PERRYSBURG, Ohio-Big banks are better than credit unions at handling new account prospects, according to a new study to be released this week.
Although credit unions pride themselves on service, the study being released by IntelliShop suggests there is at least one shortcoming. SVP Chris Denove acknowledged that he was surprised credit unions fell short of the big institutions.
"Credit unions generally have the correct perception that if someone will consider the credit union, when it comes to overall service and rates they are better than banks," Denove said. "What we found is that perception seems to be translating into a rather overly laid-back sales approach. Credit unions need to understand that just like any business they still have to have a strong sales culture. They are not pressuring the customer for sure, but they are not doing much to turn on the customer."
IntelliShop partnered with the Ft. Atkinson, Wis.-based RateWatch on the study titled "Maximizing the Customer Experience-A Mystery Shop Benchmarking Study." Late last year IntelliShop sent 120 mystery shoppers to banks and credit unions across the country to ask about opening a new checking account. The percentage of the mystery shoppers who left the experience saying they were "confident" the institution was the right choice was 42% for large banks and 30% for credit unions. Moreover, 17% of those shoppers said they would hesitate to chose a credit union, vs. 9% for big banks.
Shoppers, too, reported they preferred the personality of large bank reps over CU staff, with 40% rating large bank employees "truly outstanding," while only 23% for credit unions.
Differentiation Not Mentioned
Overall the study revealed banks and credit unions handle new account inquiries well, but have significant room for improvement in certain areas. According to the study, front-line staff of all financial institutions need to slow down and do a better job of inquiring about consumers' needs and explaining why their institution is the right choice.
Despite all the attention Bank Transfer Day has given to credit unions and their cooperative, local business model, only 23% of CUs in the study mentioned anything about being community based or focused as a point of differentiation, noted Denove.
"Credit unions appear to be under the mistaken impression that if they can get someone to consider them the credit union will be the natural choice and therefore they don't need to go into a hard sell," said Denove. "Credit unions don't realize there is a continuum that starts from complete customer self service to an overly hard sell. Think of it as a hill with a peak, and the top of the hill is the optimum (level of selling). You push too hard and you go over the peak and performance declines. But credit unions haven't even begun get up that hill."
Where Credit Unions Fell Short
According to the study, CUs fell short on asking for the shopper's business and attempting to cross-sell. Half (51%) of big banks asked the shopper if they were interested in a credit card, compared with one-in-five small banks and credit unions. Most banks (84%) asked the shopper for their checking business, compared with less than 60% at small banks and credit unions.
The survey rated banks and credit unions highly on first impressions, such as appearance of their parking lots, and quickly placing shoppers with a new account representative. The study also said credit unions are doing nothing to make prospective members cross them off their lists, withy only 17% of the shoppers saying CUs need improvement.
However, the study summary notes, "We expect that few executives would find it acceptable for one-in-five prospects to walk out with the impression that this is not the type of place they want to do business."
"Credit unions need to remember that despite having some advantages over big banks, they need to focus on the sales process and proactively communicate their benefits to prospects," said Denove.
