Different Strategies, Same Goal-Improvement
"...Your challenge is not just to improve. It is to break the service paradigm in your industry or market so that (members) aren't just satisfied, they're so shocked that they tell strangers on the street how good you are."
-Jack Welch, former GE CEO
Jack Welch never ran a credit union, but the corporate guru seems very familiar with the goals of today's credit union: increase service penetration and become a market leader. But what strategies work? What strategies don't? What's the winning combination?
One person answers those questions with one word: "What differentiates the leaders? It starts and ends with the culture," according to Cheryl Dahl, director of Consulting and Communication for Harland Educational Services, formerly MyDAS, Inc. HES sponsored a seminar that examined the questions above; the event, hosted by Affinity Plus FCU in St. Paul, Minn., offered looks at a variety of winning credit union strategies, with one common bond: relationships.
"People will be your differentiator as they deliver service to members and prospective members. It is not about your checking account versus the competitors'. It is not often about fees or rates. It is really about the relationship you have with your staff and the relationship you have with the consumer," said Dahl, who consults with credit unions around the country. "(Research indicates) members want to be valued and know their needs are heard. They also look to credit unions for options and for trusted financial advisors."
An aggressive member service incentive program was part of the strategy that yielded dramatic growth for the University of Iowa Community Credit Union over the past five years. Deb Enochson, UICCU 1st VP-service coordinator, helped develop a strategic plan that would double the credit union's asset size in five years-and a merger wasn't part of the plan. According to Enochson, the credit union first made adjustments to staffing by combined member service and consumer lending positions. A call center was initiated two years ago. In 2004, the focus was on branch managers coaching staff. This year there was a "reinvention of the front-line incentive program."
"The incentive program rewards all aspects of sales and service," explained Enochson. "Our tellers have an incentive spread sheet at their stations. They track every attempt at cross-selling products and services, not just the successes. And employees receive $20 on any loan or deposit product sold, including debit cards. Our incentive reward target for our front-line staff members was an average of 10% to 15% of their salary. That means some may earn 3%, while others earn 25%. As a whole, our sales staff averaged 11% over the first six months of 2005."
From January 2001 to June 2005, University of Iowa Community CU increased its households nearly 10%. Assets grew from $235 million to $440 million (82%); loans jumped 71% and deposits grew 97%. All of this was accomplished by adding only 10 new employees.
What does that success mean to UICCU members? The credit union is able to deliver higher rates on deposits and lower rates on loans, all while its front-line staff is looking for ways to improve the member's financial well being. "We now have a true sales and service culture," said Enochson. "All of our employees are well aware that we are here-we exist-for one reason: serve our member/owners."
A Different Approach
U.S. Federal Credit Union has taken a different approach in its efforts to build winning relationships. The credit union has invested time and effort around the theme: "Service, value, and experience you can trust." According to U.S. Federal's Training Manager Jan Holt, the credit union develops credit union "champions" through a series of initiatives: training, coaching, communications, and incentives and recognition.
"We use our Intranet as our key delivery vehicle," Holt said. "We also have a team approach to everything we do and place an emphasis on consistent and clear communication. We also do a very good job of celebrating individual and organization successes."
Holt said US FCU also instituted an incentive program, but it's not based on compensation. Instead, the credit union recognizes individual and team efforts through dinners, employee appreciation events and quarterly company celebrations. "We've also developed a 'champions congratulations' program," Holt said. "As employees reach goals established in their individualized development programs, they're awarded with certificates and other recognition. The results have been measured by greater staff retention and a more confident employee team that serves our members even better."
'I'm Not Hired To Answer The Phone'
Affinity Plus FCU has spent two years reinventing its service culture. After examining and re-examining its business strategies, the credit union's leadership reached the conclusion that the organization needed to take its commitment to members to a new level-and it didn't involve any special employee incentives.
"Our approach is very simple, really" said Affinity Plus VP of Branch Services David Larson. "We tell our employees to do what's right for the member and build relationships founded on trust. That's our goal every day. It drives our entire organization."
Larson said that all of Affinity Plus FCU's employees are expected to have direct contact with members. That means everyone, from the CEO to member service representatives, answer the phone, greet members, answer questions and provide service.
"We've had a huge cultural shift," Larson said. "We've had some employees say 'I'm not hired to answer the phone.' We tell those employees, 'Don't think of it as a phone call, think of that phone call as a member needing your help.'
"When we hire, we look for talent, not just applicable skills. Does a (prospective employee) want to make a positive impact on a person's life? That's the kind of person we want at Affinity Plus. And we emphasize the term 'member,' not 'members.' It's all about individual, focused member service."
Larson said the internal cultural change has resulted in measurable external results. More than 80% of new members at Affinity Plus come through a positive member referral. The credit union is Minnesota's second-largest, with 120,000 members and more than $1 billion in assets. The credit union operates 22 branches.
All of that is the good news-but there have been challenges. Affinity Plus experienced 50% staff turnover in 2002-2003.
"We make it clear to our team members that you will be here for the member," said Sarah Mason, Affinity Plus FCU VP of Relationship Management. "We expect passion and relentless pursuit of building relationships founded on trust. And we have very high expectations of our people as they live up to the goal of 'member first.' We expect high performance and we ask our team members to own the culture."
Mason said the credit union empowers its employees to make decisions based on the member-not based on the hierarchy of the organization.
"Some people need systems and procedures. We want people to be empowered and we emphasize that they truly are empowered to make decisions, and they should never fear making a decision based on member needs and expectations," Mason said.
As it reinvented its member service commitment, Affinity Plus management made a difficult decision. They dropped the credit union's indirect lending program.
"We certainly lost revenue with that decision," Larson recalled. "But in the long run, we weren't developing long-term relationships. We would gain an auto loan, but because we didn't have a deep service relationship with the member, it ended up being a one-product commodity-based arrangement. That's not what we're seeking. We want to build a deep, long-lasting member relationship.
"As we tell our team members, when you're making decisions, just remember 'MOE': Member first; our Organization second; and you the employee, is third. For us, it's a winning principle."
Rick Foy is senior account manager for LaBreche Murray Public Relations. A Credit Union Development Educator, Foy assists credit unions with their public and media relations strategies. He can be reached at 612.392.7616 or rfoy