WESTLAKE VILLAGE, Calif.-Member satisfaction significantly affects deposit growth at financial institutions, but credit unions need to take a fresh look at how great that effect is and what their business model is when it comes to member loyalty.
J.D. Power and Associates Executive Director Rocky Clancy will show CUs where the leverage points are and what threats loom in the world of member satisfaction at April's Grow Show conference. According to a pair of studies, there is a "strong relationship between those firms who perform in the top quintile in terms of satisfaction and those who are getting deposit growth that is double the industry average," Clancy pointed out.
But there are a host of factors that impact the role satisfaction has in driving business. For smaller institutions, satisfaction is the "basis for competition" and is a very significant factor in building loyalty and attracting new business, but larger CUs will likely find that "extraordinary levels" of member satisfaction "may not buy you what you hope it would" when compared to pricing, distribution and advertising efforts.
Satisfaction is also less of a driving force to attracting new business with the next generation, though there is obviously a baseline level for all institutions lest they quickly lose membership. CUs looking to grab the attention of Generation Y should look less to interpersonal relationships and more to other avenues on which Clancy plans to speak in greater depth at the conference.
"You need to keep a foot in this world and extend the other foot into the next world, and bridge those two," he said.
A great number of CUs making the jump to community charters also fail to connect with members that "walk in off the street," Clancy pointed out, adding that it is critical to break out the legacy and community segments when evaluating member satisfaction. He maintained that many credit unions would be surprised to find that their satisfaction levels with their community members are comparable to other banking institutions in the area and not nearly as high as the legacy membership.
In his presentation Clancy will also urge credit unions to revamp their business models and understand that most new community members who open accounts because they are attracted to the deposit rate or other specific products will not switch their checking and other accounts simply because they get a taste of the member service at the cooperative. Anecdotal evidence of such phenomena belies the reality of how individuals conduct business, Clancy maintained.
"We see activity being taken based on hypothesis or conventional wisdom instead of facts," he said. "What [credit unions] assume is going to be a legacy going forward is just going to be decayed over time."
In The Know To Grow
What: Credit Union Journal's Grow Show.
When: April 27-29
Where: Hotel del Coronado, San Diego
Who: For CU professionals desiring to grow their operations
Why: Because if you don't grow, well...
For More Info: Go to www.cujournal.com for details.
