New Strategies for On-boarding Your New Members

First impressions last forever–and drive growth!

SETTING UP THE STAGE

It’s Time to Look at Things Differently

• The types of members currently recruited.• Current member acquisition costs.• Attrition rates and the way new members are on-

boarded.• The way member communications are used to

cross sell and create loyalty.• Use of multichannel collaborative efforts.

The Impact

A 5% increase in money-losing members will

reduce Net Income by 37%. 

Source: http://bankblog.optirate.com/bank-and-credit-union-business-strategy-and-customer-life-time-value/#ixzz1yqZpy2Md

The Alternative

Growing profitable member segments by just 5% will cause Net Income to

spike by nearly 40%.

Source: http://bankblog.optirate.com/bank-and-credit-union-business-strategy-and-customer-life-time-value/#ixzz1yqZpy2Md

Cost to Acquire

Acquisition costs per member typically exceed $350

and with additional incentives

can increase to as much as $500.

Source: http://bankblog.optirate.com/is-gen-y-a-profitable-customer/#ixzz1lAwCTfBn

Lifetime Value

The average tenure of a member at a Credit Union is roughly 7 years.

• Not long enough to recover the accumulated operating losses.

Source: http://bankblog.optirate.com/is-gen-y-a-profitable-customer/#ixzz1lAwCTfBn

What’s your best cost estimate to acquire a new member?

The Real Story

• Data suggests that more than 90% of institutions under-estimate true Customer Acquisition Costs.

• Credit Unions continue to engage in member acquisition marketing campaigns that generate operating losses.

Source: Andera

Finding Profitable Members

• While creating awareness, mass media does not let you target high potential members.

• Finding and adding more unprofitable members has a negative impact on the institution’s health.

The Big Question

What percent of your members are most profitable?

The Real Value of Members

Source: Bank and Credit Union Business Strategy and Customer Life Time Value, September 2011

A Bigger Question!

Why spend $500 to recruit

a new member

with a high probability of attrition

and potential lifetime

value of $140?

Attrition Statistics

Annual Account Openings

Account Attrition 35%

Financial Loss Year One1

10,000 3,500 $1,400,000

25,000 8,750 $3,500,000

100,000 35,000 $14,000,000

1 Assuming $200 to replace account and $200 in lost revenue – A Case for Onboarding, Jim Marous

Source: Bank Marketing News

Changing the GameAnnual Account

Openings

Account Attrition

35%

Financial Loss Year One1

Saves with Onboarding

20%2

Financial Gain Year One

10,000 3,500 $1,400,000 700 $280,000

25,000 8,750 $3,500,000 1,750 $700,000

100,000 35,000 $14,000,000 7,000 $2,800,000

1 Assuming $200 to replace account and $200 in lost revenue – A Case for Onboarding, Jim Marous2 “Consistent customer communication begins with a comprehensive onboarding strategy, which can reduce new-customer attrition by as much as 50%.” – Peppers & Rogers Group

Source: Bank Marketing News

Do Something Different

• Communicate with your new members

• Show them that you care

• Be there for them

• Retain new members by building real value:• Additional product revenue

• Member satisfaction

• Loyalty

LIGHTS,

CAMERA…

ACTION!

Onboarding

1 1

Your Credit Union

1

6/20/13

On-boarding Success

Communicate now!• Relevance

• Channel

• Frequency

• Cross Sell

• Close Loop Marketing

• Track and measure

Discover Your Relevance

Discover the reasons to communicate with a new member:• Primary financial goals

• Preferred channel of communication

• What type of accounts they hold elsewhere• Future communications and product offers

And Also Fight Attrition

62% of customer defections

can be modified

if discovered in advance.

Source: SearchCRM, "Model modelers in predictive churn," By Michael Lowenstein. June 2002.

Check the following activities that you use to onboard a new member:- Telephone follow up- Personal letter- Survey- Postcards

- Email

Channel Importance

Right Message-Right Channel- Right Time

What Keeps You From…

Communication Strategies

• Data Modeling• Segmentation• Targeting

Studies show that email follow-up to a direct mail campaign can enhance results by

as much as 30 percent.Javelin Strategy & Research,

“New Account Onboarding Communication” (2007)

Frequency

“The first 90 days

is crucial for

making or breaking

a new member relationship” Kevin Roland

FedChoice FCU

Lanham, MD

TouchCampaign

Week Cycle Month Activity Purpose Note Response Trigger

1 week 1 (7) 1 CEO Letter Appreciation Welcome and thank you for joining PURL- with a reward offer or premium

2 week 2 (14) 1 Branch Letter Appreciation

Thank you! Meet our team and a listing of all available products variably driven by products that the member already has.

