Member Loyalty Group

In 2008 I attended the first ever Satmetrix NPS Certification course. I loved it – Changed my life. Quality speakers, challenging scenarios, amazing networking. The course is not inexpensive – and so I’ll admit on the first day I’m thinking “This better be worth it.” Let me tell you – it was worth every penny. The biggest “Aha” moment came when Deb Eastman from Satmetrix took the stage and introduced us to the “Customer Corridor”.

I jokingly refer to this as the $4,000 slide. It was so simple and yet so brilliant. And because everyone in that room had flown from somewhere in the world to become certified Deb used the airline experience as her model.

So, to break it down, the Customer Corridor illustrates a service experience (step by step) from the customer’s viewpoint. It’s the ground truth of the delivery. And it’s not always pretty.

She made us think about each and every step we took – from researching airlines and airfares to booking, ticketing, TSA (yikes), queuing up, boarding, in-flight, landing (hopefully), and finally baggage claim.

Everyone had to relive their experience. Some folks had bad experiences – delayed flights, lost baggage. Others had an uneventful experience, with is usually met with relief. But no one in the room really had a great experience. And that was her point.

Even if the airline did everything correctly - was it enough to create a promoter?  It is hard to create promoters.

The next step was to get into groups and talk about choreographing a WOW experience for an airline. My group came up with an interesting idea. A cry room – just like they have in church – for parents traveling with small children. The back of the plane could literally be sound proofed with a glass wall so that kids could not be heard by the rest of the passengers. The parents in our group were not offended in the least. They’ve all been there – when THEIR child is the one crying and everyone is tense and thinking “Oh please get your kid to stop crying.” As a parent, it’s my worst nightmare.

Yesterday on a Southwest flight from Dallas to Albuquerque a frustrated mom reportedly slapped her 13 month old child who wouldn’t stop crying and the flight attendant took the baby from the parent. Police were waiting when the plane landed. Not a wow experience for anyone. Made me think about the beauty of the customer corridor and anticipating needs to create promoters.

I think our cry room idea just might fly now……..

An often downplayed or discounted differentiator between credit unions and retail banks is the cooperative structure. It’s true that by placing the phrase “We are a member-owned financial cooperative with a volunteer board of directors” may not be a very compelling marketing statement in a crowded marketplace. But NPS leaders have found that by acting like a cooperative – not just saying you are one – has been a key driver of their loyalty economics.

The best-in-class credit unions run as true cooperatives, where members are co-owners and are responsible for the makeup of boards that see it as their role and responsibility to ensure that member needs are recognized and understood.

In theory this sounds simple. In practice this is where best-in-class moved from just doing the survey and calculating the score, to creating a discipline in the organization.

While these credit unions differ in a number of ways as a business, each best-in-class credit union used an operational approach using a tool called the Net Promoter Operating Model.

There are six elements of the model:

1. The first element at the core of any program is emphasis on member-centric culture, or DNA within the organization.
2. Next create a well-thought-out-plan – an enterprise road map for your program to continuously evolve.
3. Building trustworthy data is the keystone of NPS and the basis on which strategic business dec isions can be made.
4. To improve your score, you must identify root causes of promotion and detraction, as well as drivers of loyalty.
5. Taking action and holding your organization accountable shows members that their feedback matters, and will enable operational and structural improvements.
6. These elements can drive innovation and transformation across products, employee engagement, business processes, and the member experience to name a few.

 NPS becomes the organization’s microscope so they better focus on what really matters to members.

“Leaders would never tolerate a large gap between forecast and actual financial performance, but seem to look the other way when service gaps exist,” said Diana Dykstra, CEO of SF Fire CU. “Exceptional member experience won’t work unless it is a priority of management and touches work processes, systems and structure.”

That’s how you become best-in-class. Class dismissed.

SF Fire Credit Union
 
SF Fire Credit Union serves the Northern California Firefighting Community and those who support them with 2 full-service branches. They have $649 million in assets and serve 26,000 members. In the spring of 2008, they began a new leg on their NPS journey with Member Loyalty Group. You see…SF Fire Credit Union was one of the first credit unions to adopt and develop an NPS program.
 
