Relationships. At the crux of everything your credit union does, every decision you make…lies the relationship with your members. Credit union management is charged with the task of providing the right products and services, to the right members at the right times. This can only happen if you knowyour members. By focusing on relationships credit unions can effectively compete with banks, who continue to consolidate, change ownership and names, and alienate their customers. For credit unions, this presents a huge opportunity to strengthen and build its membership base.
The timing is also right, because credit unions have spent millions of dollars on technology and infrastructure to process transactions more efficiently and provide better and faster service to members. Many credit unions however, fail to realize the full implications of information they are accumulating, and how they can leverage that information to improve the entire organization.
The primary reasons credit unions do not fully utilize this information are:
- They don't have the expertise to mine the data for actionable information.
- They don't have the technology / It's too expensive.
- They can't get bogged down in the data, after all, they have a credit union to run!
Let's get personal! In personal situations, relationships are centered on what you know about the other person. You know their interests, their preferences, what motivates them, how to communicate with them, etc. The same thing applies to member relationships, the better you understand them, the more completely you can satisfy their needs and communicate with them. Now, with advances in technology, credit unions of any size can leverage the data they have to gain a thorough understanding of its members. Management can be infinitely more effective when they have this 360 degree view.
For example, a Midwestern credit union was recently involved in strategic planning for future operations, communications plans, and CRM initiatives. By integrating multiple data sources (ie. Member files, loan files, deposit files, card files, trans files) and mining the data, we started building a framework for aligning their products, services, and communication strategies with members. In this case, we looked at a few branches with approximately 80,000 members.
Our approach to "Knowing Members" was to build member segments which can be viewed in a matrix based on where members are in their lives, ie. Life Stage. This Life Stage Analysis was based on the make-up of the membership base using the following criteria: Member age, Home Ownership, Household Income, Presence of Children, Marital Status. These attributes are not always available from existing data, but can be assessed and gleaned from external sources if necessary.
What implications can your credit union draw from understanding where members are in their lives? As illustrated, nearly 1/3 of these members were in their peak accumulation years. Understanding members in their peak accumulation years, and who is spending, investing, borrowing, etc., indicates which products and services they need. Which of these members have their primary checking account with you? Direct Deposit? Existing Loans? Are they online?
In addition to understanding where your members are in their lives, realizing their loyalty for your credit union also has many implications. Do you know how many of your members consider you to be their primary financial institution? We typically glean this information from online or offline primary research. However, combining research findings (what members say) and transactional analysis (what members actually do) gives you a complete assessment of where you stand with your members. To determine loyalty, we assessed several factors including length of membership, number of products, transactional history, attrition rates, etc. As with most, this credit union had many long time members that have only one account, who were likely to simply maintain membership. In fact, nearly 50% of all members had only a share account. When you combine this loyalty measurement with the life stage factors, you begin to get a feel for which members you should be communicating to about specific products, and how.
Potential initiatives based on some initial analysis included:
- Retention of members beyond the first year
- Versioned educational materials based on life stage of member
- ATM located not where bulk of members were, but where higher density of loyal members were
- Attract and solidify relationships with those in the Early Career stage, as they enter their primary borrowing and spending years.
Do you think even the simple analysis presented here would help in decision making at your credit union? What about when you add transactional relationship you have with members? Combine the life stage of your members and loyalty factors, then add to the matrix things like: Growth of Portfolio, Account Inactivity, Account Diminishments, Request for Payouts, Mortgage Maturity, Large Deposits/Withdrawals, etc.
As financial products and services continue to become more accessible and markets continue to be saturated, consumers still seek personalized service and relationships become increasingly important. Whether it is during a transaction, in a newsletter or during a promotional campaign…when you speak to the members about the right products and services at the right times, you increase your opportunity to build a long-term relationship.
Wilson Chapman Re is a full-service marketing firm, with a division dedicated specifically to leveraging member information to improve decision making and online and offline communication channels. Their clients include financial institutions, healthcare providers, manufacturers, retailers and service providers. For information on their capabilities or to discuss content of this article further, contact Dave Wilson or Brian Olson: