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The "Order Taker" Service Culture is Killing the Credit Union Industry

Credit unions lost 25% of their primary financial relationships in 2020. Here is how to fix it.

Jun 07, 2022
By Tristate Products & Services
  • Education & Events

2020 was an extremely challenging year for everyone. Never have the lines of professional and personal life been so blurred. In March, we all got a rude awakening of the reality of the pandemic and its impacts on business. Everyone’s world was flipped on it head as we struggled to keep the credit unions open with closed branches, quarantined employees, and a remote workforce, all while trying to be the daycare and schoolteacher too. It’s a wonder we made it through.

While the craziness of 2020 still lingers, I think it is safe to say we all watched the new year come in with optimism and a feeling that better days are ahead of us. And they are. America is powerful and resilient. As we hold fast to the foundational principles of freedom, respect, service, and a willingness to come together to do hard things, we will emerge stronger than ever.

As challenging as this year was for individuals, it has been equally challenging for the credit union industry. Yes, credit unions that were positioned and prepared benefited greatly from the mortgage refinance boom and from PPP loans. However, a concerning shift in primary financial relationships is taking place of which credit unions need to be aware and take seriously.

A recent report published by Raddon Research titled, “The 2020 Challenge: Primary Status and Demographics in the New Decade” shows that the primary financial relationship is on the move away from credit unions and community banks to the mega-banks.

Raddon reports that in 2018, 21% of consumers identified a credit union as their primary financial institution. That is a slight slip from its highest point in 2013 when it peaked at 23%. Considering that only 33% of Americans are credit union members, a number in the twenties is quite acceptable. However, since 2018 the percentage has dropped significantly and appears to still be falling.

Raddon reports that in 2020 only 12% of consumers identified a credit union as their primary financial institution. That is a 25% drop each year since 2018. Where are these consumers going? They are going to Megabanks like Bank of America, Chase, and PNC which have increased their primary financial relationships from 40% to 59% in that same timeframe.

This migration of primary financial relationships away from credit unions isn’t happening only from attrition, but is rather due to a combination of attrition as well as the trend of new Millennial and Generation Z consumers entering the financial services world and choosing Mega-banks over credit unions. Either way, this is not a good sign for an industry that has worked hard to appeal to younger adults.

Why are credit unions losing Primary Financial Relationships? The data indicates four possible areas of needed improvement for credit unions to regain lost ground. Credit unions are:

  • Falling short in the use of data to identify existing, new, and upcoming member needs
  • Not properly onboarding new members to ensure adoption of all products and services.
  • Sidestepping cross-sell opportunities that deepen and expand their member relationships.
  • Failing to build awareness and confidence in their online and mobile offerings.

Bottom line, a credit union’s inability to proactively engage members and effectively communicate a value proposition stifles its ability to attract and retain primary financial relationships.

These problems have been brewing in the industry for decades and have been pointed out as a primary concern for long term growth and success by research companies like Raddon. While many have migrated their cultures to include sales with service, the majority are simply too entrenched in the “Order Taker” approach to member service and this entrenchment is now manifesting in startling ways. The days where credit unions can simply wait for their members to come to them with product and service needs are over.

What can be done to reverse it? While many of these shortcomings can be attributed to the credit union’s technology and marketing strategies, one area that we help to address here at SalesCU is the need to transition service cultures away from the “Order Taker” approach over to a proactive “Value Creator” approach. The “Order Taker” service culture is one that avoids the sale. It concedes that the member, rather than the credit union, is the expert and as such must rely on the member to present a solution to his or her own needs. This simply isn’t true and creates situations where many members feel underserved by their credit union, making them vulnerable to an incumbent institution to steal away that business.

The “Value Creator” service culture sees the member relationship as an opportunity to identify financial needs, wants, and dreams; educate the member on products and services that present solutions; and ask for a much broader range of the member’s financial business. Credit unions that employ this culture create opportunities in two different ways.

First, they take the opportunity to provide this type of service during member initiated interactions, such as when a member visits a branch, reaches out to the contact center, or applies virtually for a new product or service. During these interactions with members, employees not only serve the members’ requests, but also sell the necessary mix of products and services that solidify relationships and prevent members from leaving the credit union.

Second, they use data and other resources to:

  • Identify current financial needs their members have that are being met by other financial institutions.
  • Identify new needs for which their members haven’t found solutions yet.
  • Monitor future needs.

When a need for a product or service in any of these areas is identified, they reach out via marketing, technology, or with a personal phone call and capture the business.

A need to move the service culture from “Order Taker” to “Value Creator.” In order to develop the value creator culture, credit unions must first see themselves primarily as a sales organization and help their team members develop and identify as salespeople in a service environment. The time to begin the shift away from the “Order Taker” approach has never been better.

In an article published on The Financial Brand titled, “Four Ways Banks Must Change Before Millennials and Gen Z Will Love You,” author Bill Streeter cites a survey performed by software company, Zafin. This survey found the majority of consumers in America are using multiple financial institutions to serve their financial needs including 12.5% of consumers over 50 with five or more financial relationships.

If you think this is madness, so did those surveyed. The Zafin survey also found that nearly 75% of Millennials and Gen Z-ers, and 54% of those over 50, said they would be interested in switching their financial products and services to one single financial institution if they found one that provided for all of their financial needs.

