I am very passionate about loyalty. And many of you know that I’m a kool-aid drinking Fred Reichheld NPS purist!

IMG_0225That’s why it’s so important that credit unions develop a standard methodology for calculating their relationship Net Promoter Score. The Member Loyalty Group has done just that.

The beautiful thing about NPS is its simplicity. Fred Reichheld intended the survey tool to be “open source” meaning, anyone can do it. You don’t have to hire a statistician to calculate the score.

Simply ask a random sample of your members (to calculate a statistically significant response rate use this calculator) the ultimate question:

“How likely is it that you would recommend the credit union to a friend, family member or co-worker?” On a scale of 0 – 10.

Those that score you a 9 or a 10 are fiercely loyal promoters. They will do three things for you:

1. Buy more from you.
2. Market for you.
3. Tell you how to improve their credit union.

 
Number 3 is done by asking the simple follow-up question “Why did you answer the way you did?”

Detractors are defined as those that score you between 0 and 6. Why such a large scale? Because Fred found in his twenty years of research that loyalty is not easily won. And those that score you even a 6 are likely to defect. Passives are members sitting on the fence at 7 and 8. They are satisfied but can be easily wooed by the competition.

To calculate the value of your brand you simply take the percentage of promoters (your loyalty assets) and subtract the percentage of detractors (your loyalty liabilities). According to Member Loyalty Group, the average credit union industry score is 55%. This is nearly five times the banking industry. But I think it should be much higher.

Remember, hope is not a strategy. I know many credit unions have engaged in this important measure but are hoping their scores go up. Tying employee incentives to such a goal without really diving into the data and listening to members. NPS is not a survey, but rather a discipline, like accounting. 

The founders of the Member Loyalty Group get this. Addison Avenue, BECU, Baxter, Educators (Racine, WI) San Francisco Fire and America First all have Member Loyalty as a separate department in their organization. They listen and respond to members daily. Not annually.

My passion for this program – that I really think is the missing link between your credit union’s brand and your bottom line – began with the Filene Research Study that was published in May of 2007. At that time, the benchmark came in at 54.3%.

Two years later we raised our number to 55%. I still think that’s way too low. And with the banks doing everything they possibly can to market FOR us right now – let’s get that number up!

Who’s with me?