Today most credit unions are looking for ways to increase fee income. SF Fire took a leap of faith and decided to reduce fee income by eliminating a bad profit. According to Fred Reichheld, bad profits are made when you erode employee morale and create member detractors. Diana Dykstra, CEO of SF Fire CU made a difficult decision when she convinced her board to rebate all ATM surcharges incurred by her members at competitors’ ATMs. She found this to be a key driver of detractors and completely out of her control. When she weighed the cost of buying and deploying enough ATMs to reduce complaints versus just rebating surcharges, it was a no brainer. One way you could look at this – is as a marketing expense.
 
Her proof that this worked? Go to Yelp.com and type in Credit Unions and San Francisco and you’ll see she has the highest rated financial institution by far in the entire bay area. One of the key drivers for this voluntary expression of love? Rebating surcharges. They are also growing new memberships by about 9% per year!
 
This credit union turned bad profits into promoter members. That’s loyalty economics.
 
Up next: More key drivers of loyalty.

The first time I heard that phrase, loyalty economics, was at the inaugural Satmetrix Conference in New York City in 2007. Fred Reichheld was the opening speaker. He has spent a working lifetime researching loyalty. His discovery? Quite simply, loyalty pays.

The Member Loyalty Group (MLG) is celebrating our second anniversary this month. In just two years, we have been fortunate enough to work with over 20 credit unions and have put Fred’s findings to work. The Filene Research Institute released Exploring Ongoing Member Loyalty: Net Promoter in Credit Unions last month. Authored by our own CEO, Michelle Bloedorn and Dr. Laura Brooks, Vice President, Research and Business Consulting at Satmetrix and coauthor of Answering the Ultimate Question.

So let’s look at member loyalty, by the numbers. The economics of loyalty comes in many forms:

1. Repeat business. On average it costs 5X more to bring in a new member than it does to serve an existing member. Fiercely loyal members will be less price sensitive and place value on their relationship.
2. Retention. Reichheld discovered that retention and loyalty are not necessarily the same thing. Retention is one benefit of building loyalty, but some members may be trapped in a bad relationship and leave. SF Fire Credit Union has a 98% retention rate and a five star rating on Yelp.com, so it’s easy to conclude that their retention rate implies loyalty.
3. Promotion. Some members may be fiercely loyal but are not buying from you because they don’t need your product – yet. That’s one of the problems with calculating household profitability. It’s a snapshot in time, and the components that go into calculating that profitability vary with life stage. Is it okay to have an unprofitable promoter? Reichheld would say yes, because they are still marketing (recommending) for you.

Reichheld said “Fewer than half the employees in a typical American firm think their company deserves their loyalty. If that’s true, customers would be nuts to put more faith in the company than the employees do.”

We know that credit unions beat retail banks on issues like trust, overall value and quality of service. In fact, the average NPS for credit unions is 56.6% while retail bank providers have slipped to just 11.0% What’s interesting is how they are able to do this.

The Filene study took a two pronged approach in their research asking:

• How well do credit unions command loyalty?
• How can they do better?

The credit unions with best-in-class scores, are, in alphabetical order:

• America First Credit Union
• BECU
• DuPont Community Credit Union
• Educators Credit Union
• SF Fire Credit Union
• Wright-Patt Credit Union

These credit unions are the leaders because they focused on four areas of performance where other credit unions typically struggle:

Prompt service. Remember, banking is an errand, and the faster a member can run their errand the better.

Inquiry and problem resolution. Mistakes happen, but when you make a mistake with someone’s money it needs to be handled in a way that brings back confidence. The best in class “over deliver” when it comes to problem resolution. It’s not just enough to fix it, you need to fix the relationship as well.

Timely access to new accounts. When someone opens up a new checking account, we often forget that what they’re actually doing is MOVING an existing account. It’s a major undertaking today with bill pay, ACH, direct deposit, etc. These credit unions looked for ways to make this as pain free as possible, which in turn has created new members that are promoters from day one.

