Are Your Members Stuck on You?

by: Ron Daly, President/CEO, DigitalMailer, Inc.

I recently had the privilege of presenting at a marketing symposium that focused on how to attract new members and retain existing ones. The conversation included how to be different than the rest and getting members to become “sticky.” Every executive understands the value of “stickiness” – a company’s ability to retain its customers.

For many organizations, stickiness is achieved by cross selling; the more products or services a customer uses from a single company, the less likely they are to take business elsewhere. Products mentioned included reward checking, direct deposit, bill payment, mortgages, PFM and investment services.

All interesting products but are they reasons for members to stay with you or move to you? Last year’s Bank transfer Day was a boon for credit unions as consumers expressed their ire at banks that where charging fees for their accounts. BTD’s call to consumers to move their business from big banks to credit unions and community banks is credited with hundreds of thousands s of consumers switching their relationships to credit unions. The question we should ask is …. Did they move because credit unions were different or that they just didn’t charge fees?

Consumers are more financially “aware” and know they have choices – including credit unions. When consumers are looking at their financial choices are you on the list of options? How do you differentiate yourself from the competition?  Do you offer something else that no one else has?

Here is a challenge for you – write down what you believe is your organization’s unique value proposition, i.e. the reason a consumer moves to you or stays with you. The only rule, you cannot use the words service, people, rates or fees.

Now, write down what you think the credit union or community bank down the street would write. Are they different than yours or the same? Most credit unions are busy trying to be the same (or catch up) to banks and may have lost sight of how to be different. Members can’t be stuck on you if you are the same as every other choice out there. Adding a technology or a new service and checking the box doesn’t create differentiation. It’s how your organization uses that technology or service to make yourself unique. That is the differentiator and makes your credit union relevant and sticky.

Keeping members attached

BTD’s influence continues today.  Research by Javelin finds that consumers remain frustrated and dissatisfied with large banks:  11 percent say they are thinking of changing to another PFI this year. At Bank of America and Citigroup, one in four customers is thinking of switching.  And while Javelin doesn’t give all the credit to BTD, the research firm found that in the three months following the November push, 5.6 million Americans changed banks, a number that’s much larger than normal.

Rest assured there will be other bank transfer days where your credit union can gain and lose members. So ask yourself – what would it take for you to change your bank or credit union?  In many ways, credit unions and banks have naturally been sticky businesses because customers feel it’s too much trouble to change various accounts and switch to other institutions. Unless they have a really good reason for leaving, it’s always been easier to stay put.

Times are changing, and so are some consumer behaviors of the past – like putting up with higher fees and below-average customer service.  People are bolder and more assertive about what they want and are seeking the best value. For them, fair treatment is worth making a move.

What are “sticky” differentiators?

For many, new technologies and remote convenience services hold the answer. With more than 87 percent of Americans now owning cell phones and almost 50% of those being smartphones, mobile access and communication is getting more attention than ever. A December 2011-January 2012 Federal Reserve study found that 21 percent of people say they have used mobile banking in the past year, with another 11 percent reporting plans to use it. But for now, mobile banking is most often used to check account balances and recent transactions (90 percent of users). Only 12 percent of cell phone users reported making a mobile payment in 2011. To grow your credit union’s stickiness, adding a feature-rich, highly convenient mobile application or two may be the right move.

Credit unions also are seeing different member needs related to the security, accessibility and storage of financial documents. One service that increases stickiness and ties in with PFM initiatives is helping members organize and store their financial and personal identity records. Northwest FCU’s ($2.4 billion, Herndon, VA) offers this service through My Virtual StrongBox. This type of program offers far more than the free file storage sites you find online; it provides ways for members to place important documents into their trusted credit union partner’s safe, encrypted, online document library. Consumers can easily store and retrieve wills, birth certificates, insurance policies, deeds, titles and other essential papers.  Documents and records in My Virtual StrongBox aren’t easily portable, so Northwest FCU members may think twice about closing online services that hold all their records.

One final thought

Consumers’ expectations about what they want in their PFI are changing, and credit unions are well-poised to accommodate them.   Rather than the goal be to have members “stick” because it’s too painful to leave; shouldn’t credit unions aim for members to “stick” because there is no better place to go that meets their financial needs?

Ron Daly is the President/CEO of DigitalMailer, Inc., a company helping credit unions connect with members through the latest online technologies, including Social Sentry, a social media risk monitoring system. To learn more, visit www.digitalmailer.com or call 866-994-4900.