There are two messages here. The first is that consumers simply need direction, and right now the Mega-banks are providing that better than the credit union industry. But second, consumers are not yet satisfied with the financial services they receive. This means, right now may be the best time for credit unions to reverse this trend and recapture primary relationships. In a 2017 study by Kehrer Saltzman & Associates, we learned that consumers trust their credit union more than their bank. When asked the question of which they trusted more, 61% of respondents indicated they place more trust in their credit union compared with only 27% who indicated they trust their bank more.

Trust is earned not given. Credit unions are naturally built on trust and the numbers show. The advantage of trust is good because as credit unions reach out to make suggestions on new products and services, and engage members in the sales process, the members will listen. The significance of trust has been demonstrated at many credit unions that have employed the value creator service model. When credit union salespeople use proper, member-focused sales approaches to recommend a checking account, loan recapture, credit card, or another value-adding product, they earn that business at a high rate. The credit union sales team I led for six years maintained a sales closing rate of 70%.

How to get started: Your credit union’s service culture is not an accident. It has been shaped for years and continues to be shaped by four main areas:

  • The message you deliver as a leadership team.
  • The way you hire.
  • How you train employees to view their roles in the credit union and member service.
  • How you develop employees through coaching and accountability.
Making the transition from “Order Taker” to “Value Creator” is not complicated, but it does require your credit union to make deliberate changes in these four areas.

Leadership Message: As a leader, you shape the service culture by what you talk about most, what you measure, and what you accept as the minimum expectation for a job well done. This applies at the executive level all the way down to the critical frontline managers. Credit unions that foster an “Order Taker” service culture do so because their focus is on operations rather than opportunity.

Making a shift in this area does not need to require what some consider hardnosed tactics, but rather a change in communication of what is valued most. In some situations, it means that leadership starts better communicating what they value. One of the best places to start is by identifying examples where members have benefited from a product or service sold to them. Then tell those stories consistently and reward those who implement the “Value Creating” practices.

Hiring: Credit unions hire amazing people; however, credit unions that have “Order Taker” service cultures generally hire employees based on aptitude for operations rather than initiative and proactive engagement for those key sales positions.

This oversight in hiring is simple to spot. First, review your job descriptions for front-line employees, their managers, and the senior leaders who oversee these areas. If sales is not listed in the top 3 bullets under the job description and responsibilities, and at least twice in the top 5, you are attracting or communication the wrong message to potential candidates. Second, analyze your interviewing process, questions asked, information gathered, and overall, what you are asking potential candidates to show you. Sales must be a primary focus.

There are several adjustments you can make in hiring. When conducting an interview, ask, “How would a potential candidate explain this position to their friends or family?” If sales is not one of the first things the candidate brings up, there is significant room for improvement in communicating the expectations for the position.

Training: What an employee views as most important in his position are the things communicated to him in the first hours of training. Sales must be an integral part of any training program for those in a sales position. Credit unions that struggle to overcome the “Order Taker” service culture do not include sales in their training programs as part of their operational training material. Rather, in “Order Taker” cultures, training focuses on processing transactions, opening new accounts, processing loan applications, and the required rules and regulations of the position.

For credit unions to move past the “Order Taker” mentality, sales must be included in operational training. For example, credit unions should teach employees how to identify a product to sell at the same time as teaching them how to process a transaction. They should be teaching employees how to interview members to identify multiple product and service needs at the same time as teaching the first steps of opening an account. And they should teach employees how to identify recapture loans at the same time as teaching how to calculate debt to income.

Coaching and Accountability: Finally, coaching and accountability must support all of this. Coaching and accountability takes place between the employee and the manager. In many situations, credit unions that struggle with “Order Taker” service cultures do not deliver consistent coaching and do not hold employees accountable to specific service standards. Rather, coaching is informal and focuses specifically on operational processes such as balancing, loan audits, and just knowing how product features work.

For credit unions to develop the “Value Creator” service culture, coaching and accountability must become consistent and intentional. While operations are important, the bulk of a manager’s time spent with her team should be focused on the members’ needs and how to service those needs by offering additional products and services.

Conclusion: The credit union industry is at a critical point. The “Order Taker” approach to service has taken a toll. As a result of this “Order Taker” approach, credit unions are losing the battle for primary financial relationships. The good news is that consumers have not truly found a home for their financial needs and say they are looking for a financial institution to reach out and capture their primary financial relationship.

Credit unions are and have always been perfectly positioned to capture the primary financial relationship. But in order to do so, they must adopt a new vison of what member service is. They must take steps to move away from the “Order Taker” service culture and adopt a more member-centric “Value Creator” approach. As they do, developing primary relationships will become the focus of each member interaction, and they will win back their members’ business from the Mega-banks.

Is your credit union looking to move past it’s “Order Taker” service approach, and become more proactive in its sales conversations? To see consistent sales results at your credit union you need competent sales training, employees empowered with the sales mindset, and leaders with the expertise to coach and mentor their sales teams. Gain all of this at our Credit Union Sales Intensive Workshop on July 26-28.  

About The Author

The Credit Union Sales Intensive is presented by SalesCU in partnership with the Minnesota Credit Union Network, Montana Credit Union Network, and The Wisconsin Credit Union League.