarity of the strategic choices to optimise execution.

Furthermore, life and career transitions compound this challenge. Members who change jobs, relocate, consolidate households, or retire are significantly more likely to reassess their relationships. Yet most organisations only notice after the erosion has occurred, reacting to churn rather than anticipating the moments when relationships are most vulnerable - and most receptive to deepening.

A fair exchange of value

Member value proposition is no different to consumer value proposition. It needs to represent a fair exchange of value, where members can see personal value being created in excess of the cost of access - whether that's interest rates, member fees, or time invested in engagement.

The instinct in many organisations is to ask how to better communicate the value proposition, or how to leverage member loyalty more effectively. But this assumes the value proposition is sound and loyalty exists to be leveraged. A harder question is whether the proposition actually delivers value that members recognise and are willing to pay for.

For mutual banks, this means getting specific about which segments value their differentiator and which don't, understanding the friction points that cause disengagement even among satisfied members, and building retention into KPIs that traditionally favour acquisition (which still needs to happen in parallel).

For member associations, it means confronting whether the value proposition still resonates across career stages, whether the credential alone justifies the fee, and whether the organisation has invested as much in understanding member needs as it has in marketing member benefits.

The evidence gap

Knowing what your members actually want and need requires a holistic, strategic approach that draws on both internal and external evidence. Without this, strategic decisions are made with either insufficient data or, worse, biased data that confirms existing assumptions rather than inherited beliefs.

Leaders deserve more than conviction when making strategic bets on member behaviour. They deserve confidence - the kind that comes from tested hypotheses rather than inherited beliefs. The question "how do we know members are loyal?" should be answerable with something more rigorous than tenure data and satisfaction surveys.

Member-based organisations have genuine advantages - purpose beyond profit, community roots, governance that aligns with member interests. But these advantages create potential, not guarantee. Realising that potential requires the discipline to test assumptions, validate strategies, and earn engagement rather than assuming it.

The question isn't whether your members are loyal. It's whether you've done the work to find out what would make them loyal.