By Frank Koechlein for the CUInsight. It’s that time of year when you are no doubt finalizing your marketing strategy for 2020 and establishing member growth goals. Member growth goals are the net result of new members acquired and members lost over the year through attrition. If you currently don’t have a formal member engagement program, establishing one in 2020 could have a more substantial impact on your member growth than acquisition marketing.
Why do members leave? The leading reason stated by members leaving their credit union is the institution’s perceived lack of proactivity to provide financial advice. Research conducted by Customer Experience Solutions (CES) cites this as the primary reason members switch financial institutions. As per the research, 1 in 3 members indicated this was their primary reason for leaving.
The financial impact of this failure to deliver adequate advice and guidance can be substantial and many times not readily apparent. Accenture research, among others, puts the average annual attrition rate for financial institutions at approximately 11%. However, a weak spot for some credit unions comes in the member’s first year where it’s estimated that between 20-25% of new members will leave. This clearly points to the financial institution’s inability to engage its newest members.
To complicate things further, member attrition is not always easy to identify. Some members will leave your institution and not close their accounts. This means you have not only lost the opportunity to engage these members but you have incurred the added expense of carrying their dormant accounts.
It’s not all bad news. Now that you understand the challenge; creating an effective member engagement strategy can leverage the core strengths of your organization matched with many new service distribution technologies. In fact, the same Accenture research highlighted that 46% of members are receptive to the idea of using robo-advice as a service delivery option.
Here are 5 areas to look at when creating an effective member engagement strategy for 2020.
- Onboarding. New members are excited at the possibilities of banking with a new credit union. A sound engagement strategy will look to deliver on your value proposition, as well as, gather information regarding their financial/lifestyle goals and service preferences. These can help you create ongoing personalized messaging and the most effective ways to deliver it.
- Content. Many financial decisions by members are focused around life events; marriage, childbirth, graduation, divorce and moving to name a few. Effective advice focuses on the needs of members as they navigate their way through life and then matching these needs to the products and services offered by your institution.
- Products. Do your products and services support member goals? Are there gaps in the services you offer that force some member segments to look for solutions at other institutions. It is important to match specific member needs with services offered. In fact, many credit unions are replacing product brochures with “segment” brochures. These point-of-sale materials help branch associates work with members to identify their individual financial needs and then find the right solutions.
- Service Delivery. Members have busy lives and if it is difficult for them to get the information they need or to conduct account transactions, they will begin to look for another more convenient institution. It is important to identify these “pain points” and to address ways to better engage your members. A critical place to start is your credit union’s website. The CES research looked at bank and credit union websites; the key take-away is that most financial institutions fail to realize their site’s potential for engaging members. For example; 1% had a dedicated support page, 6% had easy to find FAQs, 100% of the sites surveyed directed members to call the service center and the average website had a staggering average page count of 337.
- Member Data. At a time when many members prefer not to come into the branch, member data is the new way of getting to know your remote service members. Member data can drive appropriate remote communications to specific segments of members, creating a more personalized experience. Member data also provides the fuel to run a more formalized member engagement program. This type of data marketing/sales platform can provide information to branch associates to support one-on-one interactions or drive broader member marketing campaigns.
With the average cost to acquire new members estimated to be between $300-$600, it is critical to have a member engagement plan in place to maximize this investment. Delivering on your brand promise by engaging with your members supports the financial well-being of your credit union and that of your members.