Vinod Muthukrishnan. Co-founder & CEO of Cloud Cherry.
Loyalty is the key component between a company with marginal growth and a company that is catapulted into the market. After an initial frenzy to acquire as much mindshare as possible in our modern digital economy, organizations of all types are now settling into the realization that fewer quality customers can significantly improve the bottom line, much more than a lengthy but shallow list of followers ever will.
The traditional model of credit unions in the United States is a good example of the value of loyalty. Credit unions have long benefited from building loyal communities because the whole ideology behind these institutions is a community of people helping each other out. That’s why credit unions have members and not customers – this loyalty has its own ripple effect, not just by lowering churn and acquisition rates, but also improving the lifetime value of the member.
So how can fintech companies and traditional banks tap into the credit union model to build greater strength in their customer base and fight against the ever-present threat of digital disruption?
Don’t Forget Your Roots
Credit unions have always been a member-first culture. They significant focus on treating their customers with great care, deliver amazing member experiences and engage with them passionately. This focus comes with an unspoken recognition that they can’t compete with the larger banks on services, technologies and sometimes even cost – but they can beat them hands down at fostering relationships.
Engendering that kind of loyalty starts with building human relationships. A person will go out of his or her way to do shopping at a store where they have gotten to know the salesperson, for example. To reach that point, however, you must reorient your focus around your customer. For every decision, ask ‘how is this benefiting my customer base?‘ ‘is there a better way to do this?’ Call it an obsession, but it is needed.
Give Employees Freedom
In order to build a loyal community of customers, you need to allow your staff the freedom to make best practices decisions in keeping customers happy. Within reason of course, but when employees have the ability to make educated decisions on the fly, geared toward an immediate need, they can be your most valuable asset in securing long-term, loyal relationships.
Your organization can create actionable steps that will empower employees to more readily engage customers and build a personal rapport. It is crucial top management commits to this policy and ensures it is implemented as a practice at the frontline level. Having employees who know customers by name or – even better – customers who know employees by name, is business gold.
Make Smart Hiring Decisions
The right customer-facing staff is important, as our digitally-savvy world has made each of us highly sensitive to interactions that don’t feel genuine. Foster a community where your employees feel passionate about your culture, your values and the products and services you offer. This in turn creates more genuine representation of your brand.
Assess whether your staff is empathetic and kind? How do they initiate conversations and handle frustrated and angry members? What kind of words do they use while conversing with customers? Your frontline often ends up being the difference between a ho-hum transaction and a bright spot in someone’s day. That’s the subtle nuance credit unions have cornered the market on, and one that breeds lasting loyalty.
Look Beyond Your Four Walls
To successfully build a community-based business model like your local credit union, it helps to get to know the community. Studies show people “like” credit unions and community banks more than national chains, in large part because people like having a relationship with their financial institution – one that goes far beyond the impersonal interaction they usually have in large banks.
To build a loyal community base its imperative to be a part of the community you serve. Instead of focusing on nationwide marketing campaigns or looking for customers anywhere and everywhere, you will reap far greater benefits by honing in on your surrounding community and building from the branch out rather than from the top down.
If you think of your customer as King Midas, then loyalty is the special magic that allows him to turn everything he touches into gold. Loyalty is the most powerful currency of our on-demand economy, and looking back at the golden era of credit unions yields valuable insight into how to tap into those practices that turn a one-time user into a lifelong brand member.