BAYTOWN, Texas -
The key, said representatives of John M. Floyd & Associates who both agreed that focusing on a credit union's existing membership will slow attrition and reduce the burden of finding a huge number of new members. At the heart of it all, they added, lies an age-old product relationship.
Executive Sales Director Richard Miller and National Director of Alliances Jared Cahill said years of research and consulting within the credit union industry has demonstrated clearly that even among select employee groups (SEGs), penetration rates remain below 20% and not much will happen until a CU gets the members all-important primary checking account.
"The prize in the game is the primary checking account. Everything stems from that," Miller said.
An Old Wisdom
While getting more members is always desirable, Miller cited the old wisdom that after a primary checking account is secured, members will seek out car loans mortgages or a line of credit. Cahill quickly added that Floyd & Associates recognize that credit unions are in an era of tight margins and "hyper-competition," but in the end talking about it won't make much difference: credit unions have to compete with a full range of products or they'll lose the members they fought so hard to attract.
"We believe there is no neutral ground. You're either growing or you're a merger candidate," Cahill said.
Miller cited as an example Bank of America's recent annual report. I proudly reported that it had added 1.2-million new checking accounts. That's due in part to the bank's national banking strategy. To offset this "branch on every corner" campaign, Miller said he first advises credit unions to make job number one an emphasis on expanding accounts-per-member, beginning with those who have just a single share account.
Getting Re-Engineered
To get to that point, credit unions should "re-engineer" the entire organization with an emphasis on a sales culture, the critical component being sales training and sales-based bonus compensation for the front line.
But before unleashing those employees on members, Miller cautioned that a credit union must also undertake a comprehensive review of the product and service menu and its competitiveness.
"Today's product line has got to include certain things or you're not going to attract members," Miller said.
Cahill said no credit union can simply rely only on member loyalty for a larger size of their wallet and that simply being small is no longer an excuse. In the age of large Internet-based banks, nonbanks with aggressive lending rates, and a BofA or Citibank seemingly on nearly every corner, credit unions need to get busy, he said.
"Between CUSOs and leagues, find a way to do it. You can't weather the storm. You'll come out of it with fewer members," Cahill said. "We need to lose this 'Our members are loyal and they love us' attitude."
Miller said every credit union already has plenty of members already signed up who need to be reached on a regular basis. A one-time marketing program or adding one more product, won't cut it.
"A lot of it is just hard work," he said. "Your product line has to be in this millennium."
One way to achieve this end, he advised, is to remove routine, busy work off the teller or MSR line and put it into the hands of someone who isn't interacting with the members. Miller said an MSR doing data entry on new accounts doesn't have time to shake hands or look a new member in the eye and learn what his or her needs are.
Free The Front Line
"Move it out of the front room and get it out back. The idea is to free the front-line people," Miller said.
Miller said after shifting work to its proper area, a credit union needs to create a sales training and incentive program that ensures frontline staff have the time to create a true relationship with members. Miller emphasized that if an MSR's work routine stays the same, a new "sales culture" won't succeed, as they won't have time to do it. In fact, a front office employing filling out forms might come to see a member as a hindrance or someone in the way of their work.
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