LOMBARD, Ill.-There is no shortage of strategies being rolled out in the wake of Bank Transfer Day.
Debit and checking promos. Member data mining. Solid credit card offers. Ramped-up front-line sales. Member education around how to use the credit union. For some they are standalone strategies; others are deploying the approaches in different combinations, according to numerous sources interviewed by Credit Union Journal about what now needs to happen in the industry to take advantage of all the attention credit unions are receiving now.
Whatever credit unions do, they better do something and get started soon, advised Bill Handel, VP of research and development for Raddon Financial Group. "This industry tends to be very reactive from a sales side. I think a major shift has to occur and credit unions must take a much more proactive approach to these new members."
To Handel that means setting sales goals and objectives that are tracked, and making sure the right people are in place with the right sales tools. "It goes back to some of the things credit unions already do, like onboarding. They just need to be more rigorous with them."
Time is already slipping away, said Handel, because the ability to get new members to pay attention to an offer is the greatest in the first 90 days after sign-up.
"One thing you want to do is make sure you always pull the credit report on every new member, regardless of what they come in for, so you can look for lending opportunities," Handel said. "This is a very good time for credit unions. But if they treat new members the way they have always treated them in the past, a lot of credit unions could get hurt by this business. Banks are jettisoning the accounts they no longer see as profitable following cuts in overdraft and debit revenue."
Sign Up & Follow UP
In Tukwilla, Wash., the $9.5-billion BECU is making the most of new members who are signing up at about double the normal pace during the last three to four months (Credit Union Journal, Jan. 23). Consumer loan apps were up 74.8% in November, and 52.7% in December over Dec. 2010 thanks to the front-line team being highly skilled consultative sellers, and then following up with new marketing and onboarding processes that rely on efficient electronic communications.
Bob Giltner, chief DDA strategist for Velocity Solutions, Wilmington, N.C., contends that credit unions can deepen relationships by promoting the use of debit cards. "The number-one measure of whether a member has really switched is if they are swiping the CU's debit card. I am going to give incentives for swiping the card more. Not only will interchange and overdraft fees increase, but the credit union will get deeper relationships. So many other products follow from the use of debit."
Omega FCU is making two moves CEO Troy Garvin says are deepening relationships. OFCU has brought credit cards back in-house, and it is also mining the data is has on the new members coming over from banks. "Almost like the old indirect program-how do we take them from a base payroll-deduction-type of member and make them more profitable."
The $85-million Pittsburgh-based OFCU has also instituted a sales and service culture that is backed by software that prompts tellers at their terminals when a member who is a cross-sale opportunity stops in.
The strategy at the $108-million California Bear CU in Los Angeles is to sell the new members a checking account and then other products follow. CEO Robert York said the Freedom checking account-a free account that pays members $5 each month when they swipe their debit card tens times or more-itself is profitable. He explained the account has significantly raised debit card transactions, and only about 300 of the 2,500 checking account-holders make the ten-swipe minimum each month.
"We make about $4 to $5, on average, on debit transactions per checking account each month. Out of every ten new accounts we are getting, we are selling seven checking accounts."
York added that at his credit union members who have a checking account are 30% more likely to take out a loan. The CU pulls a credit report on the new members to find the best loan targets and gives them pre-approval.
Drink the Kool-Aid
Roy MacKinnon, VP-marketing at the $910-million First Entertainment CU in Hollywood, Calif., said FECU will focus on educating new members about what a credit union is so they see the value and deepen relationships. "We have to get our front-line staff to make the new members drink the Kool-Aid."
But the education process must also help with member retention, giving CUs the chance to build relationships. MacKinnon said FECU will communicate about how to correctly use the CU, and work to change some of the new members' mindset.
"It is my job as a marketer to make sure these new people know that we really are as convenient, or in many cases more convenient, than mega-banks," said MacKinnon. "Help them understand about the network of 28,000 surcharge-free ATMs nationwide. BofA has 16,000 ATMs. We are more convenient, but it's a matter of new members changing their behaviors. Yes, you kind of have to hunt out all the ATMs-call the credit union, check the Internet, or use the ATM locator on your smart phone. Or, when you pay for groceries, ask for cash back. It really isn't that big of a behavioral adjustment, but it is an adjustment."