Next: How credit unions are taking loyalty economics to the next level……

In the just published Filene Research Study on Net Promoter Scores in credit unions, we had the opportunity, in partnership with Dr. Laura Brooks from Satmetrix, to explore the state of member/customer loyalty in financial institutions.  In the credit union/bank loyalty face off, it was no contest.  Credit unions outperformed banks hands down.  

What was really interesting was the “deep dive” into the differences between the highest and the lower scoring credit unions. Among a number of differences, our research showed a large gap between high-performing and low-performing credit unions in “Ease of Conducting” business.  

Life is crazy.  People are busy. Members don’t want to call to renew a CD.  They want home banking available whenever they are.  They want their transactions processed quickly. And most importantly, they want instant communication and information about everything they do with you.  

Members regularly use providers outside of the financial services industry as their point of reference for all of their service experiences.  They buy a paperback from Amazon or order a movie from Netflix where they interact with a spiffy online interface and can receive emails that tell them where their stuff is at any moment in time.  Not surprisingly, they are pretty disappointed to find out they have to wait weeks or months to “process” their mortgage loan and days to get a call back if they have questions.

High Net Promoter credit unions are addressing this reality and put a strong focus on trying to make their processes as friendly, responsive and thoughtful as their tellers.  They spend resources on making doing business with them easy and consistent.  The importance of this focus takes on long-term implications when you look at the credit union loyalty average by age.  

Across all credit unions, there is a notable decrease in loyalty scores as age drops.  An evaluation of the comments and supporting data show that the “ease of doing business” expectation gap is key factor in score difference.Maintaining and increasing member loyalty in 2010 and into the next decade will require keeping up with a high – and rapidly rising – service delivery bar.

If you are not a member of Filene Research, you can buy a copy of this report by clicking here.  If you are already a member, your copy has been sent to you.

Your member just stopped in to do business with you. How did they feel about their experience? Will they come back? Do you wonder what they say about your organization to their friends and family?

Wright-Patt Credit Union wanted to see how close they were coming to their goal of being the best financial institution their members had ever experienced and the best place their employees had ever worked, by asking just these sorts of questions. So, they embarked on their Net Promoter® journey.

In this webinar, What’s the Story Once They’ve Gone?, Amanda Minehart, Service Quality Manager at Wright-Patt Credit Union, will share how their Net Promoter® Program is resulting in a culture change that is moving them closer to their goals and reminding them that they have not one, but two jobs: serving their members, and serving their partner employees who serve their members.

You’ll learn the steps that Wright-Patt took to implement their program and communicate its importance across their organization. Plus, hear how dashboards, internal score reporting, member center monthly updates, and “Walls of Fame” all serve to keep employees onboard with the program and enthused about their contributions.

Net Promoter, NPS and Net Promoter Score® are trademarks of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.

This webinar was recorded on February 17, 2010.

We often hear the question, “What can we do to create more loyal members?”

This is a tough question (and basically the reason for the existence of our company). When faced with a tough question, I find that it’s helpful to create a picture or tell a story to better define the problem I’m trying to solve. In this case, I ask myself “If we want to create more loyal members than what would they look like? What does a loyal member look like?” Of course, the first thing that pops in my head are images of members that look something like the late-great Bea Arthur or the currently great Ed Asner. Then realizing that I’m being terribly ageist, decide that loyal members are not defined by their demographics…but by their experiences.

So, real member stories might help me better answer this question. Today, I stumbled upon Educators Credit Union’s Facebook page and read an amazing story of member loyalty:

To Connie, and All of the Employees of Educators Credit Union, specifically the members of the Loans Dept and Member Services,

I am currently a US Army Engineer Sergeant deployed to the Philippines; however, when I began my journey with Educators Credit Union, I was a skinny 17 year old trying to go to college. Admittedly, I am by nature not good with money. Some of us in society, no matter our intentions, always have trouble walking the straight and narrow.

