Combine Member Information with Sound Judgment

CUs are taking a more personal approach to member service.

January 6, 2013

When it comes to your members, you know more than you realize. Thanks to modern data archive and customer resource management systems, there is now little shortage of member information—both individually and in aggregate.

The challenge is no longer what a credit union knows about its members, it has become how to access that information, incorporate it in real-time, and respond to it with each transaction.

Across industries, business customers expect personalized attention. For example, savvy restaurateurs understand the importance of knowing their regular diners’ names, food allergies, or favorite bottle of wine. Fund-raisers know which hot-button issue will likely generate a contribution, and customize their appeals to maximize response.

Likewise, credit unions have taken a more personal approach to their members’ banking. Tellers are encouraged to recognize and greet members by name, and credit offers are customized to meet the specific situation of each borrower.

Increasingly, specific information about each member is used to better respond to each transaction. In fact, credit unions frequently cite superior member management as a key differentiator when attracting and retaining members.

Front-office employees often have qualitative information that can enhance strategic decisions and should be included in back-end data systems. Conversely, detailed member data needs to be instantly available when making member-facing product decisions.

Unfortunately, there remains a disconnect between the front-office personnel handling transactions and the back-office information repositories where member data is stored. Credit unions must bridge this gap if they are to develop an effective member-centric strategy.

Designing and implementing a member-centric strategy increases loyalty while ensuring uniformity to deposit product offers, lending decisions, or discretionary fee waivers.

When effectively deployed, these strategies not only help credit unions understand why a member may ask for an exception—to match a competitor’s offer, for example—they document these decisions into future back-office decision processes.

Building a member-centric strategy

A member-centric strategy is not simply about providing good service; it requires planning to manage the many sources of client data and increasing number of transaction points. This means taking a holistic look at member strategies and ensuring that each transaction process serves the common goal.

While each transaction—regardless of where it originates—should be personalized for the member’s individual expectations, it should also increase revenue, reduce member attrition, and improve the member’s experience.

Building a member-centric strategy involves taking a four-part approach:

This first step toward a holistic member-centric approach is to have a strategy. Quantify all information available about each member, whether from internal systems of record or external data sources, and ensure that this information is readily available whenever required. This information should include critical qualitative input from member-facing staff.

Let’s look at an example of this.

While traveling on vacation, Joe Eyesaver buys three pairs of sunglasses (one for himself, his wife, and his daughter). Unfortunately, Joe’s credit card issuer declines the transaction, citing triggers of fraudulent behavior (people usually buy sunglasses one pair at a time).

Generally, this might be a good fraud-prevention strategy to prevent unnecessary losses, but this purchase is anything but fraudulent. In fact, when Joe calls the credit union he is quick to point out to the call center rep that he used the same credit card to purchase his airplane tickets to the location city where he was making the purchase.

Unfortunately, in most cases this qualitative member feedback will never be integrated into proactive service strategies. However, the credit union that does so will have achieved a measurable impact on member experience and lifetime value.

A more general example of this applies to deposit accounts. A credit union may consider lowering home equity lines of credit because of home price depreciation on members with hundreds of thousands of dollars in deposits. This decision strategy does no favors for the member or the credit union.

Strategies should allow for insights from member-facing employees, who should be empowered to provide insights best discovered through member interactions. Actively engaging member-facing staff to align strategy designs with practical real-world experience will improve adoption, satisfy members, and meet objectives.

This collaborative approach ensures complete adoption from member-facing bankers and measurable member experience improvements that are quantified by improved member retention and new member acquisitions.

Starting with a pilot project, launch the roll-out. This should include mechanisms to adjust the strategy and update data as the project advances.

Next, measure member response both in terms-of reactions to changes in member service levels and in responses to product offers.

Finally, keep a scorecard: Measure the results as they apply to the organization’s long-term goals.

Establishing objective measures of success is critical to making sure that the piloted strategy meets financial hurdles without creating attrition with existing members. Regardless of what’s being implemented—such as deposit product fee management policies, time deposit rate exceptions policies, servicing strategies, or risk assessment models—it’s critical that members are served by these strategies.

Establishing clear metrics for success and monitoring these metrics ensures consistent outcomes.

Boost long-term competitiveness

Credit unions that successfully implement holistic member-centric strategies immediately improve operating efficiencies. The resulting member treatment strategies are easy to understand and apply consistently across the enterprise, resulting in improved member service as members come to appreciate the value of their relationship.

Investing in member-centric strategies can ensure a credit union’s long-term competitiveness by differentiating the organization from its competitors and by training employees to pay attention to what is most important to the best members.

JOHN TAYLOR is a senior business consultant with Experian’s Global Consulting Practice.