When you think about the long-term goal of your club, what’s the most important factor that comes to mind? Member satisfaction? Employee well-being? Having fun? These are all venerable goals but what clubs really need is a full membership roster. Clubs need their members to be loyal, both attitudinally by recommending the club to their friends, and behaviorally by continuing to use the club themselves. Studies into various service industries have shown that a loyalty improvement as low as 5% can improve profitability as much as 25%. These additional funds can be redirected toward capital improvements, increased staff wages, debt reduction, charitable efforts, etc. A full roster provides options that were otherwise unavailable to the club. In short, improving member loyalty means your job is that much easier.
This was the impetus behind a recent research partnership between the National Club Association and Iowa State University. Our goal was to understand what drives member loyalty within private clubs. Although there is vast research on customer loyalty in the overall hospitality industry, there is very little information specific to club members. This is unfortunate because members’ needs are unique in the industry. What drives guest loyalty in a restaurant may not be what drives member loyalty in a club—or perhaps not in the same way. Clubs are not restaurants, golf courses, pools or tennis courts even though many clubs feature such amenities. Examining club loyalty requires a holistic approach that incorporates a member’s experience with the club’s amenities, (e.g., golf course, pool, dining room) as well as the camaraderie and social warmth that comes with being a member.
This project is a series of studies that include three articles that will discuss the findings from this research. This first article explores how psychological ownership and group identity play crucial roles in developing loyalty. It investigates how a member’s commitment to the club and to the other members leads them to be more loyal. In the next edition of Club Director we’ll focus on how members become attached to their clubs, which again leads to improved loyalty. The third article will identify the primary components of service quality specific to private clubs. This will also include a measurement tool to track and improve service quality at a club.
This article discusses an overlooked way to increase loyalty through ownership and group identity. In ownership, for example, people often demonstrate status by displaying ownership over a high- value item. Think of a sports car, a beautiful house, a tournament trophy—or a club membership. These possessions tell people, “I’m somebody important.” People have a natural tendency to overstate the value of their possessions because the greater the value, the higher the status. We then looked at how the ownership effect changes based on how much a club membership is tied to a person’s identity. When a person joins a club, it often becomes their primary venue for spending time with family and friends. A person becomes a member and their identity becomes intertwined with the other club members. Our study examined how this entwinement and a member’s sense of ownership interacted.
Psychological Ownership
Psychological ownership is a feeling that a person has gets when they feel something is “theirs.” Psychological ownership differs from legal ownership in its tangibility but ownership effects are manifested similarly. For example, you may legally own your house and can show the deed to prove it. On the other hand, consider your favorite sports team. Do you consider it “your team”? What about a certain nature spot, a favorite restaurant or a project at work? Do you say these things “belong” to you in a way?
If so, that’s psychological ownership. Psychological ownership can be purely individual (This club is “mine.”) or collective (This club is “ours.”). Similar to legal ownership, a person can psycho- logically own something individually themselves or collectively with others. People often band together to support something they communally see as theirs and they see themselves as part of a collective group.
Club members have a tremendous amount of psychological ownership. Don’t believe it? Try painting the walls a different color or getting rid of that one item that’s been on the menu for years but never sells and see how your members react. If members weren’t psychologically invested in the club, they wouldn’t care. Those strong opinions, while frustrating at times, demonstrate that members truly care for the club and act like they own it. Ownership traits manifest themselves in very much the same manner whether they are based in legal or psychological footings. It should be noted that many members technically do own the club in a legal sense but for most clubs, this ownership is largely symbolic. In most cases, the share price is nominal (e.g., $1) and shares are rarely transferrable. For all intents and purposes, a member’s ownership is psychological.
Our analysis began by investigating whether psychological ownership led to loyalty. Satisfaction is well understood to be the primary predictor of loyalty; therefore, we also examined whether psychological ownership influenced loyalty directly, indirectly or both. (See Figure below for a graphical representation.) In the study, we examined whether psychological ownership causes a member to be more loyal (Path B) or does it cause them to be more satisfied and it is that satisfaction which in turn causes them to be more loyal (Paths A & C)?
