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WalletShare Research: The Essentials
Thursday, March 2, 2017 6:35 AM

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David England, Senior Research Analyst, Cornerstone Credit Union League

Rationale for Conducting WalletShare Research      

Let’s say, for example, you want to grow your credit card business. In the U.S., credit card debt is rising. In 2016, the mean credit card debt of U.S. households grew to approximately $5,700 (includes households with no credit card debt). The average amount of credit card debt, for households that have it, is just over $16,000. The average cardholder has 3.1 credit cards.

Sustainable growth can occur in your credit card business when you understand your members’ needs and wants so well that you become the number one choice for their primary credit card (the card on which they spend the most money). To do so, you must know the answer to these two questions below.

  • Do you know if your card is the one your member uses most?  
  • Do you know why your card is or is not your member’s preferred card? 

If you're not sure, consider using the WalletShare methodology to find out. It delivers a number of critical insights including those below.

Selected Goals of WalletShare Research

  • Understand how your members divide their credit card spending between you and your fiercest competitors. 
  • Determine which factors are the drivers that dominate the “which card to use most” decision, and how you size up.
  • Quantify how many competitors (and which ones) are taking how much money from you because they are more “preferred” than you.
  • Resolve how you should market your cards to multiple markets.  
  • Know early how a move by you or a competitor will impact your business and what specifically you can do to dominate in the marketplace.

Not a Satisfaction, Net Promoter Score, or Membership Survey

Beyond these goals, this approach prompts a deep dive into members’ (and non-members, if desired) motivations for the three critical metrics:  purchase, loyalty and defection.

Purchase: The research will determine specific motivations for card purchases and how you and your competition size up. 

Loyalty:  Based on research and credit unions’ experiences, increasing WalletShare improves member retention—they stay with you longer and purchase more services with you. A 5 percent increase in retention can result in a 25 percent or higher increase in profits. 

Experience and data inform us that even when your satisfaction or NPS numbers are high, loyalty does not necessarily follow. And for that matter, WalletShare does not follow either. Just because a member rates you a 10 when considering their satisfaction with you (or your card) or their willingness to recommend you (or your card) to a friend, they might use the credit card from the bank down the street much more than they use your card. The satisfaction numbers suggest that you are doing very well. Where does that leave you? You might be losing the war and you might not know it! 

Defection You cannot fully understand how to win the war for becoming members’ preferred card without incorporating your competition into the equation. The competitive intelligence you gain through this disciplined approach will allow you to dominate the markets in which you choose to compete. It will decrease defections to other cards.

What's Required? A Change in Focus

An important distinction of the WalletShare approach is that it focuses on two factors:

  • You credit card’s “rank” among the cards your member is using.
  • The number of credit cards your member is using.

When you know where your credit union stands on the two factors above, your focus will turn from “How do we increase satisfaction?” to “How do we improve our rank?” 

A key reason to make this shift in focus is that the attributes that determine a rise or fall in rank are stronger predictors of loyalty than overall satisfaction and the NPS. Raising your rank equates to minimizing the reasons your members turn to your competitors. This, in turn, improves loyalty and profitability while building your credit card business.

No manager can assess the performance of the credit union’s cards in a vacuum. You need to understand your competitive advantages and disadvantages. The competition is too smart and too willing to take your members’ business from you. 

Once you’ve transformed your credit card business and you're beginning to see what this tool can do for you, you will have already begun to consider the next WalletShare study on your loan business or checking account business. There is so much to do. 

Get started.