Member vs. community mortgages for credit unions
There is a saying in the marketing world: “it takes months to find a customer and only seconds to lose one.”
This marketing truth goes directly to the heart of the common business dilemma—is it better to target current clients/customers or is it better to look outside for new ones? Let me go ahead and resolve that dilemma for your credit union: reaching out to current members to generate more business is a far more effective tactic than reaching out to the community to obtain new members or customers.
This is, first, because gaining new customers is more expensive than connecting with your existing customer base. Many sources estimate that it can cost at least 4-6 times more to earn business from a new customer, than to retain a current one. Picture your available market as a fruit tree. Your current members are the low-hanging fruit, easily reachable. All others are harder to reach. Which fruit requires the least effort?
Another benefit that comes with focusing on existing members is an increased probability of success. Let’s compare the two: the probability of selling to an existing customer is 60-70% while the probability of selling to a new prospect is 5-20%. I don’t know about you, but I like the first odds much better. Think about that—not only will it cost you less to market to your existing members, your sales-conversion rates will be much higher. Again, when you picture the fruit tree, imagine that your members are the “ripe and ready” fruit that will easily fall off the branch, but those not yet your members will require a lot of work and money to move them into your basket.continue reading »