Credit union customer service satisfaction beats banks…meh

Last month, the American Customer Satisfaction Index’s annual findings scored credit unions first in customer satisfaction – the seventh consecutive year credit unions were ranked higher than banks among overall financial institutions. While it is tempting to kick up our heels and celebrate this well-deserved recognition of the thousands of front-line staff that put their hearts and souls into serving our members each and every day, it is important to remember that we still have work to do.

While beating the banks is exciting, the margin of victory – a score of 85, as opposed to the average bank score of 76 – is not necessarily something to be excited about. The economic meltdown that left several banks on the verge of collapse and completely destroyed (however temporarily) the public’s trust in the stability and integrity of the modern mega-bank reached its pinnacle in 2008, just six years ago. Though consumer confidence can, and has, been restored, the fact that credit unions lead in customer satisfaction by only nine points leaves much to be desired.

Market share data paints a more accurate picture

While we have and will likely continue to beat banks in customer satisfaction year after year, it really isn’t reflected much in credit union’s overall market share. The Credit Union National Association (CUNA) estimates that credit union membership expanded by 2.9 percent during the past year and that the 100-million member mark was eclipsed this summer, yet the association’s latest report issued in September of last year shows credit unions nab just 6.8 percent of the total asset market share, with smaller banks at 18.7 percent and the largest 100 banks still enjoying 74.5 percent of the market (http://www.cuna.org/Research-And-Strategy/Credit-Union-versus-Bank-Comparisons/Market-Share-of-Total-Assets—Banks-vs_-Credit-Unions/). Credit union’s market share in 1992: 5.6 percent. Twenty-two years, and credit union market share has only increased 1.2 percent.

Payday lenders boast high customer satisfaction too

Credit unions justifiably do not like payday lenders. But while we judge them on their predatory practices, we often overlook that fact that customers often profess a high level of satisfaction with their payday lender of choice – and not just because of the quick access to money; they like the service and the people who serve them.

According to a 2004 survey of payday advance customers conducted by Cypress Research Group, customers reported “high overall levels of satisfaction with their recent payday cash advance experience (77 percent satisfied). This level of satisfaction was higher than their reported satisfaction levels while ‘eating at a local restaurant’ (75 percent), ‘going to a local government office for assistance’ (61 percent), ‘or applying for a loan at a local bank or credit union’ (55 percent)…Respondents were queried in much detail regarding the application process (their understanding of the terms and repayment schedule of the cash advance, and the professionalism of the application service staff) and all satisfaction scores were at least 90 percent.” Besides the survey responses, the rapid, continuous growth of the payday loan industry speaks for itself in terms of the overall consumer satisfaction level.

Why it matters

Of course, I believe that credit unions have a better overall value proposition than banks or payday lenders, but I think we need to be careful when we hang our hat on service satisfaction. Credit unions do not own the market on good customer service satisfaction, and we need to ask ourselves if satisfaction is a good indicator of growth and overall vitality within the marketplace. I’m guessing I’m not the first to look at a nine-point survey advantage with a “meh” response.

We need to migrate away from communicating on the “how” and “what” we do. The how: personal, friendly service; and the what: consumer and business financial products and services that are just common commodities. It’s the “why” that matters most. As leadership guru Simon Sinek so passionately and emphatically said, “Consumers don’t buy what we do, they buy why we do it.” Maybe a clearer focus on our “why” we do what we do will have greater impact on market share and more importantly, member loyalty.