Credit union marketers have been so busy trying to attract new members they’ve had precious little time to consider what might happen if they were wildly successful. Bank Transfer Day—Nov. 5, 2011—and the months surrounding it saw hundreds of thousands of consumers join credit unions. That qualifies as “wildly successful.” The new challenge for credit unions: Now what?
Suddenly, the credit union conversation has shifted from attracting new members to welcoming new members. That puts member onboarding strategies on center stage.
Onboarding traditionally has been a concern of the human resources department. It had to do with the quality of a new employee’s first 60 or 90 days on the job. If a new employee felt welcomed—was given a mentor, took part in orientation, and was quickly embraced by a team or work group—that person would probably become a productive, long-term employee. If not, that new employee felt neglected or isolated, and was more likely to move on.
Now, onboarding strategies are a key component of member relationship management. These strategies help credit unions convince new members to move beyond solitary account relationships and use checking and deposit accounts, online banking, bill payment, mortgages, and other products and
Lessons of November
Bank Transfer Day highlighted the need to roll out the red carpet to new members. The Facebook-fueled campaign encouraged consumers to move their money from big, national banks to credit unions and other local, community-based financial institutions that charge lower rates and fewer fees.
Many consumers answered the call: Credit unions added approximately one million new members during the fourth quarter of 2011, according to CUNA estimates. In addition, there was 7.2% annualized growth in the number of share draft accounts for fourth quarter 2011 compared with an average quarterly growth rate of 3.2% from 2008 through 2010, NCUA reports.
Fueling the Bank Transfer Day movement were young consumers who embraced its social marketing approach, says Mike Schenk, CUNA’s vice president of economics and statistics. That makes the event and its aftermath “a tremendous opportunity for credit unions to gain ground in attracting young adults, an underrepresented membership segment.
“While these young members will initially bring deposits to credit unions, in the long run they’ll also bring loan relationships with them,” Schenk says. “This will be a very positive development over time.”
Holding on to these new members, he adds, will depend on how well credit unions:
“What matters most isn’t the exact number of new members gained,” Schenk says, “but what credit unions do with these new members.”
The fourth ‘bucket’
Consumers who switch financial institutions typically fall into one of three buckets, says Ron Shevlin, senior analyst at Aite Group. Consumers switch because they experience:
Bank Transfer Day represents a fourth bucket of motivation by appealing to those who want to do business with a different type of organization. Shevlin says that makes Bank Transfer Day a one-time event rather than an ongoing pipeline of new members.
“Long-term, sustainable growth will come from better product performance and better customer service over time,” he says.
Shevlin says an effective onboarding process requires collecting information about members through brief surveys that explore satisfaction with the new relationship, their preferred communication channels, products they currently use, and when they expect to need certain products such as mortgages or auto loans.
He advises credit unions to focus onboarding efforts on new members who use products that offer a high potential for ongoing interaction, such as checking accounts or credit cards. Members who join through accounts that require minimal interaction, such as indirect auto lending, are less likely to be receptive to your onboarding efforts.
Next: Touch points