My teammate, Andy, placed a one page handout from the book, Winning at Retail: Developing a Sustained Model at Retail Success by authors Willard Ander and Neil Stern on my desk a few minutes ago. I just got back from a productive meeting and read it while I redocked my laptop. I enjoyed the read – quick and to the point. There are five “EST” areas in which a retailer can excel.
- Cheap-Est – winning with price
- Big-Est – winning with dominant assortments (inventories / services)
- Hot-Est – winning with fashion (forward positioning)
- Easy-Est – winning with solution-oriented service
- Quick-Est – winning with fast service
Note to credit unions – smiley-Est was not one of the five. My take? Glad you clicked on read more. Customer or member service is a tablestake and not how you win. You have to have it to survive – it is not what sets you apart for the victory. Oh, and the authors mention a sixth area and it is dubbed the “Black Hole”. The description in the article goes on to say, “This is where retail firms with no clear identity and a “be kind of good at everything” strategy go to die. A few retailers like Wal-Mart have managed to master several of these EST areas over time, but they have done so specializing rather than generalizing, nimbly leaping over the Black Hole without falling victim to it.”
I would say here at FORUM we are attempting to get better at number four. I think Ron Shevlin might advocate number three in this post.
Cam Minges on August 23rd, 2008 at 01:43 AM
Amen!
Here’s the problem. The current box.
1. ROA-Est 2. Expense/Income-Est 3. Loan-to-Share-Est 4. Etc
These measurements are also tablestakes.
We have to focus more on the measures that count with our members. Wal-Mart focuses on one thing….the customer. Their customers want the best price. Wal-Mart delivers.
Nathan Saller on August 28th, 2008 at 02:50 PM
Doug,
Great post and I couldn’t agree more with your thoughts and especially with the “Smiley-Est” category. Unfortuately, in my opinion, most credit unions are either in the black hole or smiley-Est category. There are some companies in some industries that can pull off “smiley,” but it is usually coupled with exclusivity. For example, one of my collegues just bought a used BMW. She raved about the service…she was assigned a single person at the dealership who reminded her about service and was her connection to the (one) mechanic assigned to work on her vehicle. She felt as if she finally had an “executive assistant.” Will she have her service done at the dealership…absolutely. Was it the reason she bought the car? No…that fell into the Hot-est category.
Doug, you are right on with service being tablesteaks. We as credit unions need to figure out something else to compete on if we want to stay relevant. While I believe there may be a few other positions than just the ones in Ander and Stern’s book (member advocacy – does the CU have my best interests in mind, for example…look at USAA), there are far more financial institutions than there are categories…
Doug on August 28th, 2008 at 03:02 PM
Thanks for the comment Nathan. Appreciate the story about the dealership service. Your point about far more financial institutions than categories is well put.
Jim Jerving on September 2nd, 2008 at 12:31 PM
Doug, Great post. I find that many credit unions believe that they differentiate in the marketplace because they give “great service.” The reality is that they don’t. Surveys and consumers say otherwise. We in the industry have to face this reality and figure out just what “great service” is, and not assume that we have it. Banks and other financial institutions have gotten the message and often surpass credit unions in the service area.
Doug on September 2nd, 2008 at 12:41 PM
I agree with you Jim. It is about differentiation, and great service is not a differentiator that will win the marketshare we are looking for. I am preparing a post on Facecard (http://members.facecard.com/). Financial services are evolving at a fast rate and I feel like only a small minority in the credit union space are paying attention to the radical changes taking place. We are seeing disintermediation taking place and this was one of the scenarios that CUES talked about years ago with a study they did with Decision Strategies.
Mike Bartoo on September 2nd, 2008 at 01:53 PM
Doug – this entire concept reminds of a book titled The Myth of Excellence (it’s probably 10 years old or so). It discusses the lack of focus involved with the “all things to all people” approach – an unclear identity. Until a CU identifies what it does best and who it serves best (and let’s certainly hope both of those answers align) it will continue going in multiple directions and have no clear identity (hello Black Hole!). I see entirely too many institutions that just don’t have a focus. As Joe Jackson sang in the 80s “you can’t get what you want, ‘til you know what you want.”
Doug on September 2nd, 2008 at 02:42 PM
Thanks for the comment. As credit union’s add services (i.e. business loans, business deposits, mortgages, insurance, investments) it feels like we suffer from “all things to all people”. I worry with our not for profit structure and constraints on outside capital that the resources get stretched too thin at credit unions and the conversation about what to “stop” doing doesn’t take place. Reference Michael Porter’s definition of strategy, “The essence of strategy lies in the activities a company chooses. The essence of strategic positioning is to choose activities that are both different and most valued by the target customer. Strategy is about making trade-offs.” Do we make the trade-offs? Thanks again for the thought provoking comment.
Thomas C Davis on September 3rd, 2008 at 01:57 PM
Doug… Strategic positioning is one of the most fundamental challenges that face CU’s today. For the past ~10 years, CU’s have had about 5-6% market share of the financial services industry. At the same time, they have always been rated (absolutely and comparatively) high on service. I decided to investige this seeming paradox, and for the past 7-8 years, I have conducted qualitative market research with members representing a broad variety of FOMs to determine what is important in their selection and use of a financial institution and its produsts and services. As I indicated in a recent NACUSO blog, the results of this research will be published in a forthcoming article within the next month or so. Executive Summary: Based on the research, I developed a concept entitled The Desired Member Experience Model. The Model includes four rational and behavioral components that members defined as important related to: 1) Service, 2) Convenience, 3) Advocacy, and 4) Credibility…as well as the corresponding emotional components: 1) feelings being important and valued, 2) feelings of comfort, 3) feelings of trust and security, and 4) feelings of confidence. As an industrial psychologist, the conclusion from all of this is that we should consider positioning our organizations on how members feel as a result of their overall experience with us and not just tell them what great service we have. I’d be glad to send you an advance copyof the research.
Doug on September 3rd, 2008 at 03:00 PM
Great comment Tom… appreciate the contribution. Count me in on the advanced copy. Your comments remind me of a ethnographic study we did here at FORUM with Filene and Design Concepts. This study involved going to members homes to talk about how they managed their finances. A lot of feelings around this topic and most would rather talk about their health ailments than their finances. I would say a lot of similarities between the two. Can’t wait to read more.