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Solve Problems the First Time

July 11, 2018
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Market economics suggest that the price of a good or service is linked to where supply meets demand.  When demand for a good goes up, the price can go up; the reverse is true as well.  That’s why customer loyalty is so important to your long-term success. When your loyalty falls, you must either lower your loan rates or raise your deposit rates to compensate for that reduced demand.

To maintain or improve your customer loyalty requires understanding what drives loyalty.  Exceeding expectations is one key driver, as we noted in May.  Another is solving problems when they happen.

Raddon Research Insights recently produced a focused study “The Keys to Loyalty: How USAA Engenders Loyalty in Its Members through Service and Branding.”  In that study, Raddon researches explored how USAA members viewed that institution relative to the perceptions of the customers and members of other banks and credit unions, as measured in Raddon’s Relationship Survey program.

One measure stood out above all: problem resolution.  USAA members and credit union members who had experienced no issues had basically the same Net Promoter Score: 68 for USAA, 65 for the 178 credit unions in the analysis.  Basically the same: the difference between the percentage of consumers giving their institution a 9 or 10 on the willingness to recommend scale is more than 60 percentage points higher than those giving a 0 to 6.  For USAA, 75% were promoters and 8% detractors. In the case of the credit unions, 74% were promoters and 9% were detractors.  Basically identical.

Those who did experience issues had very different opinions.  The credit union members’ score fell to 17. 48% were still promoters (9 or 10) while 31% were detractors, a very significant shift.  For USAA, the score only fell to 53, with 66% promoters and 13% detractors.  This chart shows it better:

USAA solves its members’ problems to their satisfaction; credit unions by and large do not.

Where are credit unions falling short?  Largely, basic communication.  When a credit union member has an issue with fraudulent account activity, 69% of the time, they are satisfied with how the credit union handled the problem.  A similar percentage finds satisfaction with how the credit union replaced their lost debit or credit card. 

But if the issue is slow speed of service or a problem employee, the satisfaction rates fall precipitously.  The most unforgiveable sin is also the most avoidable: No Response to Inquiry.  Only 18% are satisfied with how their credit union solved that issue.

There is no real excuse to fail to respond to a customer’s concern, and customers are very aware of that.  What systems do you have in place to ensure that customer inquiries, questions, or concerns are logged and handled immediately?

There are many conversations in the industry about “big data,” and banks and credit unions are spending significant funds on data warehouses and CRM systems, all with an eye towards artificial intelligence, predictive modeling and other fancy concepts.

As someone who has implemented a CRM system for a billion dollar institution, I will tell you the best thing a CRM system can do is to log customer interactions so you can respond quickly to every single one.  Doing that, and reducing those instances of customers feeling abandoned and disrespected, will do more for your loyalty, and therefore your bottom line, than any amount of “big data.”