By Ron Schmidt
A November finding of the American Customer Satisfaction Index (ACSI) as reported in CUToday.info disclosed, “Customer satisfaction with credit unions has declined and is rated just barely ahead of small and regional banks…Member satisfaction with credit unions is down 4.7% to 81. That’s just one point ahead of regional and community banks.” And only five points better than a few of the national banks.
A Short-Sighted Endgame
Recently a CEO mentioned a remark that his board president offered, “I don’t care what you do, just make money.” It appears ‘making money’ is the end game, regardless. But what scares me about this statement is the narrow focus of managing the financials at the expense of the members and employees. Is this what has contributed to the 4.7% drop in members’ approval ratings?
So where does the member and her satisfaction with the credit union fit into your equation?
This strategy of “just make money” is currently driving some of the largest banks as they purge their experienced employees and in favor of lower paid, inexperienced college grads. They don’t blink an eye about trading experience for reduced costs – and this is often reflected in reduced customer service. The name of the game is cost and the banks’ arrogance assumes customers will stick with them.
Remember this same strategy of “just make money” contributed to the 2008 financial crisis. For example, Dave Daberko, former CEO of the defunct National City Bank, was so proud of himself when he bought a subprime mortgage originator in 1999, because it made the bank $1 billion a year. But that decision led to the bank’s demise. You may say “that will never happen again, because regulations are so tough.” Maybe, but that doesn’t guarantee that you’ll have any members left to serve.
With the influx of new members to the ranks surpassing the 100-million-mark, will dissatisfied members be leaving? In the above cited report stated, “…as credit unions add large numbers of new members, they may struggle to maintain better service levels compared to traditional banks.”
Claes Fornell, ACSI Chairman and founder explained, “…credit unions are joining the troubling trend of deteriorating customer satisfaction that we’ve seen throughout the U.S. economy. Corporations facing increasing earnings and revenue pressure keep raising premiums and fees, which combined with cost cutting to maintain profitability, is having a negative effect on service and on customer satisfaction. What might look good on the balance sheet in the short term is not helpful for long term prosperity.”
“Just Like a Bank”
So have we become them? Back in the early ‘80s when I began working with credit unions, employees describing a credit union would often say, “You know, we’re just like a bank.” And in the ‘80s as regulations became friendlier, credit unions added every service banks had, so that they were essentially, ‘a bank.’ And rhetorically we could add, “Congratulations.”
Whether you’re an employee, CEO, or board member, you may or may not be all that upset. But as far as I’m concerned, for credit unions to go through all the early growing pains in the industry, then have to pay for the banking industry’s financial disasters, we get to the end of the day and ‘we are one of them’ is disturbing to me. Is this our fault? Well, as the old comic strip character Pogo said, “we have met the enemy and he is us.” Maybe it’s time to look in the mirror?
Asking the Hard Questions
Do you assume members will ‘stick with’ you? Are you sacrificing short run cost cutting goals for long run disasters? These questions need to be first addressed at the top of the leadership chain, with the board and CEO and then with your front line people who engage your membership daily.
At the board level, how much time and focus is on the numbers and how much on the people side? Do you talk of employee satisfaction and turnover as well as member satisfaction? Do you have committees as focused on the people side as you do the numbers side?
At the member and employee levels, what are their expectations of your credit union and is your credit union a good fit? Do you realize you will have to fight to keep them? Do you do nothing and wonder what your credit union will look like after the next drop in member satisfaction? Or is it still about ‘just make money!’
Ron Schmidt is with CBS Certified Public Accountants, LLC, Solon, Ohio and can be reached at rschmidt@cbscpasllc.com or 440-542-1536 ext 28.