Can you imagine if every credit union measured ROA with a different ruler? Credit unions know that achieving a 100 bp ROA is good. You can have a lower one if you manage risk well. Net worth is another measure of safety and soundness that we all measure exactly the same way. If we didn’t we’d be in trouble.
But when it comes to measuring the REAL business we are in – serving the member – we do it sporadically (if at all) there is no credit union standard, we’ve never tied it to growth – we simply don’t have any reliable data. Consequently, financial measures rule the organization. They become our filter for all decision making.
The author of Loyalty Rules, The Loyalty Effect and his most recent, The Ultimate Question puts it best:
“A lot of companies survey customers once or twice a year and they average the numbers across all products and locations. First of all, satisfaction is not the right metric. Secondly, how can an average score once or twice a year be sufficient? Imagine that you only looked at profits averaged across all your product lines only once a year. How good would you be at managing profits? That’s how good you will be at managing loyalty.” – Fred Reichheld
When I first read about the Net Promoter Score (NPS), I was giddy. Here is a metric that is simple to use but packs a powerful punch in terms of data. Reliable data. NPS is a measure of the relationship between your member and your brand that is predictive of growth.
Diana Dkystra will be substantiating that statement at the FORUM Symposium later this year. She’s been measuring her brand with NPS for over three years. ROA no longer drives her decision making – it’s the member.
Many credit unions have used the NPS tool – however there is not a standard methodology (like ROA) that has been adopted. Until now.
Addison Avenue Credit Union, AmericaFirst Credit Union, Baxter Credit Union, BECU, Educators Credit Union (in Racine, Wisconsin), and San Francisco Fire Credit Union announced today the formation of the Member Loyalty Group, L.L.C. – a Credit Union Service Organization (CUSO) created to implement a standardized member-loyalty metric for credit unions nationwide.
The CUSO has partnered with Satmetrix, the company that developed the NPS (with Fred Reichheld), to first implement Satmetrix’s member-loyalty services. And in a few months will offer those services to all credit unions in the country, large and small.
The Member Loyalty Group’s six founding organizations have all been using the Net Promoter Score (NPS) metric to measure member loyalty for several years.
These credit unions were concerned, however, that the NPS was not being used in the same way by all of them. So they banded together to form a CUSO that would partner with Satmetrix, the company that developed the NPS, to first implement Satmetrix’s member-loyalty services within their organizations and then offer those services to all credit unions in the country, large and small.
Michelle Bloedorn, former VP Sales and Service for Baxter Credit Union has been named Executive Director of the CUSO. “Our number one priority is to develop THE standard metric for NPS. Many credit unions are using the NPS survey tool, but the methodology is not the same,” says Bloedorn. “Like ROA, we need to measure our member loyalty with the same ruler. The bottom-line has been the only measure of success and yet loyalty is what made credit unions grow. If your members cannot refer you, you will have a tough time growing in this increasingly competitive market.”
I am so excited for credit unions, and for our members to have this data.