Research: CUs Must Play To Their Strengths
Peer comparison surveys from 1996 and 2006 show that credit unions have made significant strides in the last decade while still facing similar challenges and threats. The members' service quality experience has improved, as have efforts to create a sales culture. However, interest in additional loans has decreased, and convenience and savings rates continue to be an Achilles heel. Member Research has been surveying thousands of credit union members annually for 20 years. This article shows some of the changes our statistics show over the last decade in a few key areas of member perception.
Service quality, long the focus of brand distinction, has improved dramatically in these 10 years. Members' "excellent" and "very good ratings" rose from 75.5% to 80.2% for friendliness; from 75.7% to 80.4% for courtesy; from 65.5% to 72.1% for knowledge/training; and from 39.8% to 48.7% for teller lines. High member satisfaction ratings overall service quality rose from 70.4% to 83.8%. Remember, however, that service quality can only retain, but not attract members. New members join for convenience, good rates and product value.
The primary area of dissatisfaction remains savings interest rates; here "poor" ratings dropped by less than a percentage point. The second Achilles heel for the industry continues to be convenience, which was the primary reason why members had checking accounts elsewhere in 1996 (39.1%). In 2006, it ranked at 21.3%, second only to inertia.
Credit unions have worked hard to create a sales culture-and it shows. In 1996, 4.7% of members had checking accounts elsewhere because the credit union never asked. That number dropped to 2.5% in 2006, but the industry still has a ways to go. Newsletters have remained the No. 1 preferred source of information despite incursions by the web.
Members' interest in all types of loans has decreased substantially. Only 19.7% are interested in vehicle loans, for instance, down from 30.4% a decade earlier. To fill the gap in this product interest, many CUs have already introduced business loans and other lending alternatives.
An organization is most successful when it plays to its strengths rather than focusing on minimizing its weaknesses. Although the data presented above suggests the industry's overall strengths, each credit union should evaluate itself to find its areas of greatest potential leverage.
Neil Goldman is President of Member Research. He can be reached at 310-643-5910 or ngoldman