Member engagement is critical to the long-term success of a credit union. According to a June 2015 study by Deluxe Marketing, financial institutions can lift the profitability of checking account holders by turning inactive users into fully engaged ones. That’s because a fully engaged user is:
3.7x more likely to open a credit card account
6.3x more likely to open a brokerage account
6.7x more likely to open a mortgage
One way credit unions are increasing member engagement is through email and direct mail marketing aimed at existing members. Such “re-boarding” reaffirms the institution’s value, boosts activity, and increases retention.
From the development of a re-boarding program to a team-based approach, here’s how three credit unions are solving their engagement quandaries.
Option 1 Credit Union ($285.0M, Grand Rapids, MI) partnered with Marquis, a provider of marketing analytics including MCIF and CRM software, three years ago to develop an automated re-boarding program aimed at increasing its average-unique-products-and-services-per-member. This metric, says Jerri Schmidt, vice president of marketing at Option 1, measures member engagement and is a convenient way for the credit union to see how marketing affects relationships.
Three years ago, the average-unique-products-and-services-per-member at Option 1 was 3.5. At the end of May, it was 5. That’s a significant jump in the right direction.
CU QUICK FACTS
Option 1 Credit Union
Data as of 03.31.15
HQ: Grand Rapids, MI
12-MO SHARE GROWTH: 1.43%
12-MO LOAN GROWTH: 3.80%
“It’s hard to move that number because you only have a finite number of products and services,” says Schmidt, who directly attributes the growth to her institution’s re-boarding efforts.
The credit union onboards new members with personal thank you notes and phone calls. Now, Option 1 is able to identify current members most likely to leave the credit union — whether because of competition or apathy — and aims to strengthen those relationships before it’s too late.
The credit union sends direct mail to members who hit certain triggers; for example, nearing the end of a loan term or hitting 45 days with no checking account activity. But re-boarding, says Schmidt, is an ongoing process. So in addition to triggered mailings, the credit union also mails wealth management pieces on both financial and retirement planning to members based on demographics and account relationship. It mails financial planning guides to members in the age range of 25 to 50 and sends retirement planning guides to anyone older. To trigger the mailing, members in either group must not have transacted in a branch within the past 30 days.
“Many people never step foot into the branch,” Schmidt says. “Those are the people with whom we have to create engagement because they are going to get these services somewhere. We have to remind them they have them available here as a part of their membership.”
In an environment where more members rely on online and mobile devices, finding ways to re-board independent of branch interactions is the next level that Schmidt hopes her re-boarding program can accomplish. Today’s digital devices offer ways to develop “targeted marketing based on engagement,” Schmidt says.
Similar to ads customers see online after opening certain promotional emails or visiting websites, Schmidt envisions putting targeted advertisements in front of members who have looked at the credit union’s website to research products. That way, although the member might have a totally digital relationship with the institution, Option 1 can still get information to them.
“Many people are primarily engaged on their remote devices,” Schmidt says. “They don’t come into the branch anymore. These are the folks this type of re-boarding would affect. You need to make sure when they are on other sites, you are still visible with something they have an interest in.”
Re-boarding As A Team Sport
Re-boarding efforts can help a credit union increase the number of households it serves and deepen the relationships therein, as is the case with SAFE Federal Credit Union ($926.6M, Sumter, SC).
SAFE relies heavily on onboarding and re-boarding processes it put in place in 2011, when director of marketing Lynn Blizzard was promoted to Director of Marketing. At that time, the credit union did not onboard members. So the credit union sent an email and direct mail to members who had been with the credit union for more than one year but weren’t engaged with the aim of not only re-engaging the member but also deepening the relationship. SAFE defines unengaged members as those who have been with the credit union for more than 12 months and have fewer than three products with the credit union.
CU QUICK FACTS
SAfe federal Credit Union
Data as of 03.31.15
HQ: Sumter, SC
12-MO SHARE GROWTH: 2.86%
12-MO LOAN GROWTH: 8.62%
“We know they have to have a mortgage somewhere, because they haven’t got it with us,” Blizzard says. “So we try to re-board them and have them re-evaluate their relationship, compel them to move the mortgage to SAFE.”
The credit union had to wait until the board approved the annual budget and then sent the first batch of re-boarding emails in February 2012. In the first five months, the credit union received direct responses from 91 new households and added 15 new loans from these households.
But SAFE needed to do better. So it increased the number of re-engagement touch points by syncing the marketing department and branch staff with regard to member contact.
“If I am a teller and a member comes in for a transaction, I have it on the system that they received a direct mail piece,” Blizzard says. “I remind the member, so now there are two touch-points.”
Even if members are not interested at that time, each transaction has a record of the conversation that came before it, including what the teller offered. And when both tellers and marketing material tout the benefits of an offer, the member becomes more likely to purchase.
We're doing our members an injustice if we don't show them a better way.
The credit union’s performance supports this hypothesis. In the years since implementing its system and improving processes, the number of households served has jumped at SAFE. From February 2014 to June 2014, the credit union received direct responses from 2,955 new households, booking 425 new loans — well above the 91 and 15, respectively, from two years prior. Additionally, the average age of household respondents decreased from 48.46 in 2012 to 46.25 in 2014.
SAFE’s newfound reach into households is important, as Blizzard believes the credit union plays an important role in helping members improve their financial livelihood.
“We’re the experts they rely on,” Blizzard says. “We’re doing our members an injustice if we don’t show them a better way.”
Re-boarding For Starters
Veridian Credit Union ($2.7B, Waterloo, IA) implemented an onboarding program in 2010 that starts with a welcome letter and evolves into various follow-up correspondences. But until July 2015, the credit union did not have an established re-boarding program.
“We’ve had onboarding for five years and we are looking for ways to re-engage our members, reduce attrition, and improve awareness of our products and services,” says Amela Cejvanovic, product marketing strategist at Veridian.
CU QUICK FACTS
Veridian Credit Union
Data as of 03.31.15
HQ: Waterloo, IA
12-MO SHARE GROWTH: 9.52%
12-MO LOAN GROWTH: 13.49%
In 2009, the credit union developed an engagement model matrix that integrates metrics such as attrition and retention rates as well as current average services per household.
The credit union’s internal research department uses data from MCIF as well as its own data warehouse and also takes feedback from surveys and focus groups to maintain the matrix. With these statistics, the credit union identifies opportunities to increase product awareness and usage and decrease attrition.
“All of these things are feeding into how we are targeting members,” Cejvanovic says.
Veridian uses both direct mail and email to send messages to members during trigger events such as membership anniversaries, birthdays, and taking out an auto loan. For the third, Veridian sends information regarding insurance offerings and payment protections.
Its re-boarding program will be more complex than its onboarding and provide faster reporting capabilities. Cejvanovic anticipates it will take six months to see a shift in attrition or household engagement, although the credit union has set goals to meet in the meantime.
Over the course of the first year, the credit union would like to see responses from 1% of direct mail recipients and 0.25% of email recipients, which would correspond to 2,300 members through each of those channels. The credit union based these conservative rate goals on what it was seeing from its onboarding program. And if the projections hold true, Cejvanovic estimates an $115,000 boost in net income.
Additionally, the credit union would like to post a modest improvement in its current average services per household — which is 3.0 — by the end of the year. It doesn’t have a set goal for its retention rate, but it ended 2014 with 94.49% retention and would like to maintain or improve that figure.
“We’ll know if we’ve been successful if the member retention numbers and services per household increases,” says Sarah Corkery, the credit union’s vice president of marketing. “But we’ll continue to evaluate the program and tweak it along the way to make sure it remains optimized.”