Credit Union Geek

Marketing, Strategy, and The Force by Joe Winn

The Pizza Place Incident

Originally published on CUInsight.com

This post highlights what I’ve come to call, “The Pizza Place Incident”.  In reality, it was nowhere near as exciting as the title implies.  Or was it?  (Cue dramatic chipmunk)

Here’s how it’s going to work.  I’ll share the story first.  After each section, we will discuss the key points the restaurant missed and how you can avoid them at your credit union (yes, pizza and credit unions relate).

It was a rainy evening in south Florida.  Which, for those not from here, means, “between July and November”.  My family sought shelter and sustenance at our favorite local pizza shop.  Braving the tropical squalls in our trusty four-wheel-drive while SiriusXM played songs of sun and sand, we safely arrived, our only sufferance the delay of a few red lights.  Upon sitting at the lone remaining table, we steal a glance at the menu we know so well.  Only it’s different.  Prices crept higher.  Some choices gained a dollar or so, others more.  One in particular changed in an odd way.  Of course it happened to be my mom’s favorite meal.  Instead of just raising the price, the core items were now extras.  Like broccoli.  On a dish previously called, “Pasta With Broccoli and Garlic”.  How much?  $4.  The same, I should mention, as the cost for shrimp or chicken.  Yes, chicken, shrimp, and broccoli all carried the same up-charge.  When we asked the owner about it, their response was equally perplexing.  “Yeah, that’s the way it is.”

Did she end up getting the dish?  Yes.  With the broccoli.  But she was less happy about it.  Which brings us to our first lesson break.  Make sure to stand up and stretch.  It’s important to remain active throughout the day.

If you’re going to raise prices, you must add value, perceived or otherwise, that is worth more than the increase.  Otherwise, customers get angry and may leave negative reviews (you do reply to them all, right?) or seek out a competitor.  In this case, charging the same for broccoli as shrimp made it even more frustrating.

This wasn’t the only issue faced that night.  Another item we ordered was a large pizza.  Theirs happens to reheat especially well, making it great for future meals.  After taking far longer than it should, we asked our waitress on the status of the pie.  She begins to profusely apologize, as she served it to another table (who, oddly enough, didn’t turn it down).  They had ordered a small, and it was just coming out of the oven.  We could have it in lieu of waiting for a fresh one to be prepared.  Sure, pizza is pizza, despite fewer leftovers.  Our waitress, who raced around the restaurant the entire evening, managed to stop running long enough to explain it was her first night.  “They just don’t do things the same at this location.” (The owner has a few shops around the area).  Ah, ha!  Another lesson point to be made.  Let your slice cool for a moment while we do some learning!

When your processes are unpredictable or nonexistent, you make it challenging for anyone else to create a consistent experience.  I watched as the owner micro-managed every action of the kitchen staff, the front register, our waitress, the delivery guy, and the baker.  Worse, she gave conflicting instructions depending on when she walked by.  It was obvious no processes were in place, and, as a result, mistakes were made.

Consistency is essential.  There’s a reason every Big Mac, across the planet, comes out identically.  And, for those who eat such things, that is part of the appeal.  You know what you’re going to get.  It doesn’t matter if Jan or Steve is out that day.  Anyone can follow the process to prepare the same burger.

Despite the issues, we still had a delicious dinner.  Even the weather cooperated on the drive home.  But it was a night of lessons.

  1. Pricing: Your members want to pay less and get more.  That’s normal.  So brainstorm how you can deliver value throughout their relationship to rationalize any costs.  It could be a value-add fee checking account that helps protect members’ identities and more*, or inclusive services paid though outside relationships.  Consider what you can do to grow ROA (or return more to members and your community) without imposing NSF or other punitive fees.
  2. Processes: Too often, I’ve been interacting with a credit union (client or otherwise) and their reason for a random delay is, “Bob handles that and he’s really the only one who knows how to do it.”  Worse is, “Beth ran that, but she transferred to another credit union, and we’re not sure where she left things.”

Avoid “The Credit Union Incident” by following this guidance.  Beth’s replacement will thank you.

