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 Game
Annual 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 Marous 2 “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
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
Touch
Campaign 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 Offer
We 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 Literacy
Offer 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 Offer
Offer 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 Literacy
Offer as determined by earlier response PURL- schedule a branch visit
The first 90 days…
Cross Sell Opportunity Response 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 revenue
https://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
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 Miller Dir., Financial Services Communications
800-514-0546
Thank You!
Maria Del Amo Dir. New Market Development
877-451-2463
NAFCU Annual Conference Uncover the Secret Within: Using
Member Data to Strengthen Your
Bottom Line o Data mining
o Member Segmentation
o Targeted Multichannel
Wednesday, July 10th, 2013 @ 2PM
