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Report #128 | | Members | Sign In

A Fresh Approach to Measuring Member Loyalty

Is your credit union relevant? Is your credit union providing value to its members? This report evaluates what drives satisfaction of the consumer experience and introduces a new measuring metric.

    Executive Summary

    Year in and year out, credit unions score higher on customer satisfaction surveys than almost all banking institutions. The annual American Banker/Gallup poll on customer satisfaction in banking has ranked credit unions in front of all financial institutions for the past 23 years. Additionally, Forrester Research, which tracks a metric that is a close approximation of satisfaction, called “customer advocacy,” ranks credit unions collectively as one of the best in the world of financial services.

    On the basis of this data, one could safely assume credit unions would also rank as a top player in the world of consumer financial services. This is not the case—the credit union industry’s market share has remained relatively stable over the past decade.

    Could it be that the typical customer satisfaction surveys are measuring the wrong thing? Or, if satisfaction surveys are measuring the right things, do they measure what drives satisfaction? We set out to answer these questions by examining a new metric called the Net Promoter® score (NPS), which claims to be a predictor of organizational growth and customer retention.

    What is the research about?

    NPS a method that attempts to predict organizational growth and customer retention. Net Promoter is a simple yet elegant tool to measure consumer loyalty that is gaining recognition as a way to manage customer experience and profit growth. This report provides your credit union with a primer on the NPS metric and will catalog the preliminary statistics we found while measuring the NPS of seventeen credit unions and nearly 40,000 members.

    What are the credit union implications?

    The deceptively simple premise of NPS is what attracts most firms to the idea; however, the process for measuring and understanding NPS goes much deeper. Firms that are utilizing this measurement build NPS into all aspects of their strategy and operations, including customer segmentation and profitability analysis, executive and staff compensation, service experience audits, product development, and many others. One key findings has showcased that high NPS correlated with high credit union asset growth, high membership growth, and high loan growth.