Finally – The NPS Standard for Credit Unions!

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

That’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?

Net Promoter Score Update

Fred says the score is dead – stop being score whores and DO something with the data already!

Okay – I’m paraphrasing. I just returned from the third annual Satmetrix NPS Conference. This one was in San Francisco and included such speakers as the CEOs of Charles Schwab, Intuit, Logitech and my favorite, Zappos.com. It also included Tammy Gallegos from America First Credit Union and Diana Dykstra, San Francisco Fire Credit Union.

This conference is two days of non-stop sessions designed to push your brain into another realm. They don’t give you a giant notebook full of power point presentations, but rather a pad of paper in a nice leather portfolio and a pen. Take notes!

Here are my favorite notes from the sessions I attended:

Charles Schwab CEO, Walter Bettinger II:

Financial institutions are the king of “gotcha” fees!

Do not give a great deal to a new (unknown) client if you can’t offer the same deal to an existing (loyal) client!

Bad data leads to bad decisions.

Servant leaders breed a customer-centric culture.

Richard Owen, CEO of Satmetrix:

Flat is the new UP!

The economics of customers acquisition is changing. It’s lots harder to acquire new customers, so you better not lose the ones you have!
Word-of-mouth has always been the Holy Grail and is trusted 78% of the time.
Let your customers market FOR you!

ZAPPOS.com CEL Tony Hsieh:

Retention is the new Acquisition!

We are a service company that happens to sell shoes, clothing, handbags, etc.

75% of our business comes form repeat customers.

Take the money they would have spent on marketing and put it into the customer experience and let them market FOR us!

Whatever you’re thinking – think BIGGER!

Chase the vision, not the money.

and finally

Fred Reichheld, author of The Ultimate Question and co-author of the Net Promoter Score:

The only way you can afford to grow in tough times is through referral.

A promoter is worth 3X more than a detractor.

BUT, who do we care most about to learn from? Which customers should you listen to? NPS is a conversation, not a survey. Who cares what your score is, what are you DOING with the data (verbatims) you receive?

You need to get your CFO involved. Accounting systems have not caught up with NPS.

My take: This is the third year NPS practitioners from around the world have gathered and I’ve seen a distinct shift from, how to gather good data and how does your score compare in the industry to “screw the score” if you’re not listening to the RIGHT customers and making the RIGHT decisions (hard decisions) to improve your service to them, you’re toast.

Retention today is everything – stop wasting money on membership bribes and the spray and pray approach to marketing. We need new tools in this economy – the DISCIPLINE of NPS is the right tool for the right job.