As recently as 1999, Orange County's Credit Union's method of membership development could best be described as passive. But that changed after the credit union realized it was missing out on a potentially large market, and it created a business development team that is now being credited with driving more than a quarter of its growth.
The team has been charged with focusing on multiple-product relationships and aggressive marketing in order to attract new members and cross-sell to existing members.
The results have been very positive. In 2001, the business development team -which is comprised of Business Development Manager Jason Lindstrom and account executives Alan Stobaugh, Jonathan Pankow and Karina Higareda-was credited with bringing in 1,775 new members to Orange County's Credit Union, representing 26% of total new member growth for that year.
"What we have challenged the business development team with in the last 18 months is to move from a quantity goal of getting members to getting more quality members and really demonstrating what the value of having a solid relationship with the credit union is," said Lynda Hill, the credit union's vice president of marketing and business development.
Orange County's Credit Union defines "quality members" are those who have multiple services with it. OCCU measures the success of its business development efforts in terms of the services members use at the credit union. In 2000, Orange County's Credit Union's services-per-new-member ratio was 1.299. At the end of 2001, it had increased to 1.970-a 52% increase. In comparison, its branch network's services-per-new-member ratio was 1.480 in 2000, and had increased to 1.899-a 28% jump by the end of 2001. In addition, the average profitability of members acquired through the business development program increased 11% from 2000 to 2001.
"Today, in business development, we're not defining a solid or quality member by the channel new members use, but by the depth of the relationship they have with us," Hill said. "We're taking it one step at a time with the sales force. Our goal for new members is two services minimum, for example, a share and checking or a share and loan. For the first quarter 2002, we achieved 2.003 services per new member. 37% opened a checking account. Additionally, 31% received a debit card and 12% signed up for online banking. So, without making it mandatory, our Account Executives are still promoting the value of these convenient delivery channels, which enhances the quality of the member and their contribution to the credit union.
"We want a win-win relationship. We want to work with companies that will benefit from our services, while the credit union will benefit from having their employees as members."
Hill, who came to the credit union in 1999, said that a major component in the philosophy shift was that the credit union began recruiting employees with more of a sales mindset.
"We then made a conscious effort to define the kind of SEG we would want to work with," Hill explained.
Orange County's Credit Union's management identified desirable SEGs as those with a minimum of 50 employees; that had a dedicated human resources person so it could develop that relationship and have a point of contact, and which offer direct deposit. The credit union also developed an incentive program for its account executives.
How Incentives Are Structured
OCCU has structured its incentive program with monthly thresholds for the following:
* Services Per New Member.
* Percentage of new members with checking.
* Percentage of new members with any loan
* Number of new checking accounts opened by existing SEG members
* Number of new loans opened by existing SEG members
Those numbers are tracked monthly and paid quarterly on a sliding scale, once the monthly threshold is met.
Besides recruiting new SEGs, account executives are responsible for enhancing relationships with existing SEGs.
"There were a number of SEGs that had been with the credit union for a while whose relationship had not been fully developed," Hill said. "The job requires both acquiring and retaining SEGs."
The account executives are armed with an array of promotional materials developed by Orange County's Credit Union's marketing department, including flyers, posters, newsletters and e-mail messages that are focused and branded to the credit union's look and are need-based in their messages.
"Our messages are 'Here's how we can solve your employees' needs' when we are sending materials to a contact person, and 'Here's how we can solve your needs' when we are sending materials to the employees," Hill told The Credit Union Journal.
Many of the materials are printed in both English and Spanish.
Why Chase SEGs?
Orange County's Credit Union has $545-million in assets, 67,000 members and six branches.
Its community charter permits anyone who lives, works or worships in Orange County to become a member.
So why does Orange County's Credit Union aggressively market to SEGs when it has a community charter. The answer is simple: Because it can.
"We have a marketing opportunity that traditional banks and thrifts don't have," Hill noted. "They don't have a relationship with employers that credit unions have. It is something that is profitable for us and we don't simply want to rely on our community charter. It is a very efficient form of marketing because we can target specific messages to certain groups as opposed to doing a full media campaign, which is more expensive."