When I started college at age 17, my first banking experience was with Wells Fargo. It consisted of overdrawn accounts, bouncing checks, and denied credit applications. That year contained some hard lessons for me, and brought me back home to Union Grove, Wisconsin where I decided to go to Carroll College. It was a few weeks before school started when I found out that my actions freshman year basically took me out of the running for financial aid.

That is when I came to ECU. My father was sitting next to me, nervous as I’ve ever seen him, trying his best to get his son into college. Educators pulled up my credit history, sat with me and my father and listened while I explained each entry. In the end, I received a loan without even needing my father for a cosigner. My credit was not a mathematical product of numbers, but a product of character. It was very much like having an extended member of the family forgive my past, and trust me when I said I was going to do better. And better I did.

From then on I was no saint by any means. It has been almost 6 years since the day I joined the ECU family. From when I joined to when I left college my GPA doubled. Since joining the service I have progressed to the rank of Staff Sergeant, earned the Green Beret, and plan on serving my country not only as a soldier, but as a teacher once I get out. During that time I have had rough times, bought cars, a motorcycle, made late payments, missed payments, and had to bank from Iraq, Philippines, Nepal, Thailand, and Canada.

Through everything, when I called ECU, it was not just a bank I was calling, it was calling home. Someone was always there IN PERSON to tell me what the situation was, believe me when I said that I needed help or wanted to fix it, and listen when I said I needed financial advice.

Maybe I am just an inexperienced banker. A 23 year old who has a lot to learn. Maybe every Credit Union is like this, or maybe I am just lucky. It doesn’t really matter. Just like Connie was to me today, Educators Credit Union has always been there for me with sound financial support, and a friendly neighbor on the other end of the line to wish me a Happy Holidays, and thank me for being a customer.

So Thank You Educators Credit Union. And may you have a wonderful Holiday Season!!

Craig M.

Reading this amazing story makes it clear what the credit union did in order to earn his loyalty. Educators:

• Treated him with respect and understanding.
• Offered advice and guidance any time he needed it.
• Helped him out in a time of need.
• Were friendly and treated him like a loved member of their family.
• AND…drumroll…they did all of this consistently throughout many different interactions.

This may not be the key to developing a loyal relationship with EVERY member, but it sure sounds like a great place to start. What stories do your loyal members tell about your credit union?

PS – REAL Solutions has some amazing member stories posted here and here.

Recently, I had the great pleasure of visiting the team at Wright-Patt Credit Union in Fairborn, Ohio. We’ve been working with Amanda Minehart, their Service Quality Manager, for the past year to kick-off their Net Promoter Program. Wright-Patt has always been a member-focused, service-driven organization…and they were ready to take it to the next level and integrate member feedback into every part of their credit union.

That's me on the left & Amanda on the right at the Wright-Patt headquarters in Fairborn, OH.

 I’ve been incredibly impressed with the rapid engagement within the front-line management and executive team. The executive and management teams invest time during their regular meetings to discuss the feedback they are receiving from the program, performance levels for various parts of the organization and ways to use this feedback to improve the member experience. And they continue to ask for more and more feedback…it’s absolutely wonderful! So, when the opportunity presented itself…I had to go out and see for myself what these guys were up to.

Amanda arranged for Michelle (our CEO) and I to attend one of these regular manager meetings, which was great. I could tell immediately that each of the managers knows and understands their score, AND…more importantly…what members say they need to do in order to improve that score.

Then, we saw the NPS forum she created on their employee intranet. This is a place for the entire company to see the survey results and have two-way conversations about the feedback. Staff is encouraged to share their ideas on how to improve member service.

The Net Promoter League scoreboard at the Gantt Member Center. This is visible to all employees as they enter their breakroom...a great reminder that "promoter worthy" service is everyone's goal.

One of my favorite parts of the day was going on a tour of several Member Centers  (at Wright-Patt “branches” are called “Member Centers”). Here, we got to see how each Member Center encorporates NPS feedback into their day-to-day operations.

