Don't Confuse Member Satisfaction With Loyalty

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Every year the Gallup Organization and the American Bankers Association release the results of their joint customer satisfaction survey and every year it shows that members are more satisfied with their credit union than are customers of banks.

For almost 20 years, credit unions have outperformed banks, and savings and loans when it comes to their members' level of satisfaction, yet over the same period of time credit union market share has remained flat.

On average, members turn to their credit union to provide less than 10% of their financial services.

If members are highly satisfied with their credit unions as reported in the Gallup/ABA poll, why don't they trust their credit union with more business?

The answer to that question is unique for each credit union. It may be lack of awareness, lack of competitive pricing, employee training, employee turnover, lack of trust, or simply lack of member input. Credit unions tend to use their annual (or bi-annual) member satisfaction survey as a grading mechanism to report to the board or as a basis for figuring annual bonuses.

Some managers believe so long as the members are reporting a high level of satisfaction, they have done their job. It's the marketing equivalent to, "you can lead a horse to water but you can't make it drink." There is evidence that suggests the level of customer satisfaction has very little to do with profitable growth.

Fred Reicheld, author of "The Ultimate Question, Driving Good Profits and True Growth," suggests just that in his book, where he writes: "Some recent evidence that there is little connection between satisfaction scores and economic results comes from the American Customer Satisfaction Index (ACSI) itself, whose data used to be published each quarter in the 'Wall Street Journal'...."

Satisfaction is still a critical element in driving member loyalty, but it should not be the only element worthy of measurement. According to Professor Daniel Cot?, a leading co-operative researcher at the University of Montreal, "The focus of marketing has evolved from transactional exchanges to include sustainable relationships between parties, thereby making loyalty the primary goal of the relationship approach."

Member loyalty is defined as a member's likelihood to do more business with the credit union in two years and the member's likelihood to recommend the credit union to a friend or colleague.

Member loyalty is a higher standard for success than level of satisfaction. In the end, a satisfied member may not be loyal but a loyal member will always be satisfied. Credit unions should add member loyalty as the primary measure to define their success.

Now if we can just convince The Gallup Organization and the ABA to change their survey questionnaire to include the issue of loyalty, credit unions might begin to capture more of their member's business.

Kevin Lytle is CEO of Member Allegiance, LLC. Mr. Lytle can be reached at 608-213-0879 or Kevin memberallegiance.com.

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