PURL- with a copy of their newsletter or convenience coupons. If no response was recorded from Touch 1, present again the offer.

3 week 3 (21) 1 Email w/Offer OfferWe are here for you…appreciate your business…product offer

Content Page-with offer base on entry. Include a form as response mechanism.

4 week 4 (28) 1 Postcard w/Offer Offer Determined by the client PURL- with a reward offer or premium

5 week 6 (42) 2 Email w/Fin Info Financial LiteracyOffer as determined by earlier response

Web Page-with offer base on entry. Include a form as response mechanism.

6 week 8 (56) 2 Postcard w/Offer OfferOffer as determined by earlier response PURL- with a reward offer or premium

7 week 10 (70) 3 Email w/Survey Appreciation

New Member Survey: List of product and services and measurement of customer service Web Page-with survey form

8 week 12 (84) 3 Postcard w/Fin Info Financial LiteracyOffer as determined by earlier response PURL- schedule a branch visit

The first 90 days…

Cross Sell OpportunityResponse to Cross Sell Efforts

Source: BAI, The Ninety Day Opportunity

Make it “sticky”

Reduce Attrition & Cross Sell

• You have a 50/50 chance of keeping a member who has only a savings account with your credit union active in the first year, but…• 10 times more likely to keep a member who has both a

checking account and a savings account.

• 18 times more likely to keep a member who has a checking account, a savings account and an installment loan.

• 100 times more likely to keep a member who has a checking account, a savings account, an installment loan and a safe deposit box.

Source: Effective cross-selling: How to build revenuehttps://www.cuany.org/access_files/.../ConnectionMarch12.pdf

A Big Question

Check the top three products that you would offer in an on-boarding program?

The more you know…

Static Personalized Highly Relevant

10x lift Right Time

Learning

Response Rate

20x lift

20% lift

5x lift Right Message

2x lift Right Individual

Source: Caslon & Company

Closed Loop Marketing

Data

Closed Loop Marketing

Data

Messaging/Channels

Closed Loop Marketing

Data

Messaging/Channels

Trackable Response

Closed Loop Marketing

Data

Messaging/Channels

Trackable Response

Capture Information

Closed Loop Marketing

Data

Messaging/Channels

Trackable Response

Nurture Activities

Capture Information

Closed Loop Marketing

Data

Messaging/Channels

Trackable Response

Nurture Activities

Revenue

Capture Information

Closed Loop Marketing

Data

Messaging/Channels

Trackable Response

Nurture Activities

Revenue

Best Practices

Capture Information

Proof Point• A $1.6 billion credit union in Texas developed a monthly

campaign based on next product potential, value score segments and P$ycle codes.

• Incorporated the ability to track response and areas of interest.

• Integrated hand off to sales. • Results:

• Loans and deposits of targeted members improved by 50% in first five months.

• The personal loan initiative alone generated $2.5 million in new loans, with a 534% ROI.

Source: Credit Union Business, The Lending Issue, Cross-Selling: 1 + 1 = 3 By Tony Rizzo July 2011

“Process” Not a “Program”

• Attract by knowing your members• Relate by on-boarding• Retain with effective cross-selling• Engage in regular communication• Reduce attrition and revenue loss• Grow membership life time value

ENCORE!

What Is Required to Realize this Opportunity?

• Relevance audit of existing acquisition strategies• Identification of top 10% of profitable members• Analysis of current member data to determine key

opportunity areas• Set realistic goals for return• Execute, review, modify and analyze• Repeat

Steve MillerDir., Financial Services Communications

smiller@cathedralcorporation.com

800-514-0546

Thank You!

Maria Del AmoDir. New Market Development

mdelamo@cathedralcorporation.com

877-451-2463

NAFCU Annual ConferenceUncover the Secret Within: Using Member Data to Strengthen Your Bottom Lineo Data miningo Member Segmentationo Targeted Multichannel

Wednesday, July 10th, 2013 @ 2PM