Why CUs Cannot Afford to Turn Only to 'The Big Gorilla' - There Is a World Beyond the Numbers

There is a management religion among credit union leaders today. Our faith lies in the numbers. When a decision is needed, to the financials we turn. Ratios, trends, analyses: accounting numbers rule the day.

Now don't get me wrong. Financials are critical.

Still, accounting numbers are only part of the picture... and they suffer from a fatal flaw: they only look backwards. Using only financials is like driving by looking in the rear view mirror. In good times or bad, they do a great job of telling us where we've been. They're not so good at telling us where we're going.

To look forward, we need another set of numbers. Research numbers. And a new, truly member-driven discipline.

The numbers we need are indexes of advocacy and detraction (NPS, net satisfaction, and/or net word of mouth): the numbers - and the philosophy - of the member experience.

Think of financials as the big gorilla in the room. Think of measures of the member experience as the big dog (and I'm talking a growling, ornery Rottweiler here.) Both deserve attention. Ignoring either can threaten your CU's future.

The "big dog" measurements of the member experience have advanced in recent years. Well-documented is the power of advocacy indexing (e.g., Net Promoter, Net Satisfaction, Net Word of Mouth) as a predictor of organizational growth. Why do these measures of the member experience work? Simple. They are Word of Mouth (WOM) indicators telling of members' likelihood to talk positively or negatively about your CU. Understanding your members' WOM is especially important for credit unions. Why? Because word of mouth is the primary tool consumers use to make decisions about where to bank.

So if net advocacy indexes can indicate our future success, then we finally have market research that speaks to our religion: numbers. NPS provides the "financials" of the member experience - and a view out the front windshield and not just the rear view mirror.

You wouldn't (and shouldn't) ignore your financials. They're the big gorilla demanding your attention. The measures of the member experience - offense of NPS and defense of member satisfaction - are now one more set of numbers of equal importance. They're that growling, ferocious Rottweiler also worthy of notice.

Focus groups, web, mail, and phone surveys can all play a part in understanding the member experience. When intelligently used, each can bolster the big dog, and help your CU consistently improve your members' experience.

Which would you rather have: a) Great financials and a poor member experience (i.e., unhappy, un-loyal members), or b) Mediocre financials yet very loyal members?

Which bodes better for your future success?

A real world warning. Consider the CFO turned CEO who turned his financials around and drove his credit union nearly into the ground in the process. Sure, if you cut staff, marketing, products, and service levels, you can save a bundle and look great in the short term. But a year later, when members are fed up and leaving in droves, your numbers won't look so great anymore. Ignore the big dog, the Rottweiler of research and the member experience and guess what: you're going to get bit. 

Neil Goldman is Senior Partner with Member Research, a full service research/consulting firm serving credit unions in 43 states nationwide. He can be reached at (310) 643-5910 or by email at ngoldman@memberresearch.com.