Employee Loyalty Drives Member Satisfaction

Member loyalty is essential to your credit union’s financial success and sustainability. It’s the quality of the member experience that leads to achieving financial results, and your employees drive the member experience. Their actions matter most. The classic Harvard Business Review article, “Putting the Service-Profit Chain to Work,” describes the relationships among fundamental drivers of business success. It is as fresh and relevant now as when it was written in 1994. Simply stated:

• Customer loyalty drives profitability and growth;
• Customer satisfaction drives customer loyalty;
• Value drives customer satisfaction;
• Employee productivity drives value;
• Employee loyalty drives productivity;
• Employee satisfaction drives loyalty; and
• Internal quality drives employee satisfaction.

For your credit union, member loyalty develops when their expectations are more than met. Excellent service means they remain a member, they refer others, and they rely on your credit union for additional products and services. They prefer their existing financial relationship with your credit union to the unknown quality of a different financial institution. Member retention is much less expensive than member acquisition. Moreover, loyal members, who are accustomed to excellent service, can be more forgiving when something goes wrong. And the goal is for the most loyal members to become “apostles” for your credit union, spreading the word of exceptional service. Your staff’s performance is the biggest factor in developing member loyalty, and how employees feel about their work makes the difference.

The Harvard Business Review noted how the quality of employees’ work environment has a profound impact on employee performance, productivity, engagement and loyalty. Numerous studies over time have reinforced this important effect. Engaged employees have materially higher productivity and provide higher value to the customer, have lower turnover and absenteeism, and have much fewer service quality problems. This results in higher financial returns. One Gallup poll found companies with the most engaged employees were 22% more profitable and 21% more productive than those with the least engaged employees.

The service-profit-chain is a handy roadmap for the CEO and senior leaders. It guides them to laser-like focus on the credit union’s organizational culture. Credit unions are founded on values that involve service to the member and the community, integrity, teamwork, respect and trust. A culture based on these values automatically gives credit unions a leg up. The most competitive companies today are the ones where employees identify with the mission, understand and buy into the company strategy, have opportunities for personal development and learning, and give attention to social and environmental responsibility.

The credit union’s mission of service fosters employee loyalty, as people want a strong sense of purpose and meaning in their work. They want to serve the member, and want personal empowerment, autonomy, and the learning and technological tools to make things right for members, colleagues and themselves. They are more engaged when they see growth opportunities and long-term prospects that maximize career potential and add depth to the work. Employee loyalty develops when respect and fairness permeate the culture, and they feel the psychological safety that lets them express themselves, take risks and learn from mistakes. Loyalty is nurtured when employees and leadership trust each other. In such a culture, employees are motivated to give their best.

Millennials, who now represent about half of the labor force, are particularly attuned to values and culture. Their expectations exceed the employee satisfaction needs that the Harvard Business Review described years ago. Beyond being satisfied, they must feel challenged, mentally stimulated and have management take their objectives and ambitions into account. Gallup reported they are three times more likely than non-millennials to leave a job, particularly if they don’t have these requirements addressed. When half of the workforce might have one foot out the door, management must take notice, especially as turnover incurs costs beyond the expense of recruiting, hiring and training replacements. There are costs of decreased customer satisfaction and lost productivity.

Metrics for employee engagement and member satisfaction are prerequisites for managing the links in the chain.  Management must understand how employees feel about their work, their colleagues and the organization. Moreover, current and complete member data, including satisfaction metrics, give management and staff information needed to effectively serve them. Senior management’s active use of current data provides the information that leadership needs to take action to drive employee engagement, and related member satisfaction.

Credit unions must meet and exceed member expectations in today’s hyper-competitive financial landscape. A highly engaged workforce will make the difference, as your people make day-to-day decisions involved in delivering the great service to members that enables your credit union to excel.

Stuart R. Levine is Chairman and CEO for Stuart Levine & Associates and EduLeader LLC. He can be reached at 516-465-0800 or slevine@stuartlevine.com.