A Quick Guide to Credit Union Member Acquisition Costs

In a perfect world, the reputation of any given credit union would precede it, and people would flock from far and wide to join. Not a dime would be spent on marketing.

Unfortunately, it’s not a perfect world. Any credit union growth strategy is going to rely on marketing for brand recognition. The real question is, how much does a new member cost? And, just as importantly, is it worth it?

Average Credit Union Member Acquisition Cost

One of the more telling issues that we’ve repeatedly seen is that credit unions don’t know how much it costs to acquire a new member. Usually, this is because of two variables.

1.    There Is No Standard Member Acquisition Cost

This is the most common reason why credit unions don’t have solid numbers for member acquisition costs. There is no set methodology for calculating member acquisition costs. Each credit union might include different variables.

For example, one credit union might consider only the cost of advertisements, banner ads, newspapers, email campaigns, and the like. Another credit union might add in a portion of their marketing team’s salaries or the cost of their online account opening platform. You might want to include operations’ salaries and the cost of any conference or speaking engagement as well. Yet another credit union may read the cost somewhere (like here) and call it good.

Pro tip: if you’re in the last party, I’ll save you some time right now:

We typically see the average new credit union member acquisition cost sit somewhere between $350 and $700.

2.    Member Acquisition Costs Differ Per Account Type

This is where things get really tricky. Depending on the market, different account types may be easier or more difficult to market to.

In a bull market, there’s more monetary velocity. Businesses see good profits, unemployment falls, and the paychecks are fat. People are willing to spend money because they can count on more money coming in.

When the market is strong, credit union member acquisition costs for loan accounts are much lower. More people are ready to improve or buy houses, purchase new cars, and so on. They’re already looking for the best loan terms out there, so it doesn’t take as much nurturing to convince someone to open an account.

It can be easier to attract members for loan accounts than for deposit accounts in a bull market. That’s because instead of finding better ways of saving, people are finding better ways of spending.

However, in bear markets, the opposite is true. Fewer people splurge on a new car when the economy’s in the dump. Fortunately, it’s easier to attract new members for deposit accounts when the market is bad. That’s because people are looking for better ways of saving rather than finding better ways of spending.

Your marketing team should adjust its messaging to reflect the market.

Balancing Member Acquisition Cost with Member Value

Long-term growth strategies must be profitable. If they’re not profitable, then what’s the point?

No credit union wants accounts that do cost more to maintain than they make in profit. Loan accounts increase long-term profitability significantly, so it would seem to follow logically that credit unions would primarily target new loan members.

However, an imbalanced loan portfolio carries considerable risk.

For total member ROI, balance is key. A member with a $50,000 mortgage and a $20,000 deposit balance is better for the bottom line than a member with a $100,000 mortgage and no deposit balance.

So, promoting product saturation is another credit union marketing need. Not only does engagement drive loyalty, but it significantly improves portfolio balance and long-term ROI.

Give Your Credit Union the Right Marketing Tools

Marketing is key to finding new leads and improving engagement/product saturation among members. Content marketing powered by marketing automation are recommended, if not necessary.

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If you’d like to see solutions for lowering member acquisition costs, join our Fintech Call Program. We’re happy to discuss best-fit fintechs in the marketplace that can address your pain points. The Fintech Call Program is free to credit union leaders.