November 2016

1. Driving up member retention & deep brand connectionsA Behavioural Science inspired proposal for Virgin Active November 2016

2. Driving up member retention & deep brand connectionsA Behavioural Science inspired proposal for Virgin Active November 2016

3. What is Virgin Active’s challenge?

4. Current context Virgin Active context Wider context Cultural trends are shifting towards a more holistic approach to health – focus on nutrition and mindfulness is considered just as important as exercise There is an ongoing tension around gym culture – gym is for the ‘serious’ gym goers / exercise obsessives. This can alienate the less confident, fitness-focused, struggling to identify with such ‘serious gym’ brands Virgin Active has lost some of the original Virgin spark! There is little point of difference with other gym brands, i.e. it doesn’t give any more to its members or workforce than its competitors do This means that customers and workforce are losing a deeper connection with the Virgin brand, which is having an impact on retention: for every 15,000 who join Virgin Active each month, 15,000 leave The brand has lost some of its heart, its differentiation. There’s no brand love beyond a functional connection

5. Behavioural mission Identify current behavioural strengths and weaknesses that impact brand connection and develop a series of actionable behavioural nudges to build a deeper relationship To inject the some colour back into the heart of the brand And ultimately increase retentionacross Virgin Active clubs Identify behavioural inflection points for Diageo to connect with and enhance consumer experiences across the Out to Switch Off and Catch Up ‘occasion journey’, e.g. what can we leverage in the planning stage(s)? Understand what features of existing core calendar occasions could be built off & extrapolated to more frequent, relaxed social occasions& what can’t! Fuel disruptive behavioural activation ideas to grow Guinness in the Demand Space – leveraging Always On triggers to “keep the fire burning”, e.g. • Digital, social & proximity OOH content • Bar presence and consumer BTL comms • Trade and customer advocacy (TBC)

6. Additional context for identifying a set of behavioural nudges Virgin Active are soon to be launching a set of brand values With each value it will be important to look at the behaviours that will drive brand connection, and those that won’t What does the customerneed to see and feel? What does the workforceneed to see, feel and do? Ensure that the behavioural nudges developed fit with the new values and bring the brand alive

7. Why The Behavioural Architects and why a behavioural-led approach? Topline BE concepts BE examples TBA case studies

8. Why The Behavioural Architects? Behaviour change experts! Use the latest insights from Behavioural Science Conduct research in context to surface behaviours people are not consciously aware of Proven project successin the sports world Are an award winning agency! We deliver actionable insights to drive behavioural change that are easy to understand and implement Topline BE concepts BE examples TBA case studies

9. Why use Behavioural Science? Behavioural Science (or BE) gives us a deeper understanding of the blueprint of current behaviour – it identifies the triggers and barriers driving this behaviour Against this blueprint of current behaviour, BE concepts and frameworks give us the simple tools to change people’s behaviour! Understanding the challenge… …Finding the solution! Topline BE concepts BE examples TBA case studies

10. Here are some key BE concepts we will leverage to unlock ‘brand connection’ touchpoints along the journey Anchoring Reciprocity Priming Framing The same information framed(presented or ordered) in two different ways can lead to totally different behavioural outcomes We surprisingly susceptible to subconscious influenceson behaviour via words, images and smells No decision is made in a vacuum – our behaviour is influenced by a specific piece of information from which we adjust. We tend to respond to a positive action with another positive action. This also applies to negative actions. What are people anchoring to when they think of Virgin Active? How can the brand be more overtly anchored against its values, and shift any negative anchors? Where are there areas that work against reciprocity and need to be dialleddown? Where can Virgin Active dial up reciprocity, for both its customers and workforce to leverage brand loyalty? How can Virgin Active identify and remove negative primes in the environment and dial up positive primesthat speak to its values? How can Virgin Active reframe negative information?Where can more positively framed messages that connect with the brand values be dialed up? Topline BE concepts BE examples TBA case studies

11. A few more really useful BE concepts Commitment & Coping Planning Giving Feedback Peak-end Rule Habit Loop We are more likely to follow through with a behaviour if we commit to doing it verbally or in writing. Planning how to overcome any obstacles also increases our chances of success! Subconscious behaviours that start with a trigger, a routine and a rewardthat builds a neural loop after repeating it a number of times We need consistent, positive feedback to reinforce a good behaviour. We tend to judge our experiences almost entirely on how they were at their peakand how they ended vs. net or overall pleasant/unpleasantness. Where is there negative or a lack of feedback in Virgin Active clubs, and where/how could Virgin Active give positive feedback and build a stronger brand connection? What is stopping / demotivating customers from attending the gym and how can Virgin Active dial up commitment and coping planningto support customers in visiting their club? How can Virgin Active create stronger triggers and rewards for both customers and staff and identify barriersto creating stronger gym habit loops? How can Virgin Active avoid negative peak-endsand enhance the positive peaks-ends of customers’ experience? Topline BE concepts BE examples TBA case studies

