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.
Credit Union 2.0 began as an innovative digital strategy playbook, Credit Union 2.0, written by Kirk Drake and has evolved into a full service digital credit union consultancy that specializes in developing meaningful digital brands. We don’t just come up with what’s cool. We give credit unions the tools, playbook, and strategies they need to make a real impact and engage their members.
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