The Price of Attracting New Members

Over the last decade, many credit unions have converted to community charters or accumulated a large and diverse number of employer relationships, thus lowering the barrier for membership enrollment.

Educational and promotional expenses per net new member continue to steadily increase, and the credit union industry spends an average of $467 on every net new credit union member, as of mid-year 2008. However, there are distinct differences between federal credit unions that hold a community charter versus those that primarily have a membership base comprised of specific employer groups or associations.

Prior to 2006, the average educational and promotional expenses per net new member did not differ substantially between these groups. In the past two years, this metric has increased dramatically for federal credit unions that identify themselves as community chartered on their NCUA 5300 call report. As of mid year 2008, the average community-chartered federal credit union spent an average of $791 per net new member. There could be a wide variety of reasons why this increase has occurred: media buys have become more costly, new competition has emerged (such as Internet-based banks), market saturation intensified, perhaps many community credit unions captured the 'low-hanging fruit' in the first few years following a conversion and have to work harder to capture the remaining potential members, and similar such influences.

It is often more cost-effective to reach a target audience of potential and existing members through a specific SEG channel rather than broad general media campaign. Most credit unions traditionally grew through a single sponsor or multiple SEG relationships, and it's important to remember how unique and beneficial these relationships can be.  Despite a credit union's type of charter and primary focus, there are many advantages to working through specific employer groups.   




Nov. 10, 2008



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