Posted by David England, Senior Research Analyst, Cornerstone Credit Union League on 8/22/2016

Are Member defections, internal growth, and increases in new Members where you want them to be?  For too many credit unions, the answer to the question is, “No.”  Some credit unions decided to innovate and do things differently.  You can too!

One of the tools to consider is the Member Effort Score (MES), a system which uses Member feedback to improve service and modify internal policies and procedures.  Yes, this research really pays off.  And, it is a straightforward approach that will have all of your employees on board with improving your bottom line on a continuous basis. 

More Reasons to Use MES

Did you know that credit union Members are more likely to defect due to poor service than they are to stay for great service – or even great rates.  Think about these statistics.

  • One-in-four customers are likely to say something positive about their customer experience, while 63% are likely to speak negatively about a bad service experience.
  • Among customers experiencing a positive service transaction, 23% told 10 or more people about it, while 48% of those with a negative experience told 10 or more people about it.

The “word” on your credit union gets out because about six-in-10 people run into problems when they contact customer service.  For example, they:

  • Had to re-explain things.
  • Had to use multiple channels (e.g., had to switch from the web to phone).
  • Were transferred.
  • Put out moderate/high effort to resolve their issue.
  • Had to contact the company multiple times to resolve their issue.

Think about Members or potential Members asking themselves: “Where should I do my banking?” or “Where should I get my Mortgage?”  Your service reputation and your Members’ past service experiences matter. 

Recent research is confirming that reducing a Member’s effort to the point that you are making it easy to resolve issues/accomplish transactions does more to retain customers than exceeding their service satisfaction expectations.  Acting on the insights that expose how to resolve Members’ problems not only improves customer service, but it also reduces customer service costs (e.g., getting it right the first time) and reduces Member defections. 

Reducing Member effort makes you a stronger competitor.  This method can help in many areas such as new Member application, Member defection, requesting a mortgage loan, setting up bill-pay, and transferring funds.  So, get started eliminating obstacles and make it easy for Members to contact you and use your products/services.

Basic Steps of the Member Effort Score (MES)

The Member Effort Score (MES) is measured using two questions: (1) an “Agreement” question that measures how easy it was for the Member to handle their issue/request; and, (2) a question about expectations being met or not met (designed to put the first answer into a frame of reference).  Expectations matter.  If a Member expects giving low effort and has to give high effort, you may be at risk of losing him/her.  If a Member expects high effort, then meeting this expectation is far less risky than the first scenario. 

The size of the gap between actual performance and expected performance indicate areas where your service is viewed as exceptional and/or needs to improve.  The other questions in the survey (diagnostics) will pinpoint the specific actions that need to be improved and those that are delighting your Members.

Engage your Members and staff and remove obstacles (e.g., a Member has to call back multiple times or has to call customer service after several attempts to solve a problem online). You might learn not only how to solve that particular problem, but you might get a bonus – you will learn how to head off additional problems!

 

Categories: Research, Strategic Planning & Consulting
Posted by Mr. Howard Bufe, AVP, Credit Union Resources, Inc on 8/19/2016

In our own individual styles we have written into our mission and vision statements to have a positive influence on our member’s financial lives.  These philosophies and statements drive what we do on a day to day basis.  We strive to provide the ultimate consumer financial journey.

To achieve our vision we must become and remain relevant in our member’s lives today and tomorrow.  Are you positioned appropriately for today’s financial market?  More importantly, are you preparing yourself for the future of financial services market?  With all the current and future disruptors impacting our environment (i.e. Fintech), we must prepare ourselves for transformation.  Transformation of your business model begins with empathy.  It’s about listening and genuinely caring for your member’s needs and perspectives.  A great place to start is realistically ask yourself these questions:  Are we deliverying services that are in step with how they live and work?  What will keep your current members coming back and engaging more?  How do we appeal to new members?

To materially improve the member experience, we need to address four items:

  1. Adopt/enhance member-centric practices

  2. Redesign processes from beginning to end

  3. Apply and utilization resources to make the member journey efficient and responsive

  4. Rise above organizational silos to drive member centricity throughout the credit union

It’s important for us to recognize that the American consumer now has more access to financial tools, providers and advice than ever before.  Consumers have made it clear, when delivering financial tools and services, make it fast, make it easy and it must be secure.

