The Credit Union 2.0 blog gives you all the tools you need to see the forest for the trees.
It can be hard to bring in new members to credit unions. And the reality is, that difficulty can be measured in dollars. Member acquisition costs can add up quickly.
So, it’s critical to keep new members once you get them. Unfortunately, there’s no secret formula to reducing new member churn.
Or is there?
Continue reading “One Way to Reduce New Member Churn at Your Credit Union”
Lead scoring. You may have heard the term. Perhaps you’ve talked about it without knowing what it was even called. Fortunately, we’re here to bring you an introduction to lead scoring for credit unions.
Many credit unions measure the success of a marketing campaign solely with “home run” metrics. For example, we measure car loan promotions by the number of car loans booked. We judge credit card campaigns by the number of cards delivered.
While there is no question that win/loss metrics are important, there is a middle ground. Continue reading “Lead Scoring: Getting to Know Your Members”
Content marketing is a kind of marketing strategy designed to attract and nurture inbound leads. It relies on maintaining a consistent and prominent online presence to show up in peoples’ internet searches. Can credit union content marketing work?
Few credit union marketing strategies are exactly alike. Each credit union fills a unique niche and appeals to particular local community. Each credit union offers something that other financial institutions near them don’t.
With quickly evolving technology and the popularity of online and mobile banking, traditional marketing avenues are changing as well. Content marketing can help credit unions reach prospective members who turn to the internet first to gather information about companies, products, and services that interest them.
Continue reading “Does Credit Union Content Marketing Work?”
Credit union membership growth! How do you measure it? It seems like a simple question, just like “where can I get the best burger in town?” seems like a simple question. However, once different interpretations of what constitutes a new member—or a good burger come into play—things don’t stay so clear.
I have been on the Board of Directors at South Bay Credit Union for the last 11 years. At almost every board meeting, our COO delivers the monthly new member report. We seem to grow by a certain percentage each month, yet we have had roughly the same number of members for the last decade. How does that happen? Member attrition.
Member attrition is not a focal point of many credit unions. It certainly wasn’t for SBCU until just last year. I don’t know why I had that epiphany about focusing on attrition, but I did.
It forced us to focus on why members were leaving, which members were leaving, and where they were going. In my opinion, there are members whom we don’t mind leaving. Let that sink in for a minute…
Not all members are good members participating in the cooperative. Just like a team is only as strong as its weakest player, a cooperative is only as strong as its weakest link. Think of the Great Wall of China. It kept China safe for centuries until the gates were opened from the inside and the Mongols walked right into China and took over. The weak link was the open door in the hundreds of miles of brick wall.
Armed with the data on which members we were losing, why we were losing them, and where they were going, we were able to address a growth strategy in a tactical manner. Intuition is great, but data is factual. Using data, we were able to “farm” our existing members and cultivate those members to be our most profitable and highest participating members.
Knowing why members leave and which ones you want to keep allows you to fix the reasons why those members leave. The first step in membe
r growth is to stop the bleeding. You can add 50 new members per day, but if you’re losing 50 per day as well, you’ll never grow.
Now that we have fixed the leak in membership, it is time to start adding net new members. Take a look at this study from NCUA. Can you explain to me why the larger the credit union, the greater the new member growth?
My guess is that the larger credit unions grow because of their ability to spend on advertising. TV, radio, print, online, etc. are all things smaller credit unions struggle to do at scale.
However, that is changing daily. We are moving from a one-to-many toward a one-to-one marketing environment. Tailoring the message to the individual potential member you are targeting is a much more cost-effective way of doing this.
One-to-many marketing does work. It’s inefficient, but it does work. One-to-one marketing works better, though. If you know who you’re marketing to, you can ensure that you and your prospect are well-suited to one another.
To put it in terms you might be more familiar with, think of it as the RFP process. If I run a core provider or mobile banking provider, I probably get 50 or so RFP’s to complete each month. Some vendors will complete all 50 and hope for the best. If they complete all 50, they will likely get included in 25 searches, do 10 demos, and get 5 new clients. The more efficient vendors will evaluate all 50, score the potential for winning by developing an ideal prospect persona, reply to those 25 that fit their ideal client profile, do 20 demos and get 10 clients. Double the clients, half the work, a pretty good model.
New member acquisition is the same. You can advertise to thousands with your generic message, onboard as many as you can, and then have 40% of them leave because they are not a fit for your credit union (they are not your ideal member). Or, you can use technology to find the potential members that fit your ideal member persona, target them specifically, and onboard the same number of new members who will not leave. And you can do that for half the cost.
The first step is identifying your ideal member or persona, which you will have already done while examining member attrition. Then, find the right partner to help you put your message in front of them at the right time in the right context.
There are several examples of this being done and CU 2.0 would be happy to help you. Contact us here.
And, for the record, the best burger in town is from In-N-Out.
A recent survey showed that credit unions and their members are looking for different things from their credit cards. In fact, 76% credit union card goals were aimed toward growth, while the rest prioritized member services. But here’s the rub: 100% of members polled listed “false declines” as their number one service issue for credit cards.
Clearly, there’s a disconnect between member experience and credit union card goals. Growth is a good end goal but making sure existing cardholders feel taken care of is paramount for retention. There is nothing more frustrating to a member than a false decline in the middle of a busy day.
Speaking from personal experience, I know how frustrating a false decline is. Recently, an old friend came through town. We caught up over drinks and because we were on my home turf, I offered to pick up the tab. My card was declined.
It worked out in the end. I pulled out a different card and paid with that. Nevertheless, it was surprising and a little bit embarrassing.
Imagine if I had been out to dinner with a new prospect or client. A hiccup as small as a false decline could have signaled that we weren’t ready or able to take on their business.
False positives on credit cards can be as high as 90%. I’ve held my fair share of cards over the years, and I relegated any credit card that couldn’t consistently function properly to the back of my wallet. Credit union card goals should include reducing false positives to better align with member needs. If you want your credit card to be top of wallet – focusing attention on reducing false positives is as important as your rewards programs.
An unused credit card in the back of a member’s wallet costs a credit union money, reputation, and relationship trust. Unfortunately, many credit unions aren’t sure how to address false declines, because they want to maintain security and reduce the risk of fraud.
Reassessing your credit card processor could be your best move. In your RFPs and vendor research, pay attention to false positive decline rates. Also, you can group issuers and acquirers together to see both sides of transactions. Strong data analytics and machine learning can aid in reducing these kinds of problems.
Another option is to try a pilot with Flexpay to help find and tune your fraud prevention. Matching up your transaction history with Flexpay’s merchant history will enable you to reduce fraud and improve the member experience. Best of all, it’s a pilot – so there isn’t any cost!
Nobody should have to rifle through their wallet to find a card that won’t mistakenly decline purchases. Or worse, nobody should be left without a way to pay because of an inadequate processor.
Credit union card goals should align with member credit card needs. Members need credit union credit cards that they can trust. Problem-free credit card processing reflects well on the credit union and its sophistication, which will increase their confidence in other available services.
The best part of reducing false positive decline rates is that it will inspire member confidence in their credit cards, which will aid growth and reduce attrition.
There are two ways you can give members what they want: first, you can ask your card processor to prioritize false positive declines. Second, you can join our effort to connect merchant data and credit union data via machine learning. Together, we can reduce fraud risk while maximizing member approval.