Deeper Analysis

Register now

CUs Rated Well On 'Advocacy'

NEW YORK -When it comes to "customer advocacy," credit unions were rated higher than banks in a survey of more than 5,000 U.S. households conducted by Forrester Research. The study ranks 34 financial firms on customer advocacy, which Forrester called a key driver in developing deep customer relationships. To be ranked, at least 100 respondents had to name the company after they were asked if they agreed with the statement, "My financial provider does what's best for me, not just its own bottom line."

Overall customer advocacy scores fell from a similar study conducted in 2003, with 15 firms' advocacy ranking dropping 5%. Only three-credit unions, E*TRADE and Wells Fargo-rose by five percentage points or more.

"Mergers, which tend to disrupt customer relationships, have played a role in the declining scores of several brokerages and banks," said Bill Doyle, vice president and principal analyst at Forrester. "On the other hand, companies like E*TRADE and Wells Fargo-which both saw a boost in their ratings-have implemented services that make their customers' financial dealings easier and more transparent."

Other findings: Of the companies ranked, only seven saw a majority of customers rate them high on customer advocacy. Five of those-USAA, credit unions, AAA, State Farm and Vanguard-are member/customer owned. Eighty-one percent of USAA customers agreed with the statement, compared with 82% in 2003's study.

* For credit unions, 67% of consumers surveyed agreed, compared with 62% the previous year. AAA saw 55% agree this year, compared with 54% in the earlier study.

* Of the eight bottom-ranked firms, seven are top retail banks. The three largest U.S. banks, JPMorgan Chase, Citi, and Bank of America, were the lowest ranked. Less than 30% of their customers said they believe the institutions put their interests on at least an equal footing with those of shareholders. The next two largest U.S. banks-Wells Fargo and Wachovia, scored better, with twice as many customers rating them high on customer advocacy as the bottom feeders.

CUJ Resources

For additional information on this study, visit

One 'Disturbing' Finding

THE WOODLANDS, Texas-Only about one-in-five credit union members rate themselves as extremely satisfied with their credit union, although nearly one in three say its performance has actually exceeded their expectations.

But a new survey by D. Hilton Associates (DHA) here said it has uncovered something more "disturbing," with approximately three of every five members also admitting to conducting business with another financial institution regularly.

"Looking at overall satisfaction figures really can be misleading," observed Brian Kidwell, vice president of strategic research for DHA. Loyalty and product use is the key to improving business. Extremely satisfied credit union members tend to use more products, maintain higher account balances, and have more profitable relationships over time."

According to Kidwell, the findings give credit unions good reason to keep working to move members from simply satisfied to extremely satisfied status. Increasing member satisfaction is a method for building loyalty. He also pointed out that those members who are extremely satisfied are both the credit union's best potential customers for products and the most likely to recommend the credit union to others, which makes them good targets for promotional materials. In addition, analysis of the characteristics of these extremely satisfied members may help the credit union to learn more about the types of members it is-and isn't-serving extremely well. That can suggest new target marketing techniques as well approaches that may address gaps in services for groups not being as well satisfied by current offerings.

D. Hilton Associates said its survey findings also offer credit unions reason to question whether they are getting the lion's share of their members' business for either savings or loans. For example, when asked to estimate their average household savings balance in a given month, 26% indicated they maintained $10,000 or more at the credit union while 44% said they maintained $10,000 or more elsewhere. On the loan side, 24% of members estimated their loan balance at the credit union in a given month was $10,000 or more while 29% said they maintained a loan balance of that size elsewhere.

DHA's findings also indicate that employment still influences credit union membership. Among those surveyed, 61% achieved eligibility for membership in their credit union as an employee or retiree of an eligible employer, and 60% have been a member of their credit union for more than a decade. Demographically, 65% of the members are 45 years of age or older and 49% of them live in households with incomes of $50,000 or more. The average household size for survey respondents is 2.73 persons while the average members per household was 1.92.

"We encourage credit unions to conduct member surveys before they begin their annual strategic planning process," observed Brian Kidwell. "As these findings show, it's not enough that members say they're satisfied with your performance. You have to look at their behavior and where they're actually taking their money when they open a new savings or loan product."

CUJ Resources

For additional information on this study, visit

Measuring What Consumers Value

NORTHVILLE TOWNSHIP, Mich.-What do members want?

According to a new study released here, when it comes to selecting a financial institution, the characteristics that define a credit union-good member service, low fees and good loan rates-are significantly more important to consumers than financial sophistication and product array, attributes typically associated with banks.

The "Financial Brand Image Study" was conducted by the Berline Group and A&K Research and commissioned by the Michigan Credit Union Foundation (MCUF) to identify and report on the advantages and disadvantages of the various institution brands including credit unions, banks, thrifts, mutual funds and insurance companies, as perceived by 1,400 credit union members and non-members. The unique differences were analyzed and contrasted with both quantitative and qualitative measures.

"The research confirmed that the brand 'credit union' is distinct from a bank, and those characteristics that define a credit union are significantly more relevant to the consumer than those attributes that are identified with a bank," said Michigan Credit Union League President David Adams.

"This is the most compelling portion of the research in that it illustrates the weakened position of banks in the areas of consumer importance.

"Banks simply do not rank as highly as credit unions for most of the attributes that are important to purchase behavior."

When the credit union non-member rankings are compared to credit union member rankings, the credit union position is markedly weaker, but it remains competitive with banks, according to the survey.

It is the non-member that represents that growth potential of the brand and their perception of credit unions is similar to their perception of banks.

"The survey concludes that becoming a bank does not improve the marketing position of a credit union," Adams said. "In fact, converting from a credit union to a bank charter may actually weaken a credit union's marketing position."

CUJ Resources

The study is free to MCUL-affiliated credit unions. Non-affiliates may obtain a copy for $99 at

Retailing Pitfalls

CHICAGO-The Center for Financial Services Innovation (CFSI) has released a research paper examining relationships between financial institutions and retailers in branching.

Entitled "Retailers as Financial Services Providers: The Potential and Pitfalls of This Burgeoning Distribution Channel," the paper assesses the business and policy implications for both the financial services and retail industry as banks and retailers both partner and compete with each other in their efforts to provide financial services via retail locations.

"Retail locations provide underbanked consumers with additional access to financial services, and offers financial institutions and retailers significant business opportunities," said Katy Jacob, author of the report and CFSI's Senior Analyst. "But these practices have not yet been fully incorporated into the financial mainstream. There are a lot of questions surrounding how this could change our understanding of what a financial services relationship looks like."

CUJ Resources

For more info on the study:

For reprint and licensing requests for this article, click here.