The CU Realist, oops, I mean CU Skeptic, recently wrote:
One idea mentioned (in this and other posts) is the thought that if credit unions refer to the people that consume their services as “members” or “owners” this will cause people choose credit unions over banks. While I understand both terms are correct references to the privileges granted to those at a credit union, and I agree both are neat, cool ways to think of these people, this notion ignores the role that drives the interactions of these people and the role they identify most with: “customer.”
My take: I agree with him on the owner term, but disagree on member.
I own shares in a number of companies. I think of myself as an “investor” in those firms, not an “owner.” My ability to influence decisions, direction, and changes is non-existent. It would be an insult to my [albeit limited] intelligence for those firms to call me an “owner.”
It’s an analogous situation with credit union account holders (how’s that for avoiding the controversy?). These people are looking for checking accounts, savings accounts, car loans, etc. They’re not really looking to become an “owner” of the credit union.
Now, the Skeptic could probably take my logic and say it’s the same with the term “member”. In fact, I don’t believe that people become members of credit unions because they want to be a member, but because they need a financial product, want it from the CU, and therefore become a member.
But I do believe, however, that CUs should continue to use the term member when referring to their customers. Why? Because it implies a different treatment or customer experience.
The critical decision CUs must make isn’t deciding which term to adopt (member vs. owner), but living up to the promise and expectation that whatever term they choose implies. And, in fact, shape their customers’ expectations for that term in the first place.
They could try to shape expectations around the term “owner”, but that seems to me to be an uphill battle, not worth fighting. I’d go with member.
And membership has its privileges, right?
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First credit unions are cooperative financial institutions. There are 7 principles of being a cooperative, the 2nd one being:
Democratic Member Control
Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights – one member, one vote – and cooperatives at other levels are organized in a democratic manner.
The collective group of members own the credit union. If they aren’t the owners then I would ask who is? Before a merger of credit unions the members (owners) have the final vote. I don’t believe the statement of member/owner is something that people come to a credit union for. It is the basis of the establishment of the credit union. Any member at the AGM can propose a motion, have it seconded and voted upon which may be passed, not by the number of share or deposits one has but by the principle of one member, one vote. There is no shaping of expectations around the term “owner”, it just remains of fact of who they are. The sorry situation in our system is that because of the size of large credit unions this unique and interesting ownership model gets lost. Here is the question to ask most credit unions – What percentage of membership attend your AGM?
Either way the reality is that CU’s have customer loyalty that Banks could only dream of. I would say its not the term ‘member’ in isolation, but the aspects of service and engagement that CU’s provide, and the term member nicely reflects that, as well as the legal connotations, of the word.
I can’t rattle off what coop principle it is, but I believe a “member” must also be actively involved in the coop. I would argue that using your debit card doesn’t satisfy that requirement. We as CU need to get member involvement up, whether that is participation in annual meetings, online converations (changeeverything.ca), job applicants, or simply feedback to the CU.
@Robbie: I totally agree that the responsibility of membership is currently lost. I’d be interested to hear of ways cus can hold people accountable for their membership. Can a cu say “If you miss 3 annual meetings in a row, you are out.”? What about “If you don’t document 20 volunteer hours a year, see ya!”?
PS. Robbie, be careful roaming around the blogosphere not knowing “what coop principle it is” 🙂 Here’s one resource I’ve seen you may want to bookmark. http://www.creditunion.coop/history/cu_philosophy.html
Colin, you’re right about loyalty. I’ve seen brand loyalty studies suggesting that CUs have over 2x the loyalty scores from their members as Banks have from their customers. However, I believe this has more to do with the non-profit status of the CU charter vs. the profit-seeking nature of banks (and most other businesses). Once you move the profit motive to the back burner, providing great value (i.e., better rates) and great service truly become the most important motives.
From the consumer standpoint, do we care more about what we are called (owner/member/customer) or the actual experiences we have with an institution?
People aren’t necessarily choosing a credit union over a bank because they want to be considered a “member” or “owner”. While these terms certainly imply a different (or maybe a better) level of service and/or experience than the term “customer” – is it really enough to drive consumers’ choices?
I would argue that credit unions need to do more than simply rely on the implied benefits of membership and/or ownership. They should make it a point to define what kind of unique value and experiences they bring to their “account holders”, communicate that value, and live it – as this, in my opinion, allows them to drive consumers’ decisions rather than leaving it up to perceived benefits/definitions of membership or ownership.