Psychological ownership can be viewed by two perspectives: INDIVIDUAL and COLLECTIVE. When we looked at a member’s individual psychological ownership, we found a slight correlation with loyalty. This implies that the more a member feels that they own their club, the more loyal they are. They’ll tell their friends about the club and visit more often. The results can be explained by something called the endowment effect. When a person owns something, they tend to want to protect it. They also tend to place a higher value on it than it otherwise should have. Experiments in behavioral economics have shown that a person will demand more to part with an item than they were willing to give up to acquire it. In other words, once a member psychologically owns their club they’ll be less willing to give up their membership, all other things being equal.
When we looked at the psychological ownership a member feels they have in common with other members, we found a relationship similar to the individual effect above. However, the collective aspect implies a sense of community. Members recognize the fact they share ownership with the other members and that fact causes them to be loyal. This implies a commitment to the group. In effect, the collective aspect of Path B is showing that because of that communal ownership members feel better about their club and use it more often.
We also found that individual psychological ownership is a very strong predictor of satisfaction (Path A). This means that as a member’s individual psychological ownership goes up, their satisfaction also goes up and by almost the same amount. How- ever, we did not find support for a similar effect with collective psychological ownership. This difference implies that satisfaction is highly dependent on how much a member feels they own the club but the communal aspect is unimportant. It is interesting that this result differs from the effects on loyalty above. Satisfaction is felt personally whereas loyalty is felt (at least partially) through a commitment to the other members.
The results confirm a long-standing belief that satisfaction leads to loyalty (Path C). This was expected, but it does allow testing for another effect of psychological ownership on loyalty. Path B discussed above shows a direct influence. Additionally, Path A shows an effect on satisfaction and Path C shows an effect of satisfaction on loyalty. Thus, we can draw a path from psychological ownership to loyalty indirectly through satisfaction (Paths A & C) as well. Both effects must be considered as shown in the table. Note that the indirect effect is moderately strong and actually stronger than the direct effect. In other words, individual psychological ownership helps improve loyalty directly, but perhaps more importantly it also causes a member to be more satisfied and that satisfaction also causes them to be more loyal.
Group Identity
Group identity describes a member’s sense that they are part of the overall membership. Research has shown that people tend to positively bias ingroups and negatively bias outgroups. People tend to prefer or demonstrate loyalty toward brands that rein- force their sense of identity. Think of Harley-Davidson owners, Apple devotees and Lululemon fans. Each of these customer groups have a strong sense of shared values, community and traditions. Each of these companies also have extraordinarily loyal customers that shun competing brands. Further, these customer groups also tend to discount the severity of negative events like a bad service encounter and emphasize the impact of positive events in their ingroup brand.
Private clubs also have a strong sense of values, community and traditions. Clubs are common places for members to spend time with family and friends. It is not uncommon for there to be two or three generations all to have memberships. Club traditions such as the member-member golf tournament or an annual summer party contribute to a strong sense of “us” (the members), versus “them” (the nonmembers). This study also examined how this sense of identity impacted satisfaction and loyalty. More specifically, we asked whether a member’s sense of identity increased, decreased or did not affect the positive relationships between psychological ownership, satisfaction and loyalty described above.
Three aspects of identity were measured: solidarity, satisfaction and centrality.
SOLIDARITY refers to the social bond a member has with other club members. This pertains directly to the strong sense of values and community present in clubs. Solidarity enhances a member’s sense of belonging and attachment to others. When a member has high solidarity with other members, they’re reaffirming their commitment to the other members.
SATISFACTION in the sense of identity is not the same as overall satisfaction with the club. Satisfaction in this sense refers to a member’s satisfaction with being a member of the group itself as in the group’s collective self-esteem, pride with being seen as a member, and so forth. Some identity theorists believe identity satisfaction may be the root cause of the positive ingroup bias. If a member is proud of the fact that they are a member of their club, they’ll also report higher satisfaction with the club overall because the two notions fuel each other. It is axiomatically better to belong to a high value group than a low value group. Thus, a club member will positively bias their club—give it a higher value—because it enhances their own self-esteem.