Today’s consumer typically ranks their primary financial institution high, although households have relationships with four financial institutions on average.  This reflects a strategy on their part to maximize rewards, rates and results, in an effort to meet their varied needs.  How do we fit into their plan?

As you strategize your future ask yourself:

  1. What’s our member value proposition?

  2. What makes us stand out?

  3. What will bring them to do business with us?

  4. Are we relevant in today’s market?

  5. Are we positioning ourselves to address future disruptions?

Categories: Strategic Planning & Consulting
Posted by Mr. Chad Stanislav, VP Financial & Technology, Credit Union Resources, Inc on 8/15/2016

Fraud and deceit have been around since the beginning of man.  History is riddled with examples of persons being duped for gain.   Proverbs says “food gained by fraud is sweet to a man, but afterwards his mouth is full of gravel”.  Those who have experienced fraud first hand would enjoy being the one to place the gravel in someone’s mouth.  I imagine some of you are thinking worse than just gravel.  Deceit can be found everywhere from nature to animals.  Unfortunately, the human kind of animals has taken deceit and fraud to new levels.

There are three basic components to fraud; need, opportunity, and justification.   Amazingly, need and justification are closely related and all driven by the mind.  Humans have the ability to create needs based on social norms regardless if real or perceived.   There are those who would say our moral fiber has been unraveling for years to the point where doing the right things means less and less with each passing year or generation.  As more is studied about the mind/brain, it is proving as complex as many of the recent events of fraud.  People can easily be persuaded to believe certain ways.  So it makes sense to them when they can talk themselves into justifying why they are committing fraud.  In the credit union, there are so many reason employees commit fraud, from feeling it was owed them, a need to “keep up with the Joneses”, or plain greed.

As a financial institution, you have no ability to control or change people’s needs or justification.  However, with the opportunity component of fraud, you have some ability to alter or control.  Some people are always looking for a weakness and ways to exploit it for personal gain.  If you have been in your credit union for a long period of employment, the credit union probably has experienced fraud.   This could have been in stolen cash, fictitious loans, changing due dates, manipulating closed accounts, changing parameters on accounts to benefit someone, or running personal expenses through the credit union, just to name a few.   Over the years, credit unions have been good about developing policies and procedures to address issues or potential weaknesses.  To verify the policies and procedures are working properly, they need to be verified by someone independent of the area.  This can be accomplished by an in-house internal auditor or an outsourced internal auditor.   The credit union’s weakest links after established procedures are the employees.    Consistent training and more training is vital to strong fraud prevention.  Being diligent in the review of procedures and testing the procedures to ensure that they are being followed are essential to mitigating fraud.

Fraud is not only perpetrated by employees, it has become an ever growing, sometimes lucrative business conducted by individuals for a thrill, individuals for money, gangs and organized crime.  It is conducted locally and abroad.  There is no escaping fraud, but as a credit union you can make it more difficult for fraudsters to succeed.  The sophistication of committing fraud has moved from a scatter approach (a lot of emails to many hoping someone will take the bait) to a more targeted approach with greater reward if successful.   The people committing fraud have now learned to use social media to gather data and information about employees and members.  The patient and ever persistent perpetrator gather as much information as is needed to exploit the weak links.   Sometime employees divulge information unknowingly.  Sometime dumpster dives can reveal member information.  Sometimes finding back doors to computer system can expose weakness.  There are a myriad of ways that fraud is being conducted remotely.   Credit cards, member accounts, and the potential for identity theft are constant threats to the credit union. 

Be vigilant in reviewing the credit union’s policies and procedures, be consistent with training, and perform audits to ensure that procedures are being followed.  Policies should be reviewed on a periodic basis (annual or when significant changes are made); whereas, procedures should be reviewed on a more frequent basis.  Procedures help everyday processes.  Training in those procedures can make a credit union run smoothly with the consistency to ensure members are served properly.  Training should also include observing for items that may be out of the ordinary or that don’t make sense.  Common sense is a great tool for this, but there is a question as to whether all possess it.  Training can at least keep it in the forefront of the employee’s mind when their performing their job.  To make sure those policies and procedures are being followed, auditing the staff and various areas of the credit union ensure these are being followed, or identify weaknesses, or areas that need further training. The policies and procedures, training, and auditing are a circular process that is necessary to make the credit union operate effectively while mitigating fraud.  Make sure the checks and balances established in your credit union is capable of detecting fraud to stop it early, if not before it starts.

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