*Disclosure: My company offers such a service and produced a white paper to help credit unions determine if it or a similar solution might be a fit for their institution.

Image credit: Wikipedia

How Would You Rate This Experience? (Part 2)

This is a continuation of 3 Ways To Ensure Your Customer Service Doesn’t Suck.

Every interaction with your members results in one of three ratings:

  1. Exceed expectations. (Impress)
  2. Meet expectations. (Satisfy)
  3. Miss expectations. (Disappoint)

Like you, I’m all about exceeding expectations. But it’s tough to do all the time. Let’s take a look at some recent customer service experiences and see what can be gleaned to increase your proportion of #1s. Click the company name to see the experience.

Florida Blue
There was a billing issue with my health insurance, so I reached out for a solution. 24 hours later (an eternity for Twitter), they suggested switching to e-mail. I did so, wherein their reply said they would follow up. A week later with no response, I wrote back. Now they recommended a phone call, which, despite a long conversation and the agent saying it should work, I had no such luck. Their conclusion: The problem is a problem. Work around it.

Rating: 3

 

Intuit
I submitted e-mail feedback for their Mint app on a basic improvement. Their reply came in 3 hours and appeared to be a real person. However, their response had nothing to do with my request, so either it was a bad “machine learning” auto-reply or someone who didn’t read. Two more frustrating exchanges until they seemed to grasp my request, passing it along to their app development team.

Rating: 3

 

Comcast
They feel like a different company whether contacted by phone, in-person, or over Twitter. Also, every person gives a different story, sometimes blatantly lying about system issues or policies. Their Twitter team is the only one which tries to follow through to resolution. For my billing issue, they helped get it resolved…to an extent.

Rating: 2 (anytime they don’t burn down your house is a good support experience)

 

JetBlue
I had two separate issues for them to address. One was a delayed flight, and how it was handled. We eventually got to our destination, but with more frustration than needed. I e-mailed the tale, and they replied with an apology, explanation, and a travel voucher for future flights, no questions asked. Another experience came during a flight, where their in-seat entertainment failed (for me and the row behind). A crew member had us all enter our information in a tablet to send out a voucher. It never arrived. I asked over Twitter a week later and was told it was on its way. Another week later, no luck. I wrote back, and they issued it manually within 10 minutes. Their systems faltered, but the people were empowered to step up.

Rating: 1

 

BrightStar Credit Union

I’ve written about my credit union in the past. They’ve had challenges, and still have a ways to go. However, they are on an upward path. The app security issue? Fixed. Twitter replies arrive a bit sooner. Even phone hold times are 10 minutes or less (yes, that’s a dramatic improvement). But it was with my recent vehicle loan refinance where they shined (Get it? Bright…star? “Yes, I’m a natural blue.” – Dory). The evening of my vehicle purchase, I completed their online forms. Two days later, I had a personal reply from my now-dedicated MSR. I shared all necessary paperwork, information, and signatures. All questions and interactions were answered within a day. If not for waiting on the original lender, she would have had my refinance done in a few days.

Rating: 1

 

What can we learn from these experiences?

  • Florida Blue‘s problem was a lack of follow-up coupled with a technical glitch that no one knew existed (or how to fix).
  • Intuit either used a bad keyword checker to auto-generate replies or their support team has an inability to read the most basic requests.
  • Comcast…who knows. They have so many conflicting systems, departments, and people. It feels built to under-deliver. Don’t let your credit union get that complicated.
  • JetBlue has built their reputation on great service, and even when things go wrong, they are on top of it. I should also mention, that last interaction with them was on a Sunday evening.
  • BrightStar has come a long way. They’re still not my PFI for a few reasons, but I’m happy to have my auto loan with them. It was everything a member experience should be: Timely, personal, and clear. Oh, and they helped me get a great rate.

I read somewhere that all customer satisfaction surveys are meaningless if they don’t ask this one question: Would you recommend this product/service to your friends or family?

Well, what would your members say?

