Mar 31 2010
Exploring Ongoing Member Loyalty: Net Promoter in Credit Unions
This report uses Net Promoter Scores, credit union case studies, and a cadre of high-performing credit unions to illustrate the how and the why of credit union member loyalty.
Laura Brooks, PhD
VP, Research & Business Consulting
Member Loyalty Group
Report Number 206
Imagine if each year 31 of every 100 members left your credit union for a competitor. Now imagine you find out that your competitor lost only 16 customers of every 100. Chances are you would want to know exactly what the other credit union (or bank) was doing.
Fortunately for you, Sprint-Nextel is the company that churns nearly one-third of its subscribers every year, while rival Verizon churns just half as many. What’s more intriguing than those numbers, however, is that they can be predicted fairly accurately by the propensity of Sprint-Nextel’s or Verizon’s customers to refer their wireless service to friends. Also fortunate is that credit unions mirror Verizon more than Sprint-Nextel in terms of referrals, loyalty, and churn. The challenge? Doing even better in a tightly commodified market.
What is the research about?
This report draws on the Net Promoter Score (NPS®) to continue a series of Filene investigations that asks:
- How well do credit unions command member loyalty?
- How can they do better?
In answer to the first question, solid sources keep saying that credit unions beat retail banks on issues like trust, overall value, and quality of service. It's well established that credit unions tend to command more loyalty and satisfaction. What's interesting is how. This report adds to the loyalty series by showing not just that credit unions often perform better, but how many of them do it.
What are the credit union implications?
As the sample in this report suggests, credit unions collectively are the gold standard for loyalty and NPS in the financial services industry. But that doesn’t (and shouldn’t) stop individual credit unions from engaging their members directly to discover and adjust to their needs. In fact, the cooperative structure demands it, especially at credit unions where the board of directors and credit union managers lack day-to-day interaction with regular members.
As the authors describe, there is still room for credit union improvement, and the most effective use NPS to differentiate themselves from other credit unions with prompt services, inquiry and problem resolution, and timely access to new accounts and communication during new product applications. Tracking loyalty and improving delivery make not only good cooperative sense but good business sense