CU: Allegacy FCU
Category: Incentives
Equity lines of credit at Allegacy Federal Credit Union grew 19% last year-faster than the previous seven years combined-thanks, in part, to a unique employee incentive program aimed at growing membership and revenue.
Officials of the $1-billion CU are crediting its employee bonus plan for success in all four target areas of a campaign that included an aggressive product design and increased direct marketing for each product.
"We worked on it for several months before we put it out there," said Cathy Pace, SVP and CMO at AFCU. "There actually had been another credit union who had been doing this for about three years, so we were able to follow their pattern."
Pace said the goal of the program was to deepen and enhance member relationships with core products and services-Visa, checking, auto loans, and home equity/mortgages by providing superior service.
"The results have been impressive," Pace said. For example, in 2004:
* Checking usage increased 23.2%. The previous year, it was 22.8%.
* Equity growth was 19%. The previous year, the CU experienced a negative 2.9% growth.
* Visa card usage grew to 28.9%. In 2003, it was 21.4%.
Cheryl Swaim, advertising and communications manager at AFCU, said auto loans weren't calculated for this best practice because other factors such as indirect lending numbers would have skewed the outcome.
Pace said the bonus plan with clearly defined goals and continuous progress reports were the driving force. For each core product, the CU created five levels for the employee to attain, plus an overall net income goal for the credit union. For each level met, the employee earned .2% of his or her annual salary.
Employees, by the way, receive cross-selling education as a regular part of the CU's training initiatives, Swaim noted.
In the first quarter of 2004, every employee achieved two levels and moved progressively up the chart together, Pace said. By the fourth quarter, the entire staff had achieved nine levels.
Pace said she thinks it helped that the CU provided an Intranet page that kept a running tally of each employee's success. It included a dollar value for the next employee payout and detailed charts that highlighted quarterly goals and progress.
The staff also appointed a bonus committee, which met quarterly to discuss strategies for encouraging employees to boost numbers and create home stretch "push" campaigns to meet goals as deadlines approached.
Now in its third year, Pace and Cheryl Swaim, advertising and communications manager at AFCU, agreed the program is right on target with its goals.
"We have proven that when you have goals and you communicate those goals every day, you can have a direct impact on the bottom line," Swaim said. "We feel that it was a wonderful success."
As with year's passed, the staff plans to review the incentive plan and the levels achieved by its employees to determine what, if anything, needs to be readjusted.
"Right now, we don't have any plans to change it," Pace added. "We will go back and review it from a three years standpoint to see how productive and how profitable this has been."
