One if by land, two if...you're trying to sum up all the terrific advice, strategies and knowledge shared during the Credit Union Journal's recent Business Development & SEG Conference in Boston. In this, the second of two columns, I try to offer at least a few of the tidbits that were part of the two days of meetings.
From Darren Williams, CEO of Wescom Credit Union in Pasadena, Calif., which has an aggressive branching strategy:
* CUNA research shows that growth will be slow through 2010. I don't know what is going to happen in 2011 that is going to change that.
* If my kids had not grown up in a credit union household, I don't think they would be in a credit union today.
* We have an aging membership at credit unions of 47. At Wescom our average age has come down each of the past 10 years, but that's because we've grown.
* At the very time we should be spending more on marketing and community outreach we are cutting back (a point also made by at least one other speaker).
* Of 18- to 34-year olds, 61% are aware they could join a credit union but haven't done so. So I'm not sure awareness is our biggest problem.
* At Wescom 10% annualized growth over the past 10 years. But growth is not the endgame for us. We think of growth primarily as a measure of performance. Growth is a sign of our vitality.
* There is a strong correlation between branch growth and membership growth. We, like many, convinced ourselves in the 1990s that everything would be driven by the Internet. We've rethought that and are now very aggressive in branching. We plan to have 70 by 2010. During 2006 we added 53,000 new members.
* There must be significant functionality and all information available at every touchpoint. Our statements have all the information available on accounts in a consolidated form.
From Mark Riddle of Raddon Financial Group:
* Non-community CUs, or SEG-based CUs, have had better growth than community credit unions. It all boils down to loyalty. When you move to community you lose some affinity and you lose some of the loyalty. It's harder to be a community-based credit union.
* Which is the least predictive of share of wallet? Satisfaction. Credit unions talk about growth and are growth obsessed but we could grow just with the members you already have.
* If we ask credit unions what members want, they will say price. But consumers say what they want first is accuracy. No. 2 is knowledge level, No. 3 is problem resolution, No. 4 is professionalism. The interest rate on a loan is No. 7. I'm not saying rate is unimportant, but you could make a lot of mileage just by doing the first six.
* Credit unions with low loyalty also have low performance on service quality attributes. When you ask credit unions that are rated lowly what is the problem they say 'We don't have branches' or 'Our rates are not very good,' but our research says that's not it.
* Retention is the primary driver of growth. It's not that you're not bringing in new households it's that you are not retaining the households you already have. The top 10% of CUs have a 94% retention rate; the bottom 10% have a 90% retention rate.
From Chris Braccia of Harland Financial Solutions: You have a huge opportunity internally that you are not mining today. Fourteen percent of members defect, that is close all their accounts, every year. 85% have balance attrition driven by diminishment. Thirty-percent show an attrition rate in the first year. It costs 25% more to acquire a new member than retain a current member.
* Why is everyone skeptical about member relationship management (MRM)? Because few have succeeded and few have a plan. The reason MRM or CRM failed after taking hold in the 1990s is that it has absolutely nothing to do with technology. The reason we failed folks is that we have not had a plan. We thought it was a panacea.
* We spent tons of money on ATM networks that give you everything plus a capuccino and people are using them, but when they use them it's an opportunity to sell. It's not just a transaction delivery channel.
* We have to figure out how to get past transactions to the member experience. We need to get there because the members are going to change and we need to be there ahead of them or at least with them. The biggest hurdle we need to get past is culture. It's not that the culture is bad, it's that we need to think about it differently. The other thing is consistency. We have to be consistent across the member experience. You can't sustain product leadership because of product parity. You can't sustain price leadership. A superior member experience that isn't cookie cutter can't be replicated.
* The key is understanding the member household and not the individual member. Once profitability is assigned to each product or service, only then can you see the value of the household.
* In every financial institution I've ever been in the bottom accounts drain all the profit from the top accounts.
Frank J. Diekmann can be reached at fdiekmann<at>cujournal.com.