by Justine Rivero, CreditKarma.com
Do you know what your members really want and need from your product line? Do they want more financial products, or less?
Conventional wisdom tells us that the more choices given, the happier the consumer. Think big box warehouses, health insurance options, women’s jeans, and grocery aisles with forty kinds of detergent: the more variety of choice, the more likely every consumer will have their needs met.
However, a recent study from the Filene Research Institute, “The Psychology of Choice Overload: Implications for Retail Financial Services,” reports the opposite effect: when given too many choices, whether it’s a variety of credit cards or loan options, consumers grapple with information and decision overload. Difficulty over deciding can lead to decreased satisfaction, or worse, consumers simply walk away from both options.
What does this mean for your credit union?
Ease of choice—not necessarily a wide assortment of choice—is what members want, and financial guidance is what members need. Thus, credit unions should provide guidance based on members’ needs, and not based on products available. The key isn’t to reduce the financial products, but rather present the most appropriate product based on members’ need.
Your credit union employees are seen as financial experts to members; they should be able to tell members, “This is a right financial choice for you, because…” Members are looking to your credit union team as advisors to provide support and guidance on all their financial questions.
Here are a few ideas on how to start organizing member choice by focusing on members’ needs.
1) Ask relevant questions. The first step to knowing what to recommend is knowing what members need. Sure, every member wants a credit card, but what are they really looking for? A card with no fees? Rewards points? Or maybe they want more control with spending, and they actually need a debit card instead. Employees should spend time asking relevant questions to find out what members need so you can deliver the appropriate financial solution.
2) Know how to give a recommendation. Based on what your members say they need, survey your financial products and give a recommendation, and most importantly, give the reason you recommend it. Ever been in a restaurant and asked the waiter whether they recommend the dry-aged rib-eye versus the swordfish? It’s disappointing when they aren’t familiar either option; it’s their job to know the menu. However, when they give a compelling recommendation, you are likely to take their word for it and feel confidant you’ll enjoy your dinner. Similarly, your employees should know how to choose the right financial product and give a strong recommendation as to why that product is the right choice.
3) Give members tools. Beyond being a financial expert to your members, be a financial advisor that puts the right tools and resources in members’ hands to educate themselves on their financial decisions. For example, your products themselves should be simple and easy to understand. Are the descriptions and terms of your products boiled down simply to one, easy-to-understand page? They should be. Additionally, provide financial services that better educate members and empower decision-making. Great examples, often provided free to members, that credit unions are already implementing include:
- Mobile banking and payments software like Mobile Money provides credit union members the ability to manage their money on the go.
- Credit Karma’s Free Credit Score for Members provides credit management services for members, including the ability to check and track their credit score.
- Budgeting software like BudgetSmart give members free budgeting software to track their spending and plan their budgeting goals.
- Financial education and counseling through programs like BALANCE provides resources from free counseling services to bankruptcy prevention to assist members.
- A suite of financial management tools, like FinanceWorks, gives members the ability to manage all their accounts in one place.
While your own employees may know your financial products in and out, can they identify what your members need and connect it to one of your tools or products? In the world of options out there, ask yourself what your credit union doing to provide guidance and help members navigate the market.
Bottom line: curate your credit union’s financial products, not just proliferate.
Justine Rivero is the Credit Advisor for CreditKarma.com, the pro-consumer credit advocate that helps more than 3 million consumers realize the everyday cost savings of having great credit health.