Streamlined System Multiplies Members, Member Investment and Community Contributions

Two years ago, North Coast Co-op, operating two stores in Arcata and Eureka (California), streamlined its membership program. At the time, no one dreamed that this change would result in a ten-fold net increase in the number of members and of their investment in the cooperative.

In addition, the growth in member-owners, which has only slightly abated, has helped increase donations to the Co-op Community Foundation, North Coast's community giving program, by substantial amounts.

In the first year of the program, North Coast posted a net gain of 549 members. Compare that to prior years, when an annual net gain of 50 was the average. Last year, the net gain was 585 members. By mid-March, two weeks before this fiscal year-end, the co-op's net gain to date stood at 490 members.

Membership shares also climbed quickly under the new program. Before the new program, share investment from members averaged $20,000. The first year's net gain was $251,781 in shares; last year's was $307,625; this year's total near year-end was $245,367.

After reaching a $200 investment, a member's 2% discount is used in one of three ways. -- co-op members can "save it now, save for the future or save for the community."

Keys: simplicity and community

Surprisingly, North Coast Co-op's strong gains in membership and investment have come without any coordinated recurrent activity, such as a major membership drive. Membership director Valerie Davis attributes the program's success to its simplicity and its appeal to community-minded individuals. "The number one reason to join, according to new member surveys, is to be a part of the community."

After purchasing a $25 "A" share, the new member immediately begins receiving a 2% discount on all purchases, which is automatically invested in "B" shares until that account reaches Fair Share status, or $200.

Fair Share members make up a little over one-quarter of North Coast's 8,060 members. Once the discount is no longer invested in "B" shares, Fair Share members have three options. They can:

• receive the discount at the register on their purchases;
• invest it in "C" shares (and earn 6.5% interest through year 2000); or
• invest it in the Co-op Community Foundation (CCF).

Co-op members can, in the words of a recent co-op advertisement, "Save it now, save for the future or save for the community."

"C" share investment, which began with the new program in 1996, started off at $118,000. In just two years that investment total jumped to a whopping $900,000. Total member equity including "C" shares stands at $1.5 million. Just two years ago equity was $670,215. The "C" share program has made a big difference.

With this program, North Coast eliminated administrative fees, cumbersome monthly payment grids on membership cards and thousands of pounds of paperwork. It gave all members the 2% discount, not just Fair Share members, and also eliminated the frustrating nightly hand posting of purchase totals to all membership numbers, which became a nightmare when year-end totals had to be produced.

Essential point of sale software

But what took North Coast Co-op from its technological Stone Age into the '90s was an innovative Point of Sale (POS) software system initially designed as a frequent shopper program but reconfigured to suit North Coast's needs. "Up until then," Davis said, "the technology wasn't there to collect all this information."

Nor was the POS technology available to remember whether a Fair Share member wanted his or her 2% discount diverted to shares of the Co-op Community Foundation (CCF), rather than given as a discount. Fair Share members are allowed to change this option quarterly.

Although Davis says members and other shoppers took a while to catch on about donating to the foundation, they've made up for it in spades. During the first year that it was an option, automatic donations totaled $9,574. The next year that figure jumped to $24,973. And as of mid-March 1999, two weeks before fiscal year-end, the CCF had taken in $38,780.

Donating to the CCF is as easy as using a local non-profit's membership number at the register. Signs are posted there listing a variety of local groups North Coast supports and encourages members and other shoppers to likewise support. When they do, the 2% discount is then funneled into the CCF under that membership number. The foundation's gifting committee, which meets at least once a year, considers all those "votes" for specific groups and/or categories -- such as education, the environment, women's and children's empowerment and local agriculture -- before deciding on that year's donations.

Quite often, those register signs are tailored to specific North Coast promotions or events, such as the popular Atalanta's Victory Run and Walk, an all-woman event in May that functions as North Coast's fund-raiser for a local women's shelter. That shelter is the top group supported by members and shoppers. Its membership number tallied an impressive $23,000 in donated 2% discounts this past year, based on $500,000 in purchases under that number.

The future of North Coast's membership programs looks bright indeed. The new system's flexibility could lead to more user-friendly features such as automatically investing into "C" shares the additional 5% discount given to senior citizens and employees. The ability to build a variety of mailing lists could inform members of such things as when their favorite products are on sale or when an event they like is scheduled. "It's a wealth of information," said Davis. "We pretty much have a push-button program for members."