Originally published June 25, 2012 on CUinsight.com.
A commonly-referenced description of credit unions states that credit unions are “not for profit, but for service.” With that thought in mind, allow me to reflect on a credit union planning session I facilitated a couple of years ago. Session participants, a mixture of board members and senior executives, were fixated on service. They kept saying that the value the credit union should work to maximize was its service value. “We need to be better at service!” they would say. This went on for some time until finally the CEO asked, somewhat exasperatedly, “What is service!?” What a great question.
While opinions on what “service” means within the credit union community vary greatly, noteworthy financial gurus and online resources offering financial advice to the nation’s banking consumers have a defined perspective on what credit union “service” means. Consider the following.
- It’s often been said that there are no free lunches. But Clark thinks that credit unions are darn pretty close… Clark Howard
- Credit unions are often a better deal than banks and tend to pay higher yields on deposits…. Suze Orman
- Credit unions typically offer lower interest rates on mortgages and even credit cards… US News Money
- Even more exciting, a credit union representative uttered those four little words I’d been longing to hear: no balance transfer fee… MSN Money
- Credit unions are better than banks because on average, they have better rates and lower fees…. A Smarter Choice
There are many more comments like these from a wide variety of resources, but all have a similar theme. Service, in a credit union context, means a better deal. It means lower rates on loans, higher rates on deposits, no fees. Though each of these resources, and other like them, add caveats such as “on average” or “typically” or “more often,” the general gist of their messages is that credit unions serve members by being the low-cost alternative.
While many credit unions market their great service to members and prospective members, they often do so generically with no qualification of what that statement means. Why does that matter? Unless a credit union clearly defines “service,” then members are left to assume their own definition – and many will come to the belief based on what they’ve heard, that credit unions should be the best deal.
So back to the question of “what is service?” Service can mean many things. It can mean a market-beating financial deal as the financial pundits have suggested. It can mean individualized attention and decision-making support. It can mean convenience via a broad physical plant network or technological access. It can mean a wide selection of financial products. The list goes on.
The challenge for any credit union is to fully understand and communicate its own definition of service so that employees and members know exactly what to deliver and what to expect respectively. If delivery and expectations don’t match then “service” – whatever its definition – will be seen as less than stellar.
Consider the credit union for whom service is defined by branching convenience. All those branches aren’t cheap. There is cost, which can only be covered by appropriate pricing. In this “branching convenience” example, a credit union that fails to let members know (or ensure that they clearly understand) that resources are being pooled to offer better branching convenience, or that convenience is a primary value offered to members, risks being perceived as providing poor service if the members have other ideas about what service should be. In other words, they might not see the value in branch convenience if they expect substantially better product pricing.
Case in point: Disney is reported to have conducted a satisfaction survey a few years ago focused on visitors to the Disney theme parks. What Disney was attempting to uncover was the level of visitor satisfaction with different elements making up the park experience. What garnered the most complaints? The food. I’ve been to Disneyland and if given a survey containing questions about the food I’d have to say I wasn’t very impressed with the food either. It was marginal and expensive.
So, what was Disney’s response to this chief complaint shared by a majority of park visitors? Did Disney upgrade the food? Did they hire Emeril to add a little “bam” to their menu? No. They did nothing. Why? No one goes to Disneyland for the food.
Though this Disney story may be more legend than fact, it provides a bit of clarity to my point. The Disney experience is about the Magic Kingdom. Its about the characters… the rides… the fireworks. People know why they go to Disney theme parks. Disney knows why people go to their parks. It isn’t for the food, and even if the food is bad it won’t stop people from coming to the park, and loving every minute of their time there.
Now, in the late 90s and early 2000s the Disneyland park in California did receive ever-increasing criticism regarding its maintenance, cleanliness, ride quality… all things that DO matter to park visitors because these things tarnish the Magic Kingdom experience and its value to consumers. The company worked hard to improve these issues because, again, they matter both to park visitors AND to Disney’s theme park service/value proposition (http://www.themeparkinsider.com/columns/robert/182.cfm).
Back to your credit union. Here are a few questions to ponder. Do you know what service is for your credit union? Do your employees know? Is service a word that has real meaning, or do you talk about service generically? Do your members have a definition of service? Are you in synch with your members’ perspectives?
Service, some concrete definition of service, does matter to members. The biggest question of all is whether service, whatever its definition, matters to you.