Image credit: http://media.idownloadblog.com/wp-content/uploads/2011/05/customer-satisfaction.jpg

Big Tech Firms Have A Plan…Do You?

Originally published on CUInsight.com

This post exceeds normal length expectations.  Estimated reading time is 5-7 minutes.  It’s worth it.

The future of banking looks bright!  New possibilities, new technologies, all while serving an ever-expanding portion of the population!

Oh, you’re from a credit union.  That introduction wasn’t meant for you.  I was talking to the big tech firms, the front-runners in creating banking solutions of tomorrow.  What?  Are you saying Jeff Bezos isn’t one of my readers?  Psh, you don’t know that.

Credit unions aren’t paving the way.  Nor are they pioneering the ability to serve the underbanked.  Seriously.  Many are doing great things, that’s for sure, yet the fundamental change is originating from tech firms.  And they’re not doing it alone (more on that later).

Let’s take a look at a super-simplified cross-section of society, with a focus on traditional banking options.  Where does the credit union industry fit?

  • For the lowest-income and credit challenged (or no credit), they have few choices.  A lack of financial knowledge and many other variables leads them predominantly to payday lenders (see post on that topic) or check-cashing stores.  This situation, frankly, sucks.  People are paying hundreds of percent (or more) in interest (or substantial fees) for access to their money.  It’s really expensive to be poor.  When I deposit a check, I get every penny.  Is that really fair?
  • Individuals with sufficient credit to open an account can (and do) go to banks, but many choose a credit union, due to their lower fee structure.  Those who choose a credit union tend to carry a higher credit card balance, with more cards and higher total debt. However, and this may be due to lower interest rates, more individualized (and thus forgiving) relationships, or some other factor, they are less likely to become delinquent in their debts.
  • Higher-income individuals and businesses are more likely to be with the large banks.

So big tech firms are looking for the path of least resistance into the banking world.  It starts at the economic bottom, by offering necessities at far lower rates than the existing solutions.  Then, they offer better programs than those that people have today, focusing on convenience.  Finally, the companies want to become the lenders of choice for a wide range of needs.  By already having successful business strategies, all this can be done at much lower margins than a dedicated banking institution could possibly reach.  For example, Amazon barely makes any money on their Kindle or Echo devices (they might even sell at a loss), because they know users will purchase far more once they have them.

The following is a discussion of selected large tech firms changing the banking landscape.  Each are planting their own flag in the financial world of tomorrow.  Will all be successful?  Only time will tell.  For aesthetics and readability, each company’s actions are accessible by clicking the name.

Where are the greatest opportunities?  And how can a business decision help people the most?

PayPal

PayPal believes the answer to both those questions lies in that first economic category.  As a pseudo-banking institution already, they have held money in online accounts for use on purchases for many years.  This money could not be withdrawn at an ATM, nor used at a physical POS.  Until now.  PayPal now offers a debit card that includes many of the same features your credit union cards have.  Want to pay for dinner?  No problem.  Withdraw money at an ATM?  Sure.  Deposit physical checks?  Grab your phone and take a picture.  All with no monthly fee, no minimum balance requirement, and a ~1% fee for deposited checks.  PayPal is making it clear this account is not for everyone.  It’s mainly for those who you would call “unbanked”.  In fact, their COO even said that if you already have a banking relationship, “this isn’t an account for you.”  They believe as the digital economy continues to grow, the largest opportunity is in those who aren’t currently “banked”.

So PayPal is positioning themselves for enormous growth, while engaging an underserved portion of society, and minimizing economically stressed people’s reliance on high-fee payday lending.  Sounds like the credit union mission, doesn’t it? It should, and not in the least because their CEO keeps saying this at CU conferences.

Other tech firms are taking a different route.

Amazon

Take Amazon.  They want your checking accounts (allegedlyprobablylikely).

Why would your members want to switch to Amazon for their checking?  It’s not like it would be any different.  Except it could (according to surveys) be a fee-based account ($5-10 per month) that provided a series of perks.  Perks like ID Theft Protection.  Or Cell Phone Damage Coverage.  Perhaps it would be integrated into Prime membership.  We don’t know.  But 66% of people surveyed said they would consider paying or definitely sign up for that account, if it existed.

