Member Loyalty Is an Oxymoron in Most Credit Unions
Peter Drucker said, "Quality in a service or product is not what you put into it. It is what the client or Customer gets out of it." Therein lies the opportunity for your credit union or organization, frame the issue in terms of what does a customer/member/client really want?
In the 29 years, I was a credit union executive, we spent tens of thousands of dollars on annual member surveys in which members were asked too many questions. There were 35 questions related to service that we asked, and the responses were ranked.
Year after year the #1 feature that members wanted and valued the most was accuracy and dead last was using their names. Yet most credit unions place the emphasis on using the members' name because we are a family and it demonstrates that we are different than other financial institutions.
Then when mistakes are made and accuracy is questioned, the member is forced to plead with several layers of management to get satisfaction and a fee refunded. You can use the member's name all you can in that conversation, it isn't relevant. If you are still measuring the percentage of satisfied members, you are leaving hundreds of thousands of dollars on the table.
The other benefit of loyal members is that they tell others about your service or products. Word of mouth is still the most effective form of marketing and the least expensive. In a time of economic uncertainty and narrow net interest margins, credit unions need to reduce expenses and grow revenue. It costs five times more to obtain a new member than it does to retain an existing one. Plus, your organization is spending four to five times more on advertising to get new members. That could rise to hundreds of millions of dollars spent on obtaining new members compared to an organization that has loyal members.
Organizations with high levels of loyal customers typically grow revenues at twice the rate of their competition. It has been proven that 6 out of 10 customers will never return to an organization based on poor service, not poor products.
Your magic bullet is to commit to no longer conducting business in the usual way. The employees of your organization can create and measure member loyalty... if they are lead to it.
Expand that by asking what is your definition of a customer/member/client?
When you have defined your customer, it is simpler to recognize what they want. Much has been written about the long-term value of a loyal customer and that it is far less expensive to retain a customer and increase the share of wallet, or products per household than it is to attract new customers.In the 29 years, I was a credit union executive, we spent tens of thousands of dollars on annual member surveys in which members were asked too many questions. There were 35 questions related to service that we asked, and the responses were ranked.
Year after year the #1 feature that members wanted and valued the most was accuracy and dead last was using their names. Yet most credit unions place the emphasis on using the members' name because we are a family and it demonstrates that we are different than other financial institutions.
Then when mistakes are made and accuracy is questioned, the member is forced to plead with several layers of management to get satisfaction and a fee refunded. You can use the member's name all you can in that conversation, it isn't relevant. If you are still measuring the percentage of satisfied members, you are leaving hundreds of thousands of dollars on the table.
The retail industry knows what credit unions have not yet figured out.
A satisfied customer isn't worth much; however, a loyal customer is. Retailers know that a satisfied customer who visits their store once per year and spends an average of $50 per visit will produce an annual total revenue opportunity of $50.00 based on the life of the customer. A loyal customer who visits their store once per week (52 visits per year) and spends the same average $50 per visit produces total revenue opportunity per year of $2,600.00, and $26,000.00, based on an average of once per week for 10 years. Walmart and Target get that.What is a loyal member worth to your organization?
The other benefit of loyal members is that they tell others about your service or products. Word of mouth is still the most effective form of marketing and the least expensive. In a time of economic uncertainty and narrow net interest margins, credit unions need to reduce expenses and grow revenue. It costs five times more to obtain a new member than it does to retain an existing one. Plus, your organization is spending four to five times more on advertising to get new members. That could rise to hundreds of millions of dollars spent on obtaining new members compared to an organization that has loyal members.
Organizations with high levels of loyal customers typically grow revenues at twice the rate of their competition. It has been proven that 6 out of 10 customers will never return to an organization based on poor service, not poor products.
Your magic bullet is to commit to no longer conducting business in the usual way. The employees of your organization can create and measure member loyalty... if they are lead to it.
Member Loyalty Is an Oxymoron in Most Credit Unions
![Member Loyalty Is an Oxymoron in Most Credit Unions]()
Reviewed by Anonymous
on
September 27, 2018
Rating:
No comments: