MADISON, Wis. and FOSTER CITY, Calif. — The Filene Research Institute teamed up with Satmetrix to look at credit unions' stable market share despite strong member loyalty and high customer/member satisfaction polling among financial services providers.

The research takes a new and simple approach to member loyalty called Net Promoter(R), the loyalty metric co-developed by Satmetrix, and loyalty expert Fred Reichheld, which subtracts a firms percentage of detractors from the percentage of promoters. To examine the apparent disparity between satisfaction and market share, the Filene Research Institute asked Satmetrix, a global provider of on-demand software applications and consulting, to evaluate member loyalty and analyze the elements of credit union experience that drive loyalty. Satmetrix employed Net Promoter scoring–also being implemented by firms like Apple and General Electric–to analyze 17 participating credit unions.

The study provides credit unions a primer on NPS and catalogs preliminary statistics for its application. The 17 credit unions participating in the study scored an overall NPS of 54.3%, with 67.7% promoters and 13.4% detractors, and places credit unions in the top 10% of all firms for member loyalty. Individually the credit unions ranged from a high of 79.1% NPS to a low of 19.6%.

“Overall product and service quality, overall value and member service and support are key ingredients. High Net Promoter scores correlate with high credit union asset growth, high credit union membership growth, and loan growth,” Filene Research Institute's Chief Research Officer George Hofheimer explained. Promoters are likely to be individuals who regard the credit union as their primary financial services provider; have good overall experience with their credit union; and are longtime members. Nearly 85% of promoters see their credit unions as their primary institution and 72% have been with their credit union more than five years.

The study found large gaps in expectations between promoters and detractors. “Promoters indicated multiple areas where their credit union exceeded their expectations–especially branch experience, online services, and customer service/support,” the study read. “In contrast, most detractors showed large expectation gaps in almost all areas.”

Given the small sample, the study could not conclude a correlation between NPS and growth. However, those in the study with asset growth over 11% scored between 56% and 67%, while those below that threshold were around 36% to 39%. Participating credit unions with higher loan and membership growth also achieved a higher NPS.

NPS is designed to identify key drivers in loyalty so that a plan can be implemented to improve upon member experience in these areas. “The basic premise of Net Promoter is what attracts most firms to the idea; however, the process for measuring and understanding the concept goes much deeper,” said Laura Brooks, vice president of research and business consulting for Satmetrix. “Firms are building Net Promoter into all aspects of their strategy and operations, including customer segmentation and profitability analysis, executive and staff compensation, service experience audits and product development.” –scooke@cutimes.com

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Study Looks into Member Loyalty Drivers; Member Service and Value Are Key

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