On Feb. 5, 2009, I was privileged to participate in a planning meeting with one of the most progressive credit unions in the country. They are coming off a break-even year in 2008, and — as with the industry as a whole — they are now faced with the unexpected, and unprecedented, burden of the NCUA assessment.
Its CEO started the meeting acknowledging the blow, but reminding the team, "We still have a business to run."
He also pointed out that during a NAFCU webinar, NCUA's executive director said point blank that examiners would be directed to evaluate each credit union as to its standing, independent of any assessment. The director added that credit unions would not be penalized for mandated contributions to the Stabilization Plan.
The CEO continued. "This is also the time to set ourselves apart. Everyone else will be retrenching, pulling back, and looking inward. Of course we must be prudent, but that doesn't mean sticking our head in the sand. We will need to build capital — to increase income and reduce expenses faster than we grow assets. That means our decisions need to be that much better made, and our operations remain lean. So we will still pursue planning ... to lead most effectively. We will still conduct research...to be in tune with our members. We will still train our staff, to continue to improve the member, and employee, experience. We need these tools to continue to move forward."
Remember, despite any assessment, and the economic downturn in general, members still need a financial institution. They still need a positive member experience, and now more than ever, the chance to be of service exists. This is the time to fully understand member needs and create a distinctly better value proposition. Consider targeted transaction research, new and closed account studies, competitive branding and positioning research, product or delivery channel preference focus groups. Each can help you know where you can safely cut, and focus where to shrewdly invest.
Glen Urban of MIT has noted that now is the time not just to "relate, but advocate" on behalf of members. Fred Reichheld of Net Promoter fame admonishes us to remember that although financials are (deservedly) the "Big Gorilla" in the room when it comes to decision-making, financial reports and ratios can only look backward. Running your business strictly on financials alone ignores the "Big Dog" in the room-the forward-looking index (and growth predictor) of loyalty and the member experience. Saving money short term at the expense of the member experience may actually cost you more in the long term, with lost relationships.
So don't let the economy, the assessment, or uncertainty decimate your plans. Adjustments of course may be necessary, but remember, you planned for a reason: to grow and to succeed moving forward. Heed the advice of the sage CU CEO: "We still have a business to run." Again, that means offense as well as defense.
The CU management team in the meeting on Feb. 5th noted they had capital for a rainy day. To not only survive but thrive into the future, they agreed, perhaps, that rainy day has come. So take this opportunity to work together-nothing can bring teams together like a common focus. Do the research and segmentation to fully understand your members' experience. Maximize this opportunity to advocate on your targeted members' behalf and create raving fans as a result.
Success comes to the providers with the most loyal account holders... even, and especially...in the current economy. Now is the time to do what members need most-and to do these things significantly better that the competition. To borrow a metaphor, on defense, you've got to do the things that hold the line and keep members from leaving. On offense, you've got to move the team forward and find ways to score. If you don't know the specifics of what those things are, now is the time to do research, to learn, and to act.
Neil Goldman is Senior Partner with Member Research. He can be reached at 310-643-5910 or email@example.com.