MADISON, WI and FOSTER CITY, Calif. — April 2, 2007 — Filene Research Institute, and Satmetrix today announced the availability of a new study that examines member loyalty for 17 leading credit unions using Net Promoter®, the loyalty metric co-developed by Satmetrix and loyalty expert Fred Reichheld. The study reveals that credit unions rank high in terms of customer loyalty relative to other retail financial institutions. It also shows that credit unions with the highest Net Promoter scores tend to experience higher asset growth, membership growth, and loan growth.
Credit unions have become accustomed to earning high scores on member satisfaction when compared to other financial institutions. The annual American Banker/Gallup poll on customer satisfaction has ranked credit unions at the top of the list for 23 straight years. Despite these lofty rankings, credit union market share has remained relatively stable over the past decade. To examine the apparent disparity between satisfaction and market share, the Filene Research Institute asked noted customer loyalty consultants at Satmetrix to evaluate member loyalty and analyze the elements of credit union experience that drive loyalty. Conclusions are detailed in a newly-released report by the Institute titled A Fresh Approach to Measuring Member Loyalty.
Satmetrix employed a new metric called the Net Promoter score (NPS) to analyze member loyalty for 17 participating credit unions. Net Promoter is a simple yet elegant way to measure loyalty that is gaining recognition across a wide range of industries. It gauges how strong customer relationships are by comparing the number of “promoters” with the number of “detractors” within an organization’s customer universe. Apple, General Electric, Charles Schwab, Intuit and other world-class firms have implemented the Net Promoter concept successfully.
The study provides credit unions with a primer on Net Promoter and catalogs preliminary statistics for its application to credit unions. The 17 credit unions participating in the study scored an overall NPS of 54.3%, with 67.7% promoters and 13.4% detractors. Credit union individual NPS ranged from a high of 79.1% to a low of 19.6%, and credit union overall NPS greatly exceeded those of other retail banking outlets.
Promoters are likely to be individuals who regard the credit union as their primary financial services provider; have good overall experience with their credit union; and are longtime members.
“The drivers of NPS in credit unions are fairly intuitive,” says George Hofheimer, Filene Research Institute’s Chief Research Officer. “Overall product and service quality, overall value and member service and support are key ingredients. High Net Promoter scores correlate with high credit union asset growth, high credit union membership growth, and loan growth.”
“The basic premise of Net Promoter is what attracts most firms to the idea; however, the process for measuring and understanding the concept goes much deeper,” said Laura Brooks, vice president of research and business consulting for Satmetrix. “Firms are building Net Promoter into all aspects of their strategy and operations, including customer segmentation and profitability analysis, executive and staff compensation, service experience audits and product development.”
Studies have shown that NPS is the single most reliable indicator of a company’s ability to grow. Relating this number to the drivers of growth within the organization is the first step; the second is creating an ongoing strategy to improve those drivers and boost Net Promoter scores.
Copies of A Fresh Approach to Measuring Member Loyalty and other Filene research reports are available free to Institute members; $75 to non-members. An electronic version is available to qualified news organizations. For information about Filene studies or on becoming a member of the Filene Research Institute, call (608) 231-8550 or visit www.filene.org.
About Satmetrix
Satmetrix is the leading global provider of on-demand software applications and consulting services to measurably improve customer loyalty. The company’s solutions support enterprise-level programs to gather trustworthy data on customer experience, derive actionable insights, and integrate this information into the daily work flow of employees throughout the organization. For more information visit www.satmetrix.com.
About Filene Research Institute
The nonprofit Filene Research Institute examines vital issues affecting the future of credit unions and consumer finance. More than 1,400 credit unions, credit union organizations, and credit union executives are members of the Institute. The Institute is located in Madison, Wis., and works in cooperation with leading researchers and academic institutions throughout the world.
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The following are trademarks of Satmetrix Systems, Inc.: Satmetrix, Satmetrix Systems. Net Promoter is a registered trademark of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.
