Cultivating Truly Loyal Members

“The only thing of real importance that leaders do is to create and manage culture.” 
(Edgar Schein, professor MIT Sloan School of Management) 

On average, only 22% of  credit union members are “truly loyal” to their credit union. “Truly Loyal” means they choose your credit union as their primary financial institution, recommend the credit union to others, and contact the credit union the next time they need a financial product or service. These members are proven to use more products and services than those who only meet one or two of the “truly loyal” criteria. And true loyalists are three times more likely to have actually recommended your credit union than members who don’t meet all three criteria.

SO, HOW DO YOU CULTIVATE TRULY LOYAL MEMBERS?

In this business, the price of admission includes a couple of key factors: competitive loan rates, minimal service charges or fees, broad range of services and high quality of service. While you may not be able to make significant changes to the first three, the last factor is within your immediate control. Service quality depends on the performance of your staff. The performance of your staff is directly impacted by the mindset and environment as a whole: your internal culture.

Come back next week  to learn more about how internal culture can help improve membership and employee retention...

The Good News... and The Bad News...

THE GOOD NEWS... 

The number of credit union members in the U.S. has increased byalmost 4.5 million over the past three years, thanks in part to the well-publicized bad behavior of banks.

THE SO-SO NEWS.... 

 Only 33% of all U.S. adults are credit union members.

THE BAD NEWS... 

About 8% of members leave their credit union each year.

According to a recent CUNA study, if fewer than 20% of your members have joined within the past four years, your growth may not be sufficient to outpace your attrition or to see any gains in product usage. To strengthen your credit union, you not only need to focus on attracting new members – it’s also crucial to find ways to improve retention and increase share of wallet among existing members. That means finding a way to increase the number of members who are loyal to your credit union. This is where internal culture comes in.

Stay tuned… 

Principle #7: Cooperation Among Cooperatives

The last of the 7 Cooperative Principles for Credit Unions is the principle of cooperation among cooperatives.
Not sure what exactly a cooperative is?  You’re not alone, and you might be surprised how many organizations you interact with are actually cooperatives.

A cooperative (or co-op for short) is a business that belongs to the people who have organized to provide themselves with the goods and services they need. For example, a farmers’ market is considered an agricultural cooperative: farmers organize a place where they can share the cost of making their produce available for public sale, and each participant benefits from the opportunity. In the case of a credit union, each member participates by putting money into the credit union so that they can also have the opportunity to take additional money out in loans or use other financial services.

Some cooperatives you might be familiar with include Dairy Farmers of America, Ace Hardware, and Ocean Spray.  Many electric power providers are also cooperatives.
As cooperative organizations, credit unions look for opportunities to partner with other cooperatives to better serve members.   Does your credit union partner with other credit unions (such as shared branching) or other cooperatives?  Spread the word!

Throughout this series, we’ve discussed each of the 7 Cooperative Principles for Credit Unions in order to help you identify opportunities to strengthen your credit union’s unique internal culture. Help your employees understand all seven principles and how your individual credit union supports them both internally and externally.  You may just find that suddenly your members are becoming more knowledgeable as well.

Principle #6: Concern for Community

The sixth of the 7 Cooperative Principles for Credit Unions is the principle of concern for community.
In addition to focusing on member needs, credit unions are committed to the sustainable development of their local communities.  This not only means providing a stable local financial resource, it also means undertaking non-financial initiatives to help the community.  Examples include holding fundraisers for a local charity, supporting literacy efforts in neighborhood schools, sponsoring teams to participate in races or other events that support various types of medical research or support, and pitching in to clean up the local community.

Many credit unions are already good at getting employees involved. Is concern for community already part of your internal culture? Then look for ways to get members involved too for a common sense of pride.

It seems like a lot of credit unions are hesitant to talk much to members or the public about their community involvement.  Credit unions by nature tend to be humble.  While humility is an excellent quality, so is sharing – particularly if you share what your credit union is doing in such a way that it inspires others to get involved too.  This presents a twofold benefit: increasing support for the charitable effort, and solidifying your credit union’s brand identity within your community. People tend to do more business with organizations they like, so encourage your employees to share all the likeable things your credit union is doing.

Principle #5: Education, Training and Information

The fifth of the 7 Cooperative Principles for Credit Unions is the principle of education, training, and information.

Credit unions are committed to providing financial education and training for members and employees for the betterment of the whole cooperative.  This is a great selling point!  Finances can be intimidating for many people, and in some ways banks seem to reinforce this feeling.  Providing education is a way for credit unions to help members overcome any trepidation, understand their finances, make better decisions, and become more financially secure – something that benefits everybody thanks to the principle of member participation. Many credit unions provide financial literacy training for children and special interest groups such as immigrants or veterans.

In keeping with the idea that people from all walks of life deserve reliable financial service, credit unions around the world also continue to make a difference by offering financial education and opportunities for underserved populations in places like Africa, India, and Afghanistan. The Credit Union National Association (CUNA) devotes a small percentage of every dollar collected in dues from affiliated credit unions to assist with the international credit union development activities of the World Council of Credit Unions.

This is a great principle to both reinforce within your internal culture and communicate externally, because everyone benefits when both employees and members are well-educated on financial topics.  When your employees truly feel like they are part of a learning organization, they are more likely to seek opportunities to educate your members as well.

Principle #4: Autonomy and Independence

The fourth of the 7 Cooperative Principles for Credit Unions is the principle of autonomy and independence.
Unlike most banks, credit unions don’t answer to a group of far-away outsiders; they are local institutions that answer to and understand the community. That means greater flexibility in responding to the needs of members and rewarding economic participation.

Of course, credit unions do have regulating bodies that oversee their activities and make sure members’ interests are federally insured.  State chartered credit unions are regulated by their state credit union department, and federally chartered credit unions are regulated by the National Credit Union Administration (NCUA), which is an independent agency whose board members are confirmed by the U.S. Senate.  Funds deposited with credit unions are backed by the U.S. Government up to $250,000 (similar to what the FDIC does for banks) and credit unions are subject to insurance examinations to verify their security.

What this means is that essentially members get the best of both worlds: the peace of mind that comes with knowing their funds are secure and the benefit of not serving as an income pool for faceless bank executives.
Are the ideas of autonomy and independence understood within your credit union’s culture? Make sure your employees embrace and explain how your credit union is a stable financial partner for your community, without the hidden strings of being beholden to outsiders.

Principle #3: Member's Economic Participation

The third of the 7 Cooperative Principles for Credit Unions is the principle of members’ economic participation.

“Economic participation” might sound like a mouthful, but it’s pretty simple. Basically, a credit union gets money from its members and then loans the money out to other members.  The more members participate, the more there is to go around.  It’s kind of like the idea that the whole is greater than the sum of its individual parts, or like how the chemistry of a team can make it even better than the skill level of the players individually. Credit unions follow a “people helping people” philosophy from the way they treat members to the way rates are decided.

Member participation leads to better rates and fees than a bank typically offers.  Plus, when there’s a surplus it often gets returned to member in the form of a dividend after appropriate reserves have been set aside - because members are owners rather than just customers. Credit unions don’t have any outside stockholders; they exist because of and for the benefit of their members. That’s a unique position in the financial industry, and a story your employees should know how to tell.

Most credit unions are pretty good at communicating about their rates and service, but it may help your employees do their jobs more effectively if they understand the “why” as well.