Michael Porter identified three generic strategies: segmentation, differentiation and cost leadership. This white paper considers a differentiation strategy. Read a series covering all three strategies.

Citadel Federal Credit Union provides banking, wealth management, and insurance services to more than 115,000 members and nearly 400 companies. At $1.5 billion in assets, it is one of the largest credit unions in the Greater Philadelphia region. Citadel service the Bucks, Chester, Delaware, Montgomery and Philadelphia counties in southeastern Pennsylvania.

Strategic Differentiation
Gallup Consumer surveys have consistently ranked credit unions high in customer service and satisfaction. In 2002, Citadel aimed to leverage this fact and embrace making ‘exceptional customer service’ their distinctive competitive advantage over all financial institutions. Historically, Citadel always delivered exceptional customer service, being known throughout the community as a company where “people helping people” is a promise to both customers and employees. Citadel’s customer service includes a high-level of personalized service that serves as a brand differentiator in the marketplace.

Consistently delivering high quality service over a period of time will result in long-term organizational growth, which translates into increased profitability. This level of service at Citadel is designated as Citadel Class ServiceSM, which permeates throughout the entire organization. Citadel Class Service is not a mere marketing term for the illusion of providing excellent customer service. Citadel proactively delivers superior customer service, on a daily basis, not only in the branch offices, but in the corporate offices also. Citadel Class Service is based upon principle-driven service excellence, which is the basis of the core principles for making sound decisions that will have the greatest benefit for the customer.

What does this mean on a day-to-day basis? It goes without saying that our employees practice patience and active listening as part of their job, to better assess what the customer needs and is trying to do. We even have had employees help members jump-start their cars and assist them in getting into their cars when they’ve locked their keys inside.

But Citadel Class Service goes beyond directly helping the member, as our financial services reps do. Everything we do as an entire organization ultimately impacts our members—when we research and upgrade our technologies, especially our online banking program; when we offer great promotions; when our departments work collaboratively, especially to solve any member problems or answer questions; when we sponsor community events; when we open new, visually appealing offices with state-of-the-art technology–this is all a practice of Citadel Class Service.

Members are always impressed when we can sympathize with their issues or questions, and we go through all the steps to be able to provide a satisfactory answer, whether it’s getting an answer from one person, or we need to contact multiple people. We spend the time with each member to make sure they are satisfied and happy with our service. Sometimes we may give a member an answer that they don’t truly like because of policies and rules that we need to abide by, but they are satisfied in the end that they were treated with respect and felt that we gave them the best service possible.

Any company can say it provides superior customer service, but at Citadel, it is sincerely delivered. To formalize this competitive advantage, SVP/ Human Development Rosemary Helm and Chief Financial Officer Maria Steffy were tasked by the Citadel Board and myself to develop a formal statement, now known as the Citadel Class Service Pledge (Figure 1). This pledge anchors Citadel’s principles in the delivery of superior customer service that exceeds customer expectations. The pledge is displayed in every department and office in the credit union.

Figure 1: Citadel Class Service Pledge

The first step was conducting research of companies across all industries that exemplified excellent customer service. They asked, “What can we learn from these companies and how can we make it better?” Internal research was also conducted to gather the opinions of Citadel’s employees. The following were noted as the important aspects of superior customer service: the ability to communicate intelligently about Citadel’s products and services, the use of technology to meet customer needs, the ability to work together to provide great service, and the desire of employees to help customers.

Common denominators of all research conducted were that companies that excelled in customer service have deep commitments to both customers and employees and that their employees have internal desires to exceed customers’ expectations. Without the commitment to employees, there wouldn’t be the trickledown effect to the customers. This commitment builds loyalty and a culture of learning, service and leadership.

With that knowledge in hand, the Citadel Class Service Pledge was created:

Citadel Representatives will use their knowledge of products and services, their desire to help people, and the technology available to them to make recommendations that satisfy customer needs and wants. They will work with customers to determine which recommendation is the best possible financial solution for them, ensuring a positive income.

Citadel took this pledge one step further and developed the Citadel Class Service Principles. This set of values applies across every business line, department and office.

Accuracy: To always produce high quality work, given any opportunity
Convenience: To make life easier for my customers
Respect: To appreciate my customers, my colleagues and our organization
Value: Continuously work to build and better my customer relationship

The differentiating factor of Citadel Class Service is that exceptional customer service is practiced throughout the life of a customer. It’s not necessarily a tactic used to gain new customers, but once they experience Citadel Class Service, they stick with Citadel.

Implementation
Citadel created a formalized training program for all current employees and new hires, from financial service representatives to senior management. This not only included classroom style of learning, but the real world application of Citadel Class Service, ranging from face-to-face interaction to phone interaction. In addition to company-wide implementation, each department within Citadel was tasked to develop its own set of Citadel Class Service Principles, applicable to their projects and daily duties on behalf of Citadel and Citadel customers. Not only does Citadel value the customers that bank with Citadel, but part of the task was to identify all customers, which included internal customers – the employees within each department. This system of serving not only external Citadel customers but also internal customers created accountability for each and every Citadel employee.

Citadel consistently reinforces Citadel Class Service by incorporating it into an employee’s job description and overall performance appraisals. Customer satisfaction scores are also taken into account during performance appraisals. See how our overall customer service ratings have improved since implementation of Citadel Class Service in Figure 2 .

Figure 2
Overall Customer Satisfaction Rating

Citadel has also begun tracking Net Promoter^® scores to measure customer loyalty and satisfaction, and we have two quarters worth of data to establish a baseline measure. Net Promoter gives objective scores that can used to measure against past performances across the industry on the same scoring base. This score is extremely important in determining benchmarks, as well as finding areas for improvement. Having a metric system allows a quantitative base for rewards and recognition programs which encompass not only sales, but also customer service performance. It also helps us to quantify the large number of members who come through referrals, which is the best testament of all to delivering Citadel Class Service!

Additionally, new and satisfied members help translate into financial benchmark improvements, such as asset growth, as you’ll see in Figure 3.

Figure 3

As Citadel Class Service is delivered consistently over time, employees gain confidence and feel empowered to make the best decisions for their customers. Employee empowerment is a key force for delivering exceptional customer service. With training and reinforcement, the concepts of friendliness, caring, flexibility, problem solving and mistake correction are exemplified. Those are the differentiating factors of a customer having a usual customer experience vs. exceptional experience.

Delivering Citadel Class Service requires a certain type of employee. In our hiring process, we look for employees who are eager to learn and who have the ability to think rationally and make educated decisions for our members.
 
As Helm advises us, “The key to exceeding expectations is to always evaluate every situation as it comes. Exceeding expectations today is not necessarily what exceeds expectations tomorrow. There is no one right, and only way, to approach a situation. We give our representatives all the education and tools to service customers effectively and we also give them the power to make sound decisions and solve problems independently, today and every day to create a positive memorable experience for each and every one of our customers. That is what differentiates Citadel. ”


Jeff March is president/CEO of $1.5 billion Citadel Federal Credit Union, Thorndale, Pa.


Apply it in Your Boardroom

1. Which of Porter’s generic strategies is most like your credit union’s strategy?
2. If you chose the differentiating strategy of service, what facets of your service culture truly differentiate your credit union from other providers?
3. How could your credit union strengthen its strategy?