Courting Disgruntled Bank Customers

Focus on delivering the CU difference to all members every single day.

February 10, 2013

Breaking up is hard to do.

In nearly every case, severing relationships—whether they’re personal, romantic, or business-related—causes some level of cost, stress, time, emotion, and inconvenience.

Eventually, we have to decide whether the not-so-good aspects of a relationship outweigh the disadvantages of change.

All of us have done it.

Consumers who want to “break up” with their bank are no different. These jilted consumers have many things to consider.

On the scale of difficulty, changing financial institutions is less difficult than a divorce but much more difficult than changing phone services or dry cleaners.

Just to change financial institutions, consumers must open new accounts, transfer funds, change their direct deposits and payroll deductions, order new checks, cancel existing electronic bill pay arrangements and set up new ones, request new debit and credit cards, and last—but not least—foster new relationships with tellers, customer service representatives, and loan officers.

But many are making that decision, and credit unions are benefiting.

In the past year, more than two million people chose to become credit union members—many abandoning previous bank relationships. It’s the best level of growth for credit unions in many years.

Consumers’ most common reasons for ending their bank relationships are credit unions’ lower fees and loan rates. Another reason is the reputation for service credit unions enjoy.

As new member relationships settle in, a key question for credit unions is: How do you keep members satisfied so they won’t leave for another financial institution?

Here are four ways to start:

1. Focus on cross-selling. The more reliant your members are on the credit union for a wide variety of services, the more difficult it will be for them to leave.

We all make mistakes and some people don’t accept that fact, but deep relationships make members more tolerant of the types of minor mix-ups that are inevitable.

2. Create a genuine “member-focused” service culture. Train all employees to focus on members, identify needs and problems, and provide solutions.

Empower staff to remedy problems and satisfy members. Reinforce the concept and reward employees who do a great job serving members.

3. Do things right. Great prices and exceptional service are critical for success. But inferior products and processes, as well as too many mistakes can overcome all the good feelings members have about your credit union.

Think of restaurants where the prices are good and staff attitude is friendly but the food is over- or undercooked, the order is wrong, or the kitchen is dirty. Do you keep going to that restaurant? 

4. “Walk the walk.” Credit unions are the darlings of personal financial experts, the media, and even some members of Congress when it comes to delivering value and good service to consumers of all walks of life.

That’s why so many new members are flocking to credit unions.

Volunteers, management, and staff of credit unions must stay focused on delivering the credit union difference to their members every single day.

In doing so, they’ll keep the members they have and continue to gain many more, including those who’ve become disgruntled with their current institutions.

Right now, credit unions are sitting exactly where they want to be and where they deserve to be. Continued focus on what they’ve been doing right for a long time—through good times and bad—will keep credit unions at the top of the financial services industry in terms of delivering quality, service, and value to people everywhere.

JOHN FRANKLIN is CUNA’s executive vice president and chief operating officer. Contact him at 608-231-4266.