By Neil Goldman
Maintaining exceptional service isn’t good enough anymore. If credit unions want to win consumers over from banks in large numbers, they must go beyond superlative account and service maintenance. To grow organically, credit unions must add value by enhancing, not just maintaining, the banking relationship.
The 2011 Bank Transfer Day was a success, and credit unions have enjoyed significant membership increases. Not to mention, credit union loyalty has never been greater, and consumers generally rate credit unions as being better on fees and in most service-related categories. Yet, the majority of bank consumers are staying put. And recent research shows that if they did in fact leave their current bank, most non-members would, in fact, simply move to another bank. Though they transferred in record numbers last year, such movement represented under 2% member growth. Why aren’t credit unions seeing 5%-10% growth, or even 20% or more?
The truth is it takes a lot to convince a consumer to change his or her primary financial institution (PFI). Most won’t change because someone else is better; the vast majority only leave if their institution becomes “worse.” Even if an institution maintains just an “okay” level of service and account management, a consumer will stay. That’s because maintaining a relationship is about not subtracting. A consumer will only leave if he or she is dissatisfied.
To get a consumer to change, a credit union must focus on enhancements. Enhancement is about adding. Credit unions must not only offer better service than the bank’s—and offer the most convenient method possible for transferring the PFI relationship—they must offer a motivating enhancement to the relationship.
To get transfer-driving organic growth, credit unions should add something substantial to already competitive banking maintenance and service. Start by looking at ways to add substantial differentiators in one of the three main criteria people traditionally give for banking at an institution: convenience, fees or technology. Most credit unions, thanks to free checking, are going to have the fee motivation that does get some bank customers to move. To grow more, credit unions should focus on relationship enhancements in convenience and technology areas.
Neil Goldman is Senior Partner, Goldman Consulting and Strategy, Inc., Los Angeles, Calif.
Discover more enhancement ideas and strategies that inspire organic growth from Goldman at Execu/Net™, August 19–22, in Big Sky, Mont.