The entire Wright-Patt team recently began the “Net Promoter League” (an NFL-style season, playoffs and Super Bowl NPS competition). Each week one of the 22 Member Centers  “plays” another Member Center. They compete for the highest NPS for that week’s transaction surveys. Rankings are updated on the Partner Net (employee intranet) every day, so each team knows how they’re doing. Team rankings are also announced at regular manager meetings…Amanda announced these during the meeting I attended, and I can tell you that the top spots are highly coveted!

The Member Centers are encouraged to post wins & losses for employees to keep track. One Member Center asks employees to send an email during the week congratulating or encouraging the team to provide great service.

 I think the competition is incredibly smart…not because it’s helping managers and staff keep track of their scores. But, the real key is that, they have created a mechanism for consistent and timely communication around member feedback that is visible to EVERYONE in the organization. Very quickly, the focus in the organization has been placed on members and what they have to say about the credit union’s service levels.

Many companies are measuring NPS, including credit unions, but few have developed systems and processes by which this information is shared on a regular basis. Front-line managers and executives are key in the NPS information sharing process – they’re the ones that control operations and strategy. But, it’s also important to remember that front-line employees need feedback too. Your member’s experience is in their hands, after all.

Thanks for a great visit! And keep up the good work!

As a group of Net Promoter practicioners, we get a lot of questions about how to “do” Net Promoter or how to improve NPS. What are other credit unions and companies doing? Here’s your opportunity to learn from some of the best in the business…

Satmetrix announced a great line-up of NPS webinars this fall. If you’re implementing a Net Promoter program or are thinking about starting one…these are super informative and helpful. Check it out.

Early in my career at Baxter Credit Union, I committed a faux pas during an interaction with one of our partners (vendors others may call them – but most are truly partners at BCU.) Mike Valentine, the CEO, very pointedly called me on it. He could see my obvious unhappy reaction because he said “Feedback is a gift. Please take it as such.” It felt a lot more like a lump of coal than a gift at the time, but over the next few days I thought about his comments and he was absolutely right. Adjusting my approach in similar situations has served me well in the years since. He really did give me a gift by pointing out my “opportunity for improvement.”

I appreciate the time he took to help me. People are unbelievable busy. They have zillions of things vying for their time and energy. Those who invest their time to tell you how you can get better truly are giving you a gift. One of the big surprises in the Net Promoter Score results among Member Loyalty Group credit unions is the huge amount of constructive feedback provided by Promoters. These members love their credit union, rating it a 9 or 10 when asked if they would recommend it to a friend, colleague or family member. However, they know things aren’t perfect. They love their CU warts and all.

While many people focus on comments from Detractors, the volume and richness of the Promoter feedback often outweighs that of Detractors. Just like in your personal life, the people that care about you the most give you the best stuff. Promoters genuinely want to help their CU get better, so they will give very specific instructions on how to do that. This is especially true through the email channel where it is easier for members to provide really detailed advice – much more detailed than you often get from Detractors who aren’t as invested in your success. Just a few examples from Promoters:

“At the Hwy 20 location I absolutely hate leaning over the counter in the great room to do business – too impersonal and no privacy! Perhaps two personal banker cubbies could be created.”

“I would like to be able to make a credit card payment on a future date. It appears that the only way to do this now is through bill pay, which seems to take extra time and there is a lag between the payment date and when the credit union receives my payment.”

Often, the members really seem pained to have to correct you and want to be careful of people’s feelings:

“Make sure everyone knows what the procedure is for purchasing vehicles in Illinois…. I am not complaining though, I am completely satisfied with the process!!”

Their thoughtful observations are intended to help make you better. Multiply these examples by the thousands of responses that are generated annually by a good Net Promoter program and you have some very powerful information. Through careful listening and well-chosen actions a credit union can truly use this insight to mold services to match perfectly to their member needs and create real competitive advantage.

Our mothers always taught us that when someone gives you a gift, you should send them a thank you note. The same applies to our members who give us feedback. The best ways to thank them are to let them know you heard their suggestions and, where possible, do something about it