If only your credit union could do something like that today (Disclosure: That’s my company)…  But I digress.

It’s not like Amazon is inexperienced in banking concepts.  In 2011, they began small business lending to sellers on their site.  They are now lending more than $1 Billion per year.  And it’s invite only.

Recently, Amazon has also expressed interest in serving the “unbanked” of the US and abroad.  Look at them, taking on the jellies!  Ok, PayPal.  They’re taking on PayPal.

Venmo

“So you owe me $14.53 for dinner.  Cool?  Just Venmo me the money when you get a chance.”

Venmo grew so quickly that you can be forgiven if you are still recovering from the windblown hair as it blew past.  Think of it as a peer to peer payment platform.  It began as a way to send money through text messages, but quickly changed into its own cross-platform app.  Users link existing debit cards/bank accounts and send or receive money through the service.  In the time it took you to read this paragraph, you could have gotten reimbursed for gas, sent your portion for drinks last weekend, and gotten the money from another friend for the tickets to that awesome concert.  They handled nearly $7 Billion in transactions in Q1 2017 alone.  Oh, and PayPal bought them in 2013.  So giving them their own section is almost cheating.

Besides, there’s a newer service that aims to do the same thing, but with a twist…

Apple

Your credit union probably supports Apple Pay.  By that I mean your debit and credit cards can be added to Apple Pay on members’ iPhones, iPads, Watches, and Macs.  It’s a brilliant payment system that I use regularly (there’s nothing like paying for groceries with your watch…except not paying for groceries).  I love the simplicity and security of the process.  I don’t love how slowly merchants are adopting the new payment terminals (and then enabling the NFC tech in them to support it).  Ugh, different discussion.

Last year, Apple Pay got an upgrade.  With Cash.  Previously, Apple Pay only worked where a normal debit/credit card could…POS, ie. paying at a merchant.  It was useless for P2P payments like Venmo supported (and PopMoney, to speak CU service lingo).  Apple Pay Cash links a debit or credit card to a digital stash of cash (you like that?) that you use to send/receive money right through iMessage.  Yes, recipients have to be fellow Apple users, but, sheesh, it’s easy.  Heck, it works with Siri.  No data is available on usage, but given it’s built in to hundreds of millions of devices, I’d say it’s only bound to grow.

To establish these potential checking and/or savings accounts, fund these digital wallets, or receive deposited checks, none of these companies are making themselves a bank.  Instead, these companies partner with an established bank, or multiple banks.  Why?  Think of your preparations when the NCUA examiner is inbound.  Enough said.

For example, for PayPal’s new debit card, they use a bank from Delaware for debit cards, another out of Georgia for check scanning, and a few banks in Utah for lending.  Note these are all small banks…is opportunity calling for your credit union?

Amazon is in talks with JP Morgan Chase and Capital One for their checking program.  Venmo uses your existing banking relationships.  Apple Pay Cash uses a Discover debit card powered by Green Dot Bank, a fin-tech which also provides their own reloadable debit card with no minimum balance, no overdraft fees, and no credit check, while still offering things like bill pay.

I feel like I’ve talked about partnering to enhance your strengths while addressing your weaknesses.  Ah, well, no worries.  We’re all here now.

So the big tech firms all have a strategy to attract the banking customer of today and for years to come.  What’s your plan?

PS – You may notice I excluded Zelle, the P2P platform of choice for American banks.  It was developed by Early Warning Services out of Scottsdale, AZ, a company formed and owned by 7 banks, with 70 more in the process of joining.  It’s their answer to Venmo, and is built in to all their mobile apps.  It connects more than 50% of checking accounts in the country and growing.  So why didn’t I mention such a large disruptor?  Because they’re not a disruptor; they’re a service of the existing banking industry, responding to the popularity of the other platforms.  You still have to pay attention to them, though.  Competition is competition.  So I ask again…what’s your plan?

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