GOAL SETTING GUIDE SETTING GOALS

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1 Credit Union Member Experience Best Practice Series GOAL SETTING GUIDE SETTING GOALS Setting goals for a Member Experience Program or Net Promoter Score can be a murky prospect for managers and executives charged with this task. These goals often affect team members compensation and setting a goal that s too low or lofty can impact long term buy-in for your program. Having collected over 4 million member surveys in the past 9 years for more than 130 credit unions, we have gained insights about loyalty score movement and the things that can influence it. In this brief guide, Member Loyalty Group (MLG) The following is an overview of how MLG participating credit unions approach goal setting and a review of benchmark information that can be used as a guidepost as credit unions set goals for the upcoming year and beyond. provides general recommendations about loyalty goal setting for 2019.

2 VARIOUS TYPES OF MEMBER FEEDBACK Credit unions typically measure two types of member feedback, Relationship and Touchpoint feedback (also called Transactional feedback). Figure 1: Types of Member Feedback RELATIONSHIP + 5 KEY TOUCHPOINTS Relationship/Touch Point Feedback Relationship Feedback New Member New Product Contact Center Remote Channel Physical Branch Touch Point Feedback Relationship surveys measure the overall Loyalty or Net Promoter Score for the organization and include very active as well as less active members. Examples of less active members might be members that only have a certificate or a loan that they pay for by mail. The feedback from these members may not be reflected in transactional surveys which tend to skew toward very active members. Transactional surveys allow credit unions to identify the experiences members are having during different types of interactions so that they can then specifically target process/service improvement efforts. Net Promoter Scores for relationship surveys are typically 10 to 20 points lower than NPS for transactional surveys. 2

3 BENCHMARKS & GOAL SETTING Most credit unions we work with set an organization-wide goal based on their relationship surveys. Often credit unions will set corollary goals for particular departments or branches based on metrics other than NPS found in the Transactional surveys. This is important because many of the things that feed into the Relationship NPS rates, locations, policies, etc. may be out of the control of middle managers. What they can impact are the service levels or the member-facing processes within their span of control. For example, a Branch Manager may have a goal based on the Overall Satisfaction rating for transactions performed at their branch. The figure below shows a common approach for Member Feedback Program Goals. ROLE WITHIN CREDIT UNION ROLE BASED GOALS GOAL/INCENTIVE METRIC 3

4 As you set your goals, we find that it is helpful to know what other credit unions have experienced. Below are the MLG benchmark Net Promoter Scores for Q for each type of Transactional survey and for the Relationship survey. The chart shows the low, average and high score for each survey type. Figure 2: Member Loyalty Group Credit Union Benchmark Scores 4

5 OVERALL SATISFACTION For those credit unions that set goals based on Overall Satisfaction ratings, we ve also included the MLG benchmark Overall Satisfaction Averages for each type of Transactional survey. The chart below shows the low, average and high score for each survey type. As you can see, the range of Overall Satisfaction scores is much smaller than the range for Net Promoter Scores. Figure 3: Member Loyalty Group Overall Satisfaction Summary Note: Credit unions participating in the survey used multiple methods for collecting the data ( and phone or paper) to ensure that they collected a representative sample of their membership. Your credit union s scores may not be directly comparable because of questionnaire or collection methodology differences 5

6 NET PROMOTER SCORE MOVEMENT In terms of estimating score movement for 2019, it is important to note that higher scoring organizations tend to move NPS more slowly and may have to work diligently just to keep their scores at lofty levels. Lower scoring organizations tend to move the score more rapidly. This is due to the way NPS is calculated. Lower scoring organizations generally have a larger percentage of Detractors, which when converted to Promoters, has a doubling effect on the NPS (e.g., converting 5% Detractors to Promoters, yields a 10 point impact to NPS). Higher scoring organizations tend to have a lower percentage of Detractors, therefore not as much opportunity for Promoter conversion. DRAMATIC GAINS ARE MORE DIFFICULT AT HIGHER LEVELS The chart below illustrates the decreasing improvements that are seen when the NPS or loyalty score increases. Figure 4: NPS Movement among MLG Credit Unions Source: MLG credit unions average improvement based on the same point in time year-over-year NPS performance (e.g. Q2 year 1 vs. Q2 year 2). 6

