Avoid These Strategic-Planning Missteps

By Jon Haller
Director of Market Research,
Credit Union National Association

As strategic planning time rolls around, credit union boards and management will be weighing the effects that a down U.S. economy, rising competition, emerging technology and other outside influences will have on their abilities to achieve their goals and objectives. Most, hopefully, will also include the essential ingredient of member survey information in their planning process, to help guide their decisions related to their policies and procedures, operations and marketing strategies for the upcoming year and beyond.

Yet there may be some credit unions considering approaching their decision-making without having a thorough understanding of their members' financial needs and behaviors.

Some of the more common missteps, misperceptions or pitfalls occasionally encountered within or among credit union boards and/or management are presented below, along with my view on why they should be avoided.

1) "Budgets are tight. We can't afford to do a survey."

While downturns in the economy and tight budgets sometimes lead credit unions to eliminate their plans for conducting their survey, it can be argued that it's actually during these tough times that doing research is most essential.

If your members are doing less borrowing because of the state of the economy, your credit union needs to ensure it is doing all it can to attract what little borrowing there is.

Moreover, members and consumers no longer hesitate to leave financial providers that are unable or unwilling to meet their remote-banking, service-quality and product needs.

Past CUNA surveys have shown that nearly one in five members had switched PFIs during the previous two years, with service dissatisfaction serving as the primary reason for leaving.

Keeping abreast of your members' satisfaction levels and financial behaviors via a member survey should be a priority—in good times and, just as importantly, in bad times.

Moreover, being able to identify those sub-groups within your membership that are most likely to be in the market for your home equity loans, used car loans, electronic bill payment, and other services—via a "target-marketing matrix" your credit union can realize tremendous cost savings (valuable, in tough financial times), increased return on its promotional investments, increased service use, and, ultimately, an improved "bottom line."

2) "We did a survey three years ago. We're on top of what our members want." Or "We did a survey three years ago. Our membership hasn't changed, so there's no need to do another one."

The broadening of remote-banking delivery channels, the shrinking pool of members and consumers in the peak borrowing ages of 25 to 44, stepped-up competition from existing financial providers, and the emergence of new competitors are only a few reasons why you can no longer let three or more years pass in between surveys. The financial services environment is simply changing too quickly. And so are your members' financial needs.

Staying on top of your service-quality and product-market-share levels, and shoring up the service aspects, policies and procedures needing help has never been more important. A two-year (if not shorter) time frame between surveys may be in order.

This time frame allows you to identify any problem areas and/or opportunities for attracting more business, decide upon and implement any necessary adjustments, have these adjustments recognized by members, and reliably measure how these adjustments have affected your members' perceptions and financial behaviors since the previous survey.

A number of credit unions we work with conduct surveys annually. Many include their member-satisfaction information as a factor in determining management and/or staff bonuses. Yet others conduct two-page surveys in between their every-other-year 4-page projects, to ensure they are effectively monitoring the subset of satisfaction, market share or other issues that they deem essential for annual measurement.

3) "We have multiple offices. We're sure they're all doing equally well at meeting our members' needs."

More often than not, members at a credit union's various offices have different demographic profiles. For example, it is not uncommon for one or more offices to serve a population with noticeably higher incomes than the other office(s). Or one office may serve a notably "younger" group of members. Each of these factors would call for different approaches, in terms of what would be essential to best meet these groups' financial service and service- quality needs.

It is also common to find that one or more offices excels in factors such as the staff's service quality, its lending service, its location or hours, and/or its ability to attract its members' business. The flip side, there will often be an office or two that is not performing as well as the others on these types of issues.

Only through conducting a member survey and reviewing the demographics, satisfaction levels and financial behaviors of members relying on your different offices can you pinpoint and work to address the areas within each office that need attention. Only then can you ensure that all of your members' needs—regardless of which office they rely on – are being met as effectively as possible.

4) "Our member-satisfaction, market share and primary financial institution (PFI) levels seem to be reasonably high. That's good enough for us."

One advantage of using an outside firm to conduct your member survey is that some providers—including CUNA Research—will compare your member survey findings to benchmarks (i.e., other credit unions' findings). Comparisons to these benchmarks provide you an additional and important perspective on how well your credit union is performing – where you excel and where there's some room for improvement.

"Is our member-PFI level above or below what it 'should be'?" "How do our staff friendliness and knowledge, convenience of hours, loan rates and approval time stack up against others?" "Should we be attracting a larger market share of our members' vehicle or home equity loans than we currently are?" "Do other credit unions get this many complaints about their location?" Comparisons to benchmarks can shed some light on these and other important issues.

Member surveys should, and often do, play a key role in credit unions' strategic planning process. Industry research, national perspectives and effective networking can help your credit union stay abreast of current and upcoming issues that can impact your members and your credit union.

But nothing can replace, is more valuable than, or can lead to a stronger "bottom line" than good old-fashioned feedback from your own members.

Whether you use an outside firm, or conduct the member survey yourself, "just do it."

Next month's topic: Salaries for Marketing VPs/Directors, Marketing Managers/Supervisors, and Business-/SEG- development Managers.

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