Value proposition preferences of credit union members and patronage activity

The purpose of this paper is to examine the technical and relational value proposition preferences of credit union members and to examine the relationship between their preference and patronage activity.

A total of 800 members of credit unions were surveyed. Exploratory factor analysis was used and four factors were extracted incorporating technical and relational dimensions of the credit union service. Member value proposition preferences are examined and the relationship to patronage activity of the credit union was explored.

The majority of members express a higher or equal preference for a relational rather than a technical value proposition. Those that express a greater or equal preference for relational value are more likely to have a higher level of patronage activity.

Credit unions are member-owned financial institutions and hence the study is context dependent. Credit unions are member-owned financial institutions and hence relational value may be more significant than in the case of non-member owned entities.

The research highlights the importance of consideration of relational value in financial services entities whose competitive advantage lies in the relational. In terms of the credit union, the impact on the relational value proposition of the credit union must be considered in the design and implementation of industry restructuring.

This paper extends the emotional value and interactive quality construct to incorporate a greater relational focus which the paper suggests is of greater relevance to high-contact financial services. The research in this paper also extends beyond the criticised static focus of consumer perceived scales (consumer perceived value) and the episode focused service quality scales. Hence, it has a more longitudinal and holistic focus. The paper also incorporates a preference between benefits approach rather than an evaluative or trade-off between benefits and costs framework.