Many credit unions have enjoyed above average member growth during the recession, and shares are growing faster than they have in years. There are two key components to this growth: maximizing new members gained and minimizing members lost. As the stock market recovers, members work to rebuild their wealth, and massive financial institutions with massive marketing budgets targeting your members more aggressively, member retention will become increasingly vital as part of your member growth strategy. Now is the time for your credit union to plan how to keep members with the credit union. Here are six steps your credit union can use to build or review your member retention strategy:
1.Determine who is responsible for member retention
It can be tempting to only focus on new member growth. After all, "new members" is often the key metric used to measure the success of marketing campaigns or promotional events. Further, barring some kind of disaster, rarely is "members lost" the key metric for specific credit union related events. As such, your credit union will need to identify key metrics relating to developing long term relationships, which will inevitably include tracking why those relationships end. This responsibility could feasibly fall into a number of existing departments, such as operations or marketing, or your credit union may want to consider creating a new department, such as a member experience or even a closed member department.
2.On-board new members
The first few months of membership are the most volatile for the relationship between credit unions and members. During this time, members are more receptive to cross-selling. However, they are also more likely to leave. These two combine to create a very powerful incentive for your credit union to have an on-boarding program for each new member. Use the first few months as an opportunity to educate the new member about relevant products and services that you offer. Also, consider trying to convert the member's other lending relationships to the credit union; for example, many credit unions offer loans to recent college grads that let them consolidate student loans and credit card debt held at other institutions.
3.Focus on selling sticky products first
"Stickiness" refers to the ability of a product or service to retain the member using it. For example, online banking and bill pay are extremely sticky products. For members that have their bill payments scheduled automatically through their online banking at the credit union, switching their account to another financial institution becomes a laborious process, a strong incentive for remaining with the credit union. While mortgage penetration remains low compared to other financial products, members with mortgages at the credit union typically have a greater number of relationships with the credit unions. Also, the average mortgage lasts around eight years, which helps develop those long term relationships.
4.Leverage non-sticky products to deepen relationships
If the member has a relationship with the credit union that could easily be terminated, such as a credit card, explore ways to turn that product into a more stable and permanent relationship as an added incentive. If your credit card has a rewards program, consider offering reward points for starting new relationships. If your member applied for the credit card online, follow-up with other online features available at your credit union—another opportunity to promote online banking if you offer it.
5.Identify retention triggers
Many events signal that a member may be considering leaving the credit union; think of these as "retention triggers." Your credit union should identify the most common reasons that members leave the credit union, and then put together a profile of retention triggering behavior. Here are some examples; if your members do one or several of these, intervention may be needed to salvage the relationship.
a.Register one, or several, complaints about the credit union
b.Hold an account that remains inactive for over 60 days
c.Withdrawal all or most of their funds from a checking or primary savings account
d.Put their current house on the market to be sold or move outside the geographic area where the credit union has branches
6.Have a pipeline for members leaving
So a member calls your call center, or walks into one of your branches, and says that they would like to close out their accounts. What is your response? While you certainly do not want to stand in the members way if they are committed to leaving, many relationships can still be salvaged at this point. Develop a step-by-step process for front-line staff to walk through with members. Track why they are leaving and determine if the issues can still be resolved without abandoning the relationships. If the member had a bad experience with a customer service representative, have incentives in place and see immediate resolution. If the member is moving outside the branch network, highlight other options, such as participation in a shared branch or ATM network, or online banking.
For more information about the role member retention during and after the recession, as well as how your credit union can develop and measure a successful retention strategy, join us on Wednesday, July 29, for our upcoming webinar A Member Saved is a Member Earned: Retention Strategies During Market Upheaval.