Member Growth Strategies
CUNA survey reveals low awareness of CUs, changing attitudes, and fickle financial preferences.
For the first time in three years, Partners Federal Credit Union, Burbank, Calif., saw a positive net membership growth of 2.2% in 2010—about triple the national credit union membership growth rate of 0.7%.
Partners Federal, $938 million in assets, is just getting started; it’s aiming for 4.5% membership growth for 2011. The effort revolves around one core principle that drives Partners Federal: Provide top-quality service based on solid information about members’ needs.
“You need to find your unique tie to the community you’re serving—your unique proposition,” says Mike Terzian, the credit union’s vice president of marketing and business development.
Terzian believes this approach can work for any credit union, with any type of membership base. Partners Federal has one sponsor—The Walt Disney Co.—which is made up of about 200 different companies. All Disney employees are known as “cast members,” including the people who work at the credit union.
“So our unique proposition is that we’re cast members serving cast members,” Terzian says. That means the credit union staff promise to deliver the service quality that fellow cast members are used to giving and receiving every day on the job.
“The Walt Disney service level is legendary,” Terzian explains. “So the bar is already high, and we have to provide that same quality of service. “
It’s a tall order but essential in the current market. Opportunities for credit union growth remain plentiful, according to CUNA’s 2011-2012 Survey of Potential Members, but the window of opportunity could be narrowing as consumers’ opinions of banks begin to bounce back from record lows.
Where’s the growth?
Credit union membership grew to nearly 92 million at the end of 2010, with about one-third of U.S. adults belonging to credit unions. Still, stronger membership growth remains an elusive goal.
In the 1980s, annual average membership growth rates were about 4%. They’ve been declining ever since. In recent years, the growth rate slipped from 1.4% in 2009 to 0.7% at the end of 2010.
Such results are especially disheartening in light of the wave of positive publicity credit unions garnered in the past two years. Numerous media ranging from The Huffington Post to The Wall Street Journal extolled credit unions as a better option than banks.
The sluggish membership growth rate stands in contrast to nonmembers’ perceptions of eligibility for credit union membership. Among nonmembers, 81% say they either know they’re eligible or could be eligible for membership, according to the Survey of Potential Members. That compares with 72% in 2008.
The gap between membership and eligibility is evident in the 18-to-24 age group. In this group, 90% of nonmembers say they know they’re eligible or could be eligible to become members. That’s up from 84% in 2008.
If so many consumers know they are or might be eligible to join credit unions, why aren’t they acting on that knowledge and becoming members?
Consumers’ familiarity with credit unions’ unique benefits and not-for-profit business model might be part of the problem. Among nonmembers, 33% are “very” or “somewhat” familiar with the services and benefits available at credit unions, the same proportion as in 2009. Among young adults, that drops to only 3%, down from 25% in 2009. Levels of familiarity have hit rock bottom among young adults at a time when credit unions have been getting a lot of positive media coverage.
What nonmembers want
What do nonmembers say would convince them to begin using credit union services? The top five needs, along with the percentages of nonmembers who selected each one, are:
- More branch locations convenient to home (37%);
- More free ATMs (35%);
- Better information on services, rates, fees, and advantages (30%);
- Higher savings rates (29%); and
- Lower service charges and fees (25%).
Credit unions bucking the dismal membership trend and achieving solid membership growth do so by meeting these needs head on.
Partners Federal delivers stellar service based on several strategies. It has a member service advisory council in each of its three markets: Orlando, Fla., and Burbank and Anaheim, Calif. Each council acts as a sounding board and builds stronger member relationships within their respective communities.
“We get good, down-to-earth information on what’s working and what isn’t,” Terzian says. “The council members also build excitement about the credit union. It’s amazing how fast they can spread the word about our promotions and initiatives.”
Another service element is enabling cast members to conduct their financial affairs “at work, at home, or at will” through conveniently located branches, online banking, and mobile banking. The credit union also builds relationships with different Disney companies, such as by doing a car loan promotion around the release of the movie “Cars 2.”
These strategies and others deliver on the “cast members serving cast members” promise—that unique proposition, as Terzian calls it, that helps Partners Federal attract and retain members. Don’t merely talk about service as the credit union difference, Terzian suggests, but “bake it into everything you do.”
