Is the concept of loyalty applicable to the financial services industry today?
Loyalty is defined in the American Heritage ® Dictionary as “a feeling or attitude of devoted attachment and affection,” while satisfaction is simply “the fulfillment or gratification of a desire, need, or appetite.” Why then are these two words continuously interchanged in regards to member service?
Where does Loyalty come from?
The etymology of “loyalty” begins circa 1400 from the old French loyalté, whose origins are in the Latin legalis, or “legal”. In examining the etymology further, one finds that the English word “loyalty” originated in the medieval feudal culture with the meaning, “faithful in carrying out legal obligations.” The modern definition of the word resonates with this feeling of obligation, or commitment to a specific person, cause, place, etc. In the Middle-Ages, the sense of obligation to one’s feudal lord was based on land and finances. In the 2000s loyalty is no longer based on a sense of financial obligations – but rather on emotions. How can a credit union make their institution a place where the member wants to be?
In the current financial services marketplace, there is a seemingly endless supply of financial institutions where a person can open a checking account, secure a loan, or obtain a credit card. What makes credit unions different? Credit unions are member-focused; rather than wanting to earn profits to pay shareholders, credit unions’ missions are to best serve their members (who, after all, are the shareholders). By making this distinction clear to members, both existing and new, credit unions can show how unique they are in the financial services marketplace.
Why, and How, Is the Credit Union Unique?
Simply defining what makes a credit union different is not enough though. The member must believe that member service is truly what the credit union believes in. How can this be proven? Personalize interactions with members – mention their children (if they have them), or inquire about how their week has been. By remembering a few small details about each member, the credit union can display how much it focuses on the member. One example of this is sending a get-well-soon card to the member when he or she is in the hospital.
Loyalty and satisfaction are directly correlated in regards to members’ emotions. Satisfaction measures what members say they feel, while loyalty measures what they actually do in response to these feelings. The graph below, from a 2005 survey by the Internet Strategy Consortium shows that eighty-two percent of online credit union members who are “very satisfied” are also likely to use the credit union for their next financial service product. What this means is that by maximizing a member’s satisfaction, the credit union increases repeat business.
How can a credit union increase members’ satisfaction? Only one source has the answer to this question. The members. Ask the members what they think would best improve the credit union’s performance and member service. Only members know what exactly would improve their service experience, what exactly the credit union could improve upon.
By taking members’ requests seriously, credit unions are not only able to make necessary quality improvements; they also demonstrate the high value placed on members’ opinions. Small steps towards increasing member satisfaction and loyalty are necessary for credit unions to distinguish themselves in modern society. The wide array of financial institutions available to consumers is vast, and credit unions are unique – simply capitalize on this uniqueness and demonstrate how the credit union emulates one of the principles credit unions were founded on: providing exceptional member service.
To learn more about successful techniques for increasing member satisfaction and loyalty, check out the upcoming webinar, “How can Satisfied, Loyal Members Facilitate Growth?” brought to you by Callahan & Associates and sponsored by Connections Online.