7 The concept illustrated in Figure 4 is one of the most critical factors in determining a proper Net Promoter Score goal, as it shows a sizable improvement is more realistic only if the scores are at a lower range. Keeping in mind that dramatic gains are more difficult at higher NPS ranges, it is important to consider these average values are based on all ranges of recent scores in MLG s database. BIG CHANGES HAVE A BIG INFLUENCE ON NET PROMOTER SCORES As you set your 2019 targets, keep in mind that even the best performing credit unions have also seen score decreases. For example, on average credit unions with Net Promoter Scores above 70 actually experienced small declines from last year to now. In most cases, the declines are temporary due to online or mobile banking upgrades, core conversions, debit/credit card conversions, etc. Typically, when large scale changes take place, members are initially uncertain about the change. They may rate their likelihood to recommend the credit union lower, until they become more comfortable and familiar with the update. Figure 5: Net Promoter Score Movement by Starting Range 7

8 MLG recently analyzed the impacts to NPS and Overall Satisfaction among our participants that converted their online banking systems. Our participants tend to experience declines in Relationship and Remote Service experiences shortly after converting. On average, the Relationship NPS declines nearly 8 points while the Remote Service NPS declines 13 points. These declines tend to be temporary, as our research has shown scores eventually recover and achieve higher levels post-recovery. The recovery period typically takes a full year from the date of conversion. With regard to the scores post-recovery, our participants tend to experience score increases indicating members are enjoying the new system more than the prior one. Figure 6: Rebound Periods After Big Changes Score Online Banking Conversions What can we expect after making an online banking conversion? Recovery Time* 11 months Relationship NPS Relationship NPS Remote Service NPS 12 months Remote Service NPS 17 months Remote Service Satisfaction +1.1 Relationship NPS increase +1.9 Remote Service NPS increase +0.3 Remote Service Satisfaction increase Remote Service Satisfaction Time Values obtained by averaging scores among Member Loyalty Group participants that changed their home banking platforms. * Based on quarterly data. 38% of credit unions did not experience a decline in Relationship NPS and therefore did not have a recovery period. We recommend that you be realistic about loyalty/service measurement goal setting when large changes are on the horizon. You may want to seriously consider setting a goal which keeps your score level or even factor in a temporary decrease at those times. TRANSACTIONAL NET PROMOTER SCORE MOVEMENT Up to this point, we ve shared data on Relationship NPS movement experienced by credit unions. Transactional NPS movement is similar, but can often move at a faster rate due to improvements at member touchpoints tending to be recognized by members more quickly. For example, dramatic improvements in speed of service or remote banking features can cause branch or remote service scores to jump. 8

9 REPORT TRANSACTIONAL SCORES BY TOUCHPOINT As illustrated in Figure 1, there are multiple touchpoints measured with Transactional surveys. When goal setting for Transactional surveys, we strongly suggest looking at each touchpoint individually instead of combining all of them together. When looking at an overall combined Transactional score, there are two main components. First, there s the score of each touchpoint, which can vary widely (note Figure 1 and the difference between the various touchpoints). The second component is the response size of each touchpoint, which is likely to be different for each time period. A combined Transactional score can shift without any of the individual touchpoint scores changing, simply by the response size changing. Figure 7: Impact of Response Size Shifts on Combined Transactional NPS As illustrated in Figure 7, the combined score declined a full point simply due to the shift in responses. Considering the scores of each touchpoint are likely to fluctuate over time as well as the response percentages, it can be a challenge to determine if a change in combined Transactional NPS is due to a shift in service levels or just a shift in responses. When credit unions monitor each touchpoint individually, the response size percentage of each touchpoint has no impact. This makes any shift in scores easy to identify, and allows the organization to quickly determine where to focus their resources. From a goal setting perspective, it becomes easier to work towards improvement without as many moving parts to the goal. 9

