Two of the more interesting marketing ploys of some businesses over the past two or three decades have been the been the rewarding of frequent users (with free travel or club memberships) and the provision of discounts to shareholders. These are known generically as customer loyalty schemes. In effect, the managers of a business are offering owners of the business and/or frequent purchasers of the business's services a benefit commensurate with their use of the business. This is precisely the most common way benefits accrue to members of cooperatives or other mutuals, such as clubs. That is members obtain a benefit from membership commensurate with use.

One consequence of the business pillaging of parts of the "cooperative (or mutual) difference" has been to further water down the publics' perception of the advantage of membership of an organisation over purchasing its services as a customer. It may have contributed to the dramatic decline in membership in most organisations, and in numbers of mutual organisations, over the past two decades.

Many people are about to discover the difference between share ownership and membership in a dramatic fashion. Coles-Myer, which had over 600 000 small shareholders and the country's largest shareholder discount scheme, has announced the phasing out of the scheme. The reason is that it has proven too successful and has eaten into profits and therefore dividends. But, one might ask, why should shareholders care. A discount in the hand is worth at least as much as a dividend in the bush. Indeed, the more one shopped at Coles-Myer, the more one received. From a shareholder point of view, this form of accessing the profit of the company is not only more timely, but possibly more tax effective (depending on the level of franking on the dividend).

The problem is that a few hundred shareholders are unable to access the profit in this way. They are the large institutional investors (the superannuation funds, the managed funds and so on). And, because Coles-Myer is really an investor owned firm and not a cooperative or mutual, they hold all the power. They hold the power because they hold most of the shares and, unlike the democratic principles of a cooperative or a mutual, where each member gets one vote, an investor owned firm is organised along plutocratic lines and awards votes, and thus power, according to the amount you invest - that is the number of shares you own.

Now that the truth is out, it would be nice to think that investor owned firms would face up to the contradictions in their attempts to copy cooperatives and mutuals, and desist. That would give consumer cooperatives and mutuals a chance to reclaim lost ground. Unfortunately, there are few of them left.

Meanwhile, the benefits of mutual organisations continue to be recognised (and appropriated for shareholders). In a recent issue of Business Review Weekly (28 March - 4 April 2002), Michael Hawker the new CEO of AIG (previously the insurance arm of the mutual NRMA) declared how impressed he was by the customer focus of staff, demonstrated by their hard work and commitment to help people during the recent Sydney bushfires. He acknowledged that this was a carryover from their days as a mutual and declared that he hoped to keep such a culture alive. It will be interesting to see if the institutions, which pushed for the demutualisation of the NRMA, will allow him.