Three Traits that Make Credit Unions a Winning Combination

By Kurt Schroeder10.03.2016

It’s no surprise that consumers are more demanding today. And no wonder: Advances in consumer technology have created an expectation for companies to provide knowledgeable, personalized help and 24/7 easy access to news, information, entertainment, goods and services, which includes, of course, banking. But even with technological advances, people are less satisfied: the American Express Global Customer Service Barometer, conducted by marketing analytics firm Ebiquity, found in 2010 that that consumers believe companies met their expectations 65% of the time and exceeded expectations 7% of the time. In 2014, those figures slid to 62% and 5%, respectively. The 2010 study also found that 28% of consumers felt businesses paid less attention to providing good customer service, a number that jumped 10% in 2014, to 38%.

Now, I suspect those figures wouldn’t have looked so glum if the surveys had focused on credit unions, but it still points out that Americans are becoming harder to please. And that affects the bottom line. The same American Express study found more than two thirds of U.S. consumers were willing to spend 14% more with a company that delivers excellent service. Plus, 46% said they always tell others about good experiences with companies, and 40% say a recommendation from a family member or friend will most likely get them to try a business.

How to Make a Good Impression

We can take some clues from social cognition, a branch of psychology focusing on how reasoning processes shape personal interactions. For example, how do people interpret signals given by others? What impressions are formed and what meaning is attached to the other person’s behavior?

Susan T. Fiske, the Eugene Higgins Professor of Psychology and a Professor of Public Affairs at Princeton University, recently co-authored a study on “Social Cognition.” Along with Amy J.C. Cuddy and Peter Glick, the study found the highest levels of admiration are achieved by people or organizations that are perceived as warm and competent.

In our work with credit unions, Baker Tilly has found that warmth and competence are important to members, but also to their institutions. Add convenience to that list and you have a winning combination. In our research into what enhances the member relationship and boosts member loyalty, interviews with members and prospective members turn up the same three themes:

  • Warmth. They remember the warmth displayed by credit union staff. If you were to ask consumers what one trait they want from businesses, warmth probably wouldn’t be in the top five frequently mentioned responses. But with consumers being directed into more cost-efficient, digital channels, the chance for pleasant human interaction greatly diminishes, so it isn’t surprising that a genuinely friendly greeting is something for members to rave about.
  • Competency. Members are pleasantly surprised by the competency of their credit union’s staff. With the financial industry’s increasingly complex products, heavy regulatory burden, and a technology-dependent environment, staff competency requires more skills and knowledge than ever before. But while many consumers have come to expect hassles when dealing with businesses, credit unions can and do display the proficiency and attention that consumers want from their PFI.
  • Convenience. The credit union is convenient. This doesn’t just mean members drive by a branch on their way to work but, rather, that services are seamless and easily accessible when needed. It could also mean members don’t experience long wait times at the branch, or that processes work smoothly across all channels.

Focus on All Three

Often, financial institutions have paid attention to convenience (and cost savings) to the detriment of warmth and competence. But if those two qualities are lacking, members will feel it doesn’t make much difference if they stay or go – especially when almost every other financial institution offers the same kinds of services.

Competition in the financial marketplace is tough – and consumer expectations are high. But your credit union still has a leg up on other financial institutions. Surveys consistently show credit unions receive higher marks than banks. Nerdwallet offered its perspective this past spring: “Credit unions tend to beat out the big banks, at least, on customer service. Between 2010 and 2015, credit unions have consistently ranked higher than banks in measurements by the American Customer Service Index. In some cases, though, banks may have better options, such as Twitter support and extended call-center hours.”

We can’t become complacent, and there’s no doubt that remote access is making it more challenging to give personal service, but when you cut to the chase, your members’ wishes are fairly basic: let them know you care, show them you know what you’re doing, and make it easy for them to work with you. Warmth, competency, and convenience are a credit union recipe for success.

Kurt Schroeder is principal, growth strategies, with Baker Tilly in Minneapolis-St. Paul, Minnesota and a consultant to MEMBERS Development Company, a network of credit unions that conducts research and development relevant to credit union performance.

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