Satisfaction vs. Loyalty

The other week, we discussed the need to move members from satisfied to loyal. To best achieve this in your credit union, it helps to have a better understanding of what separated satisfaction from loyalty.

Satisfaction means you met a very low bar of expectation. When I enter a credit union, I expect to have access to my money, make a payment on a loan or get answers to my questions.

Loyalty, however, means that I am an advocate for my credit union. I proudly tell others about the service I receive. I will go out of my way to use their services, even if another financial institution offers comparable terms.

William Bluel, a professor of Decision Sciences at Pepperdine University, explains the difference between satisfaction and loyalty at his blog this way:

Experience tells me, as do the definitions in several dictionaries, that satisfaction relates to the result of a process. The process may be a sales process, product performance process, or a service process. Loyalty relates to a relationship. Customer loyalty does not occur, but customer satisfaction can occur immediately following a successful process. Loyalty can, in fact, survive a negative process. Loyal customers will continue to purchase from a company even though they may have had a bad experience.

Even more surprising is the fact that satisfied customers will leave your credit union. Bluel also shares this:

Frederick Reichheld noted several years ago that between 65 and 85 percent of customers who defect said they were satisfied to very satisfied with their former supplier. As an example, Reichheld used the auto industry to make his point by showing that satisfaction scores are between 85 and 95 percent, while repurchase rates average only 40 percent.

What makes some customers loyal and some merely satisfied? The key is in building a relationship. Every financial institution – bank, credit union or non-bank lender – offers a variation of the same set of services. Some provide a way to store money and access that money with checks, debit cards and ATMs. Others lend money at various rates and repayment terms.

While some people will solely make their decision based on the final cost, the interest rate or the fee structure, most people involve other “intangible” factors. How am I treated when I have a problem? Does the credit union have my interests at heart?

Building loyalty is a three-step process. First, a credit union has to have a product someone needs – a loan package, a passbook account or a savings account. Next, that person must be able to conduct the transaction in a way that meets their needs and expectations. The final step is building loyalty. Loyalty requires building a relationship with the member.

Call centers and member service departments play a crucial role in the development of the final two steps. A member’s primary contact method with a credit union is by phone. Having a well-trained call center prepared to exceed member expectations is one of the easiest ways to build loyalty among your members.

Moving Members from Satisfied to Loyal

Almost every credit union I work with has a variation of the following in their mission statement:

Make sure every member is satisfied during every interaction with the credit union.

But if a customer is merely satisfied, without loyalty, they are going to leave your credit union and obtain financial services elsewhere. We would like to think that people are rational and make all of their financial decisions on facts, price and benefits. But we know better. As CU Grow so eloquently wrote:

Members are not going to remember a savings or loan rate. They’re going to remember someone at your credit union, who connected with them and went above and beyond the status quo.

This goes for all the touch points a member has with your credit union. It is relatively easy to monitor how well staff is working with members who visit the credit union in person. But how well are calls being handled? What is service like after hours? How easy is it for members to use your Web site and get answers to their questions?

These are questions that can only be answered by listening and being ready to do just a little bit extra. For example, if your member service call center is aware of an issue that will prompt a heavy volume of calls, they can preempt those calls with a proactive e-mail message or SMS text message letting members know important details.

For example, last month, much of the Midwest and East Coast were hit with ice storms and extended power outages. Imagine if your credit union’s call center reached out to your members a day in advance to let them know how to reach the credit union in the case of power outages and provided details on how services such as direct deposit or bill pay would continue to operate in inclement weather. I imagine, you would have gained not just a satisfied member but also a loyal one.

Small Gestures Make a BIG Difference In The Branch Or On The Phone

Everyone from credit union executives to the members their credit unions serve have a million and one things on their to do list each day. If that is not true literally, it sure feels like it sometimes. The below blog entry from CU Grow speaks to making the most out of those mere moments with members.

“Small Gestures Make a BIG Difference in 2009”
Rushing in and out as quickly as possible is probably what many of your members are doing right now when they walk into your credit union. They are in a hurry, with a list of fifty things to do and want a quick credit union experience. Now, it is important to note that “quick” does not mean curt or impolite.

The same importance that is paid to in-branch experiences should also be paid to call center service. Whether you can see their smiling faces or just hear their harried voices, call center and member service representatives should be prepared to deliver total member care 24/7.

I would even argue that those frantic phone calls over the weekend to your call center help better define your credit union's relationship with the member than the weekly in-branch visit and transaction...and the numbers don't lie. In 2008, our call center received 2,271,400 calls, which was up from 1,699,300 total calls received in 2007, and we expect to see even more calls in 2009.

Growing Amidst the Turmoil

It’s no secret that the financial services industry and those it serves are facing tough economic times. News of financial institutions closing is becoming more frequent and more borrowers than ever before are facing foreclosure.

Credit unions and their members, however, are weathering the financial storm better than most. I strongly believe it is because of the personalized, around-the-clock member services credit unions offer. When members can turn to a financial institution they can rely on and trust, they make better financial decisions.

As credit unions make a commitment to provide 24/7 total member service, Digital Dialogue is able to tout company growth in 2008. During the third quarter alone, we began supporting nine more credit unions with 24/7 call support for overflow, emergency services and after hour services. We now work with more than 200 credit unions in 42 states and receive more than 200,000 member calls per month.

Our growth also means we’re planning on expanding our team, and that’s great news for the credit unions we serve and for Detroit/Auburn Hills, our hometown. Local station WXYZ covered our growth last week with this report:

http://www.wxyz.com/mediacenter/local.aspx?videoid=16483

We’ll be adding up to 150 staff members over the course of 2009 to our more than 260 current employees. We look forward to welcoming friendly team players that are passionate about providing great, personalized member service to credit unions. And that’s what will keep credit unions going during these tough times – a focus on total member service.

Hello and welcome

Hello, and welcome to the credit union total member service blog. As primary author, please allow me to introduce myself. I’m Peter Schmitt, president of Auburn Hills, Mich.-based Digital Dialogue, a PSCU Financial Services company and nationwide provider of 24/7 call center operations and software solutions to credit unions.

My background includes more than 13 years of credit union industry and call center experience. In addition to leading Digital Dialogue, I currently serve on the Board of Directors for Auburn Hills-based Dialogue Marketing Inc. (a 600 seat contact center) and Credit Union Student Choice, a student lending Credit Union Service Organization (CUSO).

This blog’s goal is to provide a perspective to credit union executives on member services and call center best practices. I will discuss trends that impact the credit union industry in addition to commenting on relevant and timely news stories. My goal is to provide content that demonstrates techniques that improve member service and loyalty in the credit union industry. I will share my experiences while working directly with more than 200 credit unions and offer insight into best practices for delivering 24/7 total member care. From time to time, this blog will feature guest contributors and their thoughts, opinions and experiences.

I would like to invite your feedback as well. If you have any thoughts on my entries or would like to see a certain topic covered, please feel free to leave a comment with your suggestions. I look forward to an interactive dialogue with the readers of this blog.