10 Figure 8 illustrates this by showing that the branch touchpoint is performing steadily, whereas the remote service score is declining sharply. Figure 8: View of Each Touchpoint Individually TIME PERIODS TO CONSIDER FOR GOALS All data shown in this guide has been determined using the same point in time year-over-year (i.e., Q4 year 1 vs. Q4 year 2). This was chosen due to the credit unions within our benchmark gathering statistically reliable data on a quarterly basis for each of the survey types. When setting goals, we recommend determining the time period that ensures a solid response sample for both the starting score and ending score. For most credit unions we work with, this tends to be quarterly with most goals being set with the timing of four quarters to achieve. For example, a credit union will set a goal in early 2019 to achieve a NPS of X and use the Q score to determine if the goal was met, and the scores in Q1, Q2 and Q3 to determine if they re on pace. We do not recommend looking at an annualized or year-to-date (YTD) score, unless the response sample is too low to look at any differently. An annualized or YTD score masks recent member sentiment, which dictates future behavior. How members felt about an organization several months ago doesn t matter as much as how they feel about the organization now. 10

11 GOAL SETTING BASED ON PERCENTILES Over the past year, we ve seen many credit unions begin to set goals based on percentile performance in the benchmark, as opposed to anchoring on a specific score. Using percentiles in your goal setting means your final score isn t what matters most; it s all about where your score falls relative to other credit unions participating in the benchmark. A simple way to think about this is to consider a race. If you re keeping pace with the pack, you re doing well. If you re falling behind the pack, it can be an indicator of a problem. If you re outpacing the pack, you re doing amazingly well. If you think of percentiles as the pack, ideally you d want to gain ground or at least maintain positioning. Let s say your score declines next year. In prior years your score has remained around the 75th percentile in the benchmark and therefore you ve set your NPS goal to stay above the 75th percentile. If the current declines have allowed your score to still remain at the 75th percentile it means many of the other top performing credit unions also experienced declines (the pack has been impacted in the same way you have). If your decline is unique to your credit union, you d likely fall below the 75th percentile (you lost ground on the pack). Using percentiles in your goal setting is just another of the many ways to set goals. As with all goal setting methods, there are pros and cons that you must consider. We recommend teams discuss these pros and cons to determine which methodology best meets the needs of your organization. FINAL RECOMMENDATIONS It is our recommendation that credit unions use a Relationship score to set an overall organizational goal for Net Promoter. Relationship NPS is an accurate gauge of loyalty among a credit union s overall membership. If credit unions desire to set additional goals based on touchpoints, we recommend looking at each one individually to ensure shifts in service levels are the primary drivers of the score changes. Depending on the methodology being used and the credit union s current score and experience with the NPS metric, a consideration may be to set conservative goals until further historical data is available, at which point future goals can be based on. Within this guide, we ve highlighted some of the major things to consider when goal setting but there are many other factors to consider as well, such as sampling and survey methodology. We recommend that credit unions recognize that any survey or sampling methodology change may require a review and update of their goals once a solid response sample is collected. This is also true of adding new metrics, such as Member Effort Score, to an established program. 11

12 LEARN MORE More information on Member Loyalty Group s Voice of the Member program utilizing Net Promoter methodology may be found online at or by ing us at info@memberloyaltygroup.com. We also encourage interested credit unions to join our industry specific practitioner community, The Member Experience Network, by visiting ABOUT MEMBER LOYALTY GROUP Member Loyalty Group is a CUSO, (Credit Union Service Organization) formed in 2008 to develop a common member loyalty benchmark for the credit union industry and is the 2012 winner of NACUSO s Collaboration & Innovation Award. The CUSO has an exclusive relationship with Satmetrix, the Net Promoter company, to provide credit unions with the most effective tools for managing a Net Promoter program to collect and act on member feedback that increases loyalty, growth and retention. Member Loyalty Group serves over 130 credit unions, many of which are over $1 billion in assets, across the country. ABOUT NET PROMOTER Net Promoter is both a customer loyalty metric and a discipline for using customer feedback to fuel profitable growth in your business. Net Promoter has been embraced by leading companies worldwide as the standard for measuring and improving customer loyalty. Financial Institutions obtain their Net Promoter Score by asking customers a simple question on a 0 to 10 rating scale: How likely is it that you would recommend the organization to a colleague, family member or friend? Based on their responses, consumers can be categorized into one of three groups: Promoters (9-10 rating), Passives (7-8 rating), and Detractors (0-6 rating). The percentage of Detractors is then subtracted from the percentage of Promoters to obtain a Net Promoter Score. OUR FOUNDERS Member Loyalty Group was established by six leading credit unions to solve a common credit union problem measuring, managing and taking action on member feedback.