12. Here’s how other companies are using BE to create behaviour change – small nudges can have a big behavioural impact! Increasing customer satisfaction on train rides based on the PEAK-END RULE Netherlands Railways asked customers to report on their journey using photos and comments during a 5 week period to create behavioural journey of highs and lows. They found that small dips in customer service actually boosted the intensity of the peaks, so now work on improving the peaks to create a more positive memory for customers. Reading trashy audiobooks increased COMMITMENT to time spent in the gym A study has shown that by bundlinginstantly gratifying experiences with ‘should’ experiences can change behaviour and increase people’s gym attendance. Offering gym-goers the chance to pay for audiobooksonly to be listened to in the gymincreased their attendance by 51%, highlighting the desire for such a commitment device! Interflora’s random acts of kindness to increase RECIPROCITY Interflora wanted to boost their brand values and leverage positive word of mouth through a social media campaign drawing on random kind acts to brighten people’s day. They monitored Twitter to look out for people having a bad day then offered them a bunch of flowers to cheer them up. The campaign generated a huge feel-good factor. The agency estimate the positive word of mouth effect reached 1.75m. Topline BE concepts BE examples TBA case studies

13. Some case-studies of how TBA has changed people’s behaviour • Using BE to increase diabetes medication adherence • Adherence to type 2 diabetes medication is incredibly low, so TBA devised a simple intervention in the form of a salient reminder and commitment device for patients to use in their homes. TBA created a poster that leveraged key BE principles including: • Commitment – a promise contract between them and their loved one • Salience – a picture of their loved in corner of the page plus a bigger image of their eyes (I’m watching you!) • Feedback & Chunking – daily stickers to record and chunk goal of adherences into manageable mini-goals • The intervention had a significant impact on behaviour with 7/10 showing an increase in adherence Creating more ‘street harmony’ on London’s roads using social norms TBA created a simple behavioural intervention designed to reduce tension between cyclists and motorists on London’s roads. When humans aren’t sure about what to believe or do, they tend to look to others for guidance, often emulating their behaviour – this is called social norms. By putting a sign at traffic light junctions that read ‘most cyclists wait at red lights’, TBA researchers saw a marked decrease in the number of cyclists jumping red lights at rush hour by 21.4% and 14.5% respectively across 2 junctions. The message leveraging social norms challenged motorists’ existing inaccurate beliefs head on. Topline BE concepts BE examples TBA case studies

14. Back to your challenge!

15. To understand how to deepen brand connection there are 4 pieces of the puzzle to consider: CONTEXT SETTING Psychological, social and cultural significance around gyms etc. – changing dynamics BRAND CONTEXT SETTING Exploration of current perceptions of Virgin ActiveBRAND [including behavioural connections or disconnections from the new brand values] MEMBERSHIP BEHAVIOURAL JOURNEY Deep dive into membership journey – including joining, induction, PT etc. & drop off points (where people leave) GYMEXPERIENCE BEHAVIOURAL JOURNEY Deep dive into the behavioural journey of gym visit - including impact of workforce behaviours Each of these are not only important in their own right, but also in terms of the behavioural chemistry they create in combination

16. This will create an exciting model to identify where barriers working against the values need to be dialled down & what triggers can be dialled up to help the brand shine again The model will be based on a behavioural journey: MICRO LEVEL: (1) customer’s Virgin Active experience overall+ (2) experience affected by workforce  Lots of space with big mirrors to put make-up on and straighten my hair, while listening to the radio  (1) CUSTOMER Feel invigorated walking to work and pleased I’ve had an hour to focus on myself  Look up classes on website that look like they’re for me - feeling motivated! Being tutted by other gym member for dropping the weights Lots of familiar faces but don’t feel I can say hello   pre   post Seeing cleaner in the changing rooms makes me feel they’re clean – reassuring! (2) WORKFORCE Greeted by receptionist when arrive Receptionist was looking down at the desk so didn’t notice me trying to catch their eye on way out Spinning instructor kept telling us we weren’t working hard enough, but I was at my max - felt a bit deflated   MACRO LEVEL: where Virgin Active sits in customers broader lifestyle & identity, e.g.: Want to lose baby weight but don’t feel comfortable going back to the gym – wont’ be fit enough to keep up in class Have first baby and priorities shift to looking after her, not very motivated to work out – go for more walks with baby instead Move job and find a VA gym nearby which has lots of classes to choose from. Enjoy the fitness buzz Going to local budget gym near home 4 days a week – really into fitness and keeping slim Find a gym that seems more ‘mum’ friendly – I won’t be judged for my baby fat! 2009 2011 2014 2016 2013

17. Our overall deliverable to you An inspiring framework bringing the member behavioural journey alive - that staff across the business will be able to relate to Identification of HOW to influence member behaviours along this journey – both actions to STOP / START / CONTINUE to deepen connection with the Virgin Active brand Collaborative development of BEHAVIOURAL NUDGES underpinned by science – to increase retention

