What credit unions can learn from Amazon in a recession
Amazon’s CEO Jeff Bezos described the coronavirus to shareholders as “the hardest time we’ve ever faced.” It’s a reminder that we are all experiencing this shocking time together. Yet, Amazon will emerge from the pandemic and resulting recession stronger than before. Why? Using the same playbook they have become famous for: relentless focus on the customer.
For credit unions, member focus has always been close to the heart – but truly delivering on it, especially during a recession, is another thing.
When the economy is in good shape, all organizations have the incentive to produce as much as possible, and rough spots tend to get glossed over by a sense of winning. Diverting resources to invest in new technologies, when business is already booming, seems like leaving money on the table.
But when the business climate is stormy, and operations aren’t humming at maximum capacity, it opens capacity for IT initiatives without dampening sales. For that reason, adopting technology actually costs less, in a sense, during a recession.
And the top priority for most credit unions today should be investing in technologies that speed their digital transformation toward better insights into helping current members and attracting potential members ahead.
Bezos understood this years ago, and he fueled his relentless focus on the customer by investing in more data – and better technology to effectively deploy it – than anybody else. He built the infrastructure of insight from the very beginning. As a recent Fortune piece framed it, “Since the day Bezos founded Amazon in 1994, it has essentially been a data-driven company that just happened to do retailing.”
Asking “what needs solving for the customer, nevermind common wisdom?” has Amazon continually pushing the limits of experience – and when any company is pushing the limits they are taking on additional risk. Take the offering of Prime, which executives at the time thought was utterly crazy – until it became their engine for loyalty and growth.
Indeed pushing the limits of anything has risk. And, certainly, Amazon does make mistakes. Remember the Fire Phone? Neither do the rest of us. But you can be certain that Amazon remembers it well, and that they learned and took that knowledge forward with them became an asset.
Within financial institutions more than many other sectors, risk is almost always and only a thing to be mitigated. But taking a calculated risk during a downturn can pay multiple dividends in the long term. How can credit unions place the right bets now, when they have the most to gain? Start by asking the following questions:
- Who are the ideal members for our unique credit union and what we do better than anybody else?
- Do we understand everything we can about these ideal members, and what they really need from a financial institution now? Not common wisdom, but real insight.
- Where and how do we connect with more of these ideal members, including lowering barriers for them to join our credit union?
- Which members are driving profit to the overall organization? And notice the important separation of ideal members and profitability here. Although profit is very important to every organization, quarterly profit metrics (for example) alone should not be driving the entirety of credit union decision making.
How do we go about answering these questions – to take a page out of Amazon’s book for success? In other words, becoming more of a data-driven organization that just happens to be a credit union?
Number one is to segment and categorize your member data. A Customer Data Platform (CPD) like our Strum Platform does exactly this by helping you better understand – and actually visualize – your first party member data, coupled with third party appended data to enrich your understanding of members as well as prospects in your market.
Number two is to model the data for predictions, anticipate churn, purchases, and to understand profit at the relationship level – all so that when you are able to act, you know how to maximize the impact.
Number three is an honest assessment of what products your members are using, what products are they not using, and what’s missing from your basket of offerings.
Number four is to always be asking: how can we make this experience more seamless and even easier for our members? Ask this over and over again, every day. That’s what Amazon does.
If this is the hardest time that billionaire Bezos has ever faced, there can be no doubt that your members are feeling strained and scared and overwhelmed in new ways right now. Building the infrastructure to understand them better, and actually get them what they need faster and easier – doing this during a timeframe when everyone is especially stressed – will enable your organization to not only survive but to pull ahead for continued growth long after the recession is over, just like Amazon will.