According to Fred Reichheld's recent book, "The Ultimate Question," there is one very powerful question that gets to the heart of both loyalty and growth for any organization.
For CUs that question is: "How likely is it that you would recommend the ABC Credit Union to a friend or family member?" In membership surveys, the answers to that question add up to the "Net Promoter Score" (NPS), which determines how loyal the institution's members are and how likely the credit union is to grow. Here is how the score is calculated:
1. Survey participants rate their responses to the "ultimate" question on a scale from zero to 10. Do not use one to ten because some respondents might mistake "1" for the highest score.
2. Add the 9s and 10s together and calculate their percentage of the total number of respondents. These are your Promoters.
3. Add up all zero to six responses and calculate their percentage of total responses. These are the detractors. Ignore sevens and eights; these are the Passives.
4. Subtract the Detractor percentage from the Promoter percentage to obtain the NPS. For example, 50% Promoters minus 10% Detractors equals a NPS of 40. For banks, Commerce Bank of New Jersey achieved the highest NPS (50). Fortunately, many credit unions rate much higher.
Consider the power of this simple indicator. In a recent client application, a CU with five regions obtained scores ranging from 30 to 65.
The region that scored 65 was the fastest growing in both membership and accounts; the region with a score of 30, however, experienced the slowest growth.
In fact, the correlation of score to growth was precisely accurate for each of the regions as compared to one another. Since word-of-mouth is the No. 1 way in which people learn about credit unions, the metric makes sense: the Net Promoter Score measures word-of-mouth.
Growth and success depend on knowing one's own score and that of competitors as well. What's your NPS? Track it. Improve it. And reap the rewards.
Neil Goldman is President of Member Research. He can be reached at 310-643-5910 or by email at ngoldman<at>memberresearch.com.