Research: Without Checking You Are Invisible

Why does marketing to indirect lending (IDL) members usually fall on deaf ears? Why are response rates so low when institutions market to members who maintain their primary checking account elsewhere? When consumers are asked to name their primary financial institution, over 95 percent name the institution where they maintain their main checking account.

Not surprisingly, this institution is their first stop when they look for additional products.

They know a great deal about this institution's offerings, but their awareness level of other institutions where they have accounts remains low, with the exception of investment accounts.

Even more importantly, most ignore the marketing materials they receive from those secondary institutions.

This makes it absolutely critical for credit unions to get the checking relationship. It is the No. 1 conduit for additional relationships with the member.

But here's the Catch 22: if a credit union does not have a member's checking account, how can it raise the member's awareness of other offerings?

The solution is product packaging and cross selling, ideally at the time when the member first obtains a loan or opens an account other than checking.

For example, if a new member comes to the credit union for a mortgage or auto loan, offer an interest rate discount if the new member also opens a checking account and makes mortgage payments directly from that account.

Many credit unions join IDL programs in order to introduce themselves to new members, but when it comes to converting those members to take full advantage of the institution's offerings, no amount of marketing seems to have any effect.

That's because without checking, the institution is invisible to those members. They simply tune out, if not throw out, any marketing collateral and ignore attempts at direct selling.

That's why it's critical to establish the checking relationship right at the beginning.

Neil Goldman is President of Member Research. He can be reached at (310) 643-5910 or by e-mail at ngoldman<at>memberresearch.com.