CENTRALITY refers to the salience of one’s membership. It is a combination of how strongly they consider themselves a member and how often they think about their membership. In terms of club membership, identity status is assumed. A person either is a member or a person is not a member. A club member obviously knows their membership status, however, if the person does not often think about the membership or if they feel it isn’t as important to their identity, any associated effects will not be as strong. Centrality can be thought of as the mindshare of the membership itself.
Each relationship shown in the figure was tested to see if they changed with regard to each aspect of group identity. Solidarity and centrality reduced the impact of psychological ownership on satisfaction. Solidarity’s effect was moderate and centrality’s effect was strong. The results mean that for members who have low levels of psychological ownership, the identity aspects of solidarity and centrality become more important in predicting satisfaction. Or, if a member does not feel a strong sense of ownership, satisfaction can still be improved by increasing their sense of identity as a member both by reminding them of their sense of commitment and by increasing the frequency with which these reminders occur.
Centrality also played a very small effect enhancing the positive relationship between psychological ownership and loyalty. This implies that the more a member thinks about their membership, the more their communal-based loyalty is increased. Although, the synergistic effect was slight, the individual effect on its own (called the “main effect”) was significant. Both psychological ownership and identity centrality influenced loyalty on their own; but, when we examined how they worked together to further improve loyalty, we found only a slight effect.
Identity satisfaction showed similar main effects but we did not find evidence for any interactions. Identity satisfaction helped to explain both overall satisfaction and loyalty directly. This sup- ports the view that as a member becomes prouder of their club membership, they tend to place a higher value on it. However, this effect appeared to work independently.
Implications
These findings are very interesting because they show that a sizable amount of satisfaction comes from psychological ownership at the individual level. Also, it shows that when members think about their club in terms of shared communality with other members, their sense of identity is a very meaningful construct. The findings also show that a member’s sense of identity is an important factor in making members satisfied. Part of a member’s ultimate loyalty comes from the sense of ownership they have but a large portion of their loyalty comes from a sense of being part of the club itself. Being a member of a group associated with luxury and success increases their own self-worth but also it imposes a responsibility on the member to be more loyal.
So how can you make use of this information? First, capitalize on your members’ sense of psychological ownership, both individual and collective but especially individual. These findings suggest that reminding members that this is their club will encourage them to be more satisfied and loyal members independent of any other evaluative aspect such as the value proposition, quality of the course, service in the dining room, and so forth. Second, capitalize on the solidarity aspect of identity and emphasize how much your members have something in common with other members. Remind them that the club is the best place to spend time with family and friends. They’ll automatically develop a sense of commitment that will bind them to the club. Last, remember that the strongest effects were found in centrality. The more your members think about the fact that they’re a member the more satisfied and the more loyal they will tend to be.
Watch for parts two and three of this this series on how you can increase member loyalty in your club. In the next edition of Club Director, we’ll be discussing how members build attraction to their club and how that can improve loyalty as well. In the following edition, we’ll discuss the specific factors members look at when deciding if they’re receiving good service and we’ll provide a simple tool for measuring service quality at your club.
The researchers wish to acknowledge the National Club Association for their generous support with data collection without which this study would not have been possible.
Fredrick “Chuck” Meitner is a PhD Candidate in the Apparel, Events, and Hospitality Management Department at Iowa State University, currently conducting research on private club member behavior. His other research interests include service and operations management as well as mental health among hospitality workers. He is also an aspiring sommelier. Chuck has 20 years’ experience in private clubs, both in the kitchen and the dining room. Meitner can be reached at [email protected].
Dr. SoJung Lee is an Associate Professor in the Apparel, Events, and Hospitality Management Department at Iowa State University. Her research focuses on consumer behaviors in pop-culture tourism, club industry, rural tourism and sustainable tourism from psychological perspectives. Her current research projects include clubs’ environmental sustainability and members’ psychological and sociological behaviors. She can be reached at [email protected].