18. How are were going to do this?

19. A multi-layered methodology inspired by behavioural science PHASE 3. ANALYSIS & MODEL DEVELOPMENT PHASE 4. TEST & LEARN PHASE 5. REFINEMENT & ROLL OUT PHASE 1. FOUNDATION PHASE 2. IN-CONTEXT DEEP DIVE Approach Review any existing research or relevant background; interviewswith Virgin Active staff; develop behavioural hypotheses to test in research – use our database of nudges and case studies to inspire ideas • Meet with current and lapsed members and retrace their recent gym session in context. Use a range of behavioural techniques to unlock triggers and barriers along their behavioural journey. • Pre-arranged & on-the-spot interviews with staff to gather workforce perspectives * Analysis using Behavioural Economics to understand current blueprint and behavioural triggers & barriers to retention * Identify ways to dial up triggers/dial down barriers Trial a few ideas(quick wins), in a handful of clubs to check & challenge nudges Analysis & refinement of ideasthrough a BE-lens -to understand which work and why Deliverables *Collaborative workshop with Virgin Active aligning on behavioural hypotheses *Refined ideas to be rolled out across clubs * Contextualised insight identifying touchpoints & specific actions to leverage brand values *Interrogating hypotheses from different perspectives *Evaluation of how ideas ‘land’ in practice - to guide optimisation & roll out *An exciting model that will unlock ways to create behavioural nudges *Workshopto deliver findings and align on behavioural nudges to be trialledin a range of clubs Please note, we have provided indicative costs for phases 1-3 only on p.22-23 as the scope of phases 4-5 will be dependent on the initial work & may only require ad hoc consultancy support from us, charged on a day-rate basis.

20. Member / lapsed member sample spec would be discussed upon commission, but we envisage it looking something like: • Recruit from Virgin Active lists – a mix of: • New members (joined in last 6 months) • Established members (12 months+) • Lapsed members (left less than 3 months ago) – ensure they left because didn’t use / like the gym vs. e.g. move away • Location: • Approx. 5 clubs across the UK that have retention problems, possibly including one London club • Demographics: • Equal male : female split • Age (to reflect typical Virgin Active age brackets) • SEG (to reflect typical Virgin Active SEG brackets) – assume a BC1 spread • Additional factors to consider: • Tier of club • Mix of customer values and motivations to exercise, as well as how they use the club e.g. classes only, gym floor etc.

21. Project Team & Costing

22. Our team RACHEL ABBOTT (DIRECTOR) Rachel has a background in anthropology, innovation and advertising. Heads up TBA’s social behaviour change research offer – which includes real-world applications of a broad range of psychological and behaviour change & tools to macro societal issues through a deep understanding of the behavioural context. Rachel is motivated by the opportunities behavioural science provides to generate deeper and more actionable insights for clients (and its potential for consumer empowerment too!) CRAWFORD HOLLINGWORTH (FOUNDER) 25 years experience working as a advertising planner, strategic consultant and qualitative researcher. Founder of The Behavioural Architects, previous Global Exec. Chairman of The Futures Company and Founder of HeadlightVision. Crawford’s focus is on the application of new understanding coming from the behavioural sciences and how this can enrich current marketing and market research techniques. He has written extensively on this for publications including New Scientist & Marketing Week.

23. Our team • ROSIE MAXWELL (SENIOR STRATEGIC CONSULTANT) • Rosie has always been fascinated by people’s behaviour in all walks of life and has a BSc in Psychology & Business. • She joined TBA in 2014 and regularly works along Rachel in healthy lifestyle (incl. sport/exercise) behavior change research. • A keen Virgin Active member, Rosie has both a insider consumer perspective to add to this project, which will provide useful context.

24. Project Costs for Phases 1-3: £51,660 excl. VAT and expenses FOUNDATION • Estimated expenses: • Please allow a budget of £2300 for for fieldwork to cover travel and subsistence (including hotel costs where applicable) in 5 locations across England. • Expenses are charged at cost and kept to a minimum IN-CONTEXT DEEP DIVE ANALYSIS & MODEL DEVELOPMENT Costs for phases 4-5 TBC dependent findings from phases 1-3. Virgin Active may only require ad hoc consultancy support from us (charged on a day-rate basis), dependent on the nature of nudges to be developed, rolled out & monitored

25. Project Costs for Phases 1-3: £41,450 excl. VAT and expenses We can also offer a more scaled back option: reducing number of stakeholder depths, sample size and number of locations visited • Estimated expenses: • Please allow a budget of £1600 for for fieldwork to cover travel and subsistence (including hotel costs where applicable) in 4 locations across England. • Expenses are charged at cost and kept to a minimum FOUNDATION IN-CONTEXT DEEP DIVE ANALYSIS & MODEL DEVELOPMENT

26. Rachel@thebearchitects.com 07887 744873 Crawford@thebearchitects.com