Longer member relationships improve loan and deposit balances.
Credit unions heavily investing in increasing member loyalty can expect those loyal members to lead to more new members, according to a survey of potential members from the Credit Union National Association. The survey found credit union membership growth benefited from loyalty more than bank customer growth.
Credit unions’ loyalty score, which is based on members answers to questions about their attitude toward their credit union and its services, is 37 percentage points above banks’ loyalty score. However, banks have been closing that gap in the past two years, according to the report.
“The findings in CUNA’s National Member Survey can help credit unions better understand the member trends that will impact the credit union movement in the years to come,” says John Haller, CUNA director of corporate research, in a statement. “Credit unions need to understand their members in order to survive in today’s financial environment.”
And financial institutions that successfully secure members’ loyalty can also expect to see those satisfied members drive loan and deposit growth, according to the RFG Loyalty Index, measured by Raddon Financial Group in Lombard, IL. Its 2006 survey of 93,000 members from 117 credit unions found a direct positive correlation between member loyalty and financial performance.
“Improving member loyalty takes an understanding of what drives loyalty within a credit union’s unique market and member base,” The Raddon Group reports. “Pricing or breadth of products offered may be the most considerable driver of loyalty for some credit unions. For others, it may be leading-edge electronic delivery channels or offering the most convenient branch locations in the area.”