Today, more members are closing accounts because they "need the money" or want to consolidate funds at their primary financial institution for convenience. Perhaps reflective of the economy, the trend is of some concern, but credit unions that understand the drivers behind the attrition they are experiencing can take action to reverse it. It's always easier to retain and grow business from within than to attract new members.
Paying off a loan is one common trigger for account closure, especially if the member has no other relationship with the institution. Credit unions often let these members go without any attempt to market other types of accounts to them. During phone calls made in closed account research, a significant percentage of these members express an interest in being contacted by the credit union to learn about other products and services. Ideally, members should be called three months before they pay off their loans. Even people who close their accounts to consolidate funds often simply lack education on what the credit union offers.
One institution was losing significantly more business members than it was adding. Concerned about the loss of these profitable members, it commissioned closed account research which produced two pivotal findings. First, it showed that the institution's computer system was dramatically over-reporting the closed accounts, generating erroneous data which could have led to bad decisions. It also revealed internal communication problems, system integration challenges and ignorance of how to access the system. These highly actionable research results allowed the CU to begin reversing the trend.
Worldwide, credit unions fare better during tough economic times than do other types of financial services companies. Particularly today, many people trust credit unions more than banks and are open to expanding their relationships with them. Don't let members leave without asking why. You can't retain members if you don't try. Let closed account research be the driver to fuel member retention.
Mike Anstead is VP of sales and service for Member Research and can be reached at 949-833-6901 or email@example.com.