No one disputes that loyal members do three things:
- They buy more from you – increasing services per hh and profitability.
- Market for you – decreasing your marketing expense
- Tell you how to improve their cooperative – “I’ve been a member since…”
You know they do it – but can you measure it? A study released today from the Filene Research Institute, Exploring Ongoing Member Loyalty: Net Promoter in Credit Unions, proves that credit unions with the highest Net Promoter Scores (NPS) also have the highest profits. Fred Reichheld, author of The Ultimate Question, refers to NPS as the company’s growth engine. If done properly, it is a valid predictor of the future health of the organization. Unlike ROA which reflects the current operating condition.
In my opinion, NPS was the missing link on the balance sheet. The majority of our accounting measures focus on the quality of our widget (loan) rather than the quality of our product (service). If your credit union believes that service is your differentiator, why wouldn’t you measure it as rigorously and accurately as ROA?
NPS does just that. And, it’s very simple. By asking a random sample of your members this question: “On a scale of 0 to 10, how likely is it that you would recommend the credit union?” you can begin to understand what really drives loyalty.
The Member Loyalty Group, a CUSO founded by Addison Avenue, America First, Baxter, BECU, Educators and San Francisco Fire Credit Unions, partnered with Dr. Laura Brooks (co-author of the book Answering the Ultimate Question) for the Filene Report. If you’re not already a Filene member, you should join. If you are, your copy is on its way.