eBrief: The Challenge of Retention

Segmenting your customer base can help you better understand current performance as well as future potential.


Under the best economic conditions, financial institutions face an uphill battle in acquiring, developing, and ultimately keeping new account relationships. Such trials are intensified in stressed economic conditions. For credit unions, retaining members is critical to sustaining net account growth in any economic environment. According to one banking industry study, banks typically lose relationships with 10-12% of their households each year. While credit unions typically have lower churn, even small improvements in account retention will have a major impact on primary account growth.

Understanding how member acquisition is influenced by changing needs is one way credit unions can build informed strategies that support organic primary account growth. Consumer behavior is traditionally driven by three factors, and segmenting your member base will help you maximize current performance as well as future potential. 

1.       Employment-Driven Behavior
New jobs spur consumers to change financial institutions. Encourage members to set up a direct deposit; then support increased debit card usage by stimulating ATM habits and promoting electronic micro-payments.  

 2.       Mortgage-Driven Behavior
Members “bank” where they keep their mortgages. Fewer new mortgages typically result in fewer new members, so engage your members by up-selling and cross-selling primary products, such as insurance, retirement, mortgages, or loans.

 3.       Confidence-Driven Behavior
Consumer anxiety over the safety of their financial institution – and therefore the safety of their money – affects their willingness to concentrate savings in one institution. Strengthen and cultivate relationships by emphasizing quality assurance processes and establishing specialized retention units, then monitor member behavior changes to prevent attrition.




July 23, 2010


  • The problem of attrition is becoming more challenging to credit unions. An even greater challenge seems to be acquiring new members. The dramatic increase in competition among banks and financial services companies has generated the need for financial institutions to place increased emphasis on customer retention and acquisition.

    Banks and other financial institutions face competition from both bank and non-bank entities. For example, in the late 1990’s, there was rapid growth in the housing marketing in Florida. Consequently, the increase in demands for loans attracted high levels competition within the financial services industry.

    In the past, banks competed with banks and other financial intuitions for lending business. Now, all that is changing. Many “non-bank” organizations are providing lending services to small and mid-sized companies and individuals

    As a result of increase competition from banks and non-bank financial institutions, many credit unions have become aggressive in their approach to marketing and acquisition of new customers.

    The trend these days are for companies to aggressively offer discounts, introductory coupons, and other incentives to lure new customers. However, research in the financial services and other service industries show that these tactics can backfire.

    I am in agreement with the article which touts segmentation and a very target approach as the way to go.

    By: Karlene Facey C.E.O. Clarocision Research & Marketing- www.crmfirm.com

    Karlene Facey