A window is closing
For the past two years, credit unions have had a prime opportunity to promote their service orientation while many nonmembers looked for an alternative to banks.
In 2011, however, consumers’ opinions about banks seem to be on the mend. Is the window of opportunity closing? Will credit unions act quickly enough?
A lot of bank advertising now projects a customer-focused, trustworthy image. The image repair work seems to be reaping some benefits.
Nonmembers’ satisfaction with their banks has rebounded since CUNA’s Survey of Potential Members two years ago. Two-thirds of nonmembers now claim to be “very satisfied” with their banks, and 30% are “somewhat satisfied.” These figures compare with 55% and 37%, respectively, in 2009.
Fourteen percent of nonmembers say they’re more satisfied with their banks than they were a year ago, 78% are equally satisfied, and 8% are less satisfied.
A related survey points to a significant gap between the satisfaction levels of credit union members who use banks (50% very satisfied) and nonmembers who use banks (66% very satisfied). This raises interesting questions:
- Could the gap be affected by the fact that members using banks have experiences with both types of institutions?
- Are members less satisfied with banks, at least in part because they compare their bank experiences to those they have at their credit unions?
- Can credit unions convince nonmembers of what bank-using members seem to already know, that the grass can be greener at the credit union?
- Although consumers’ confidence plummeted regarding banks in general, they’re happy with the particular bank they use, according to a 2011 Ernst & Young study. Seventy-seven percent of consumers give their own banks a four on a five-point satisfaction scorecard.
This is in line with CUNA’s survey findings, which note that 96% of nonmembers say they’re at least “somewhat satisfied” with their banks.
The Ernst & Young report goes on to tell banks that the keys to success in the future will be brand management, personalized service, and efficient pricing. Ironically, those strategies come right out of the credit union playbook.
Next: Opportunities abound
Opportunities for growth remain abundant. To grow, credit unions must not only boost their appeal to consumers overall, but they also must target their messages and outreach approaches to different subgroups among potential members. They need to know where the strongest possibilities lie for attracting more members.
According to the Survey of Potential Members, three key market groups that credit unions simply cannot afford to ignore are:
- Baby boomers;
- Hispanics; and
- Youth and young adults.
Looking at consumer penetration by age groups, the lowest penetration levels are among consumers ages 18 to 24 and those age 65 or older. Only 23% of adult consumers ages 18 to 24 belong to credit unions. That’s similar to the 27% of those age 65 or older who belong. Nonmembers in these age groups are prime candidates for credit union membership.
Nonmembers younger than age 18 represent another prime opportunity. It’s estimated that about 19 million young potential members live under the same roofs as your adult members. Offer your adult members—parents, grandparents, and other relatives—incentives for signing up these younger consumers who represent your credit union’s future.
Instant iPad Service
Like millions of Americans, Brett Wooden couldn’t wait to get his hands on an iPad. He got one the day it first came out, as an early Father’s Day present from his wife.
Later, Wooden, business development manager at $837 million asset Unitus Community Credit Union in Portland, Ore., had an idea. Part of his job is going out to meet current and prospective members and to open new accounts. Why not take his iPad with him?
“One of the challenges I faced was that I had to do a paper application,” he says, “and then members had to come into a branch to fund the account. That’s time-consuming, and it was difficult to get people to do that.”
With the iPad, he could use the credit union’s online account-opening application and have the member fund the account electronically on the spot. Soon, after members
raved about the new convenience, the executive management team decided to buy iPads for all business development officers.
They use the iPads in the field to sign up members, take loan applications, and sell additional online services. “We can do pretty much anything on the iPad,” Wooden says.
Reaching out to young adults was the initial objective. “They want things instantly,” he says. “Plus, we’re meeting them in their environment, where they’re comfortable.”
Wooden has found the iPad account signups to be popular with older members, too. “Executives, for example, can’t get away to come into a branch, so we meet them right at their offices.”
Before using the iPads, the business development team averaged 67 new members per month with a cross-sell ratio of 3.3. Soon after starting to use the iPads, the new-account average jumped to 102 per month, and the cross-sell ratio rose to 3.9.
Overall, the iPads are a hit with members. During an on-campus event at Reed College, Wooden signed up 18 new members in only four hours.
“We’re often sitting next to bank representatives at these events,” he says. “Having iPads with us makes us stand out.”