LaggingNew Member Growth Spurs Program To Boost Penetration
CU: Northern Massachusetts Telephone
Category: Member Retention/Penetration
After a disappointing tally of new members in recent years, Northern Massachusetts Telephone Workers' CU shifted its focus to existing members.
The result: reactivation of stagnant accounts, more loan business, and an understanding in every department about the importance of retaining members.
"In the fourth quarter of 2004, senior management at NMTWCU realized that over the past few years our net amount of new members was much lower than our planned growth expectations," wrote Suzanne Morison, VP of Operations at NMTWCU in her submission to The Credit Union Journal's Best Practices program. "Over several management meetings it was determined that NMTWCU had been more focused on obtaining new memberships than retaining current memberships."
Morison said that while the $400-million credit union continues to emphasize new membership recruitment, it created an interdepartmental team of senior managers from marketing, operations, retail and compliance to examine the existing base and develop a formal member retention strategy.
Northern Massachusetts Telephone serves about 25,000 members in the state's communications industry.
Among the areas management honed in on were inactive memberships, inactive checking accounts, service levels, member education, and employee education
"In November 2004, we began collecting data on the reasons memberships were being closed," Morison said. The team created a "Request to Close Membership" form that allowed them to track reasons for closures.
Diane Baker, VP of marketing and administration, said it was much easier than trying to chase information from members who had already left.
"The form asked such things as whether they still had an ATM card and their reason for closing the account," she said, noting that they could choose one of five options or write in their own reason.
"The No. 1 reason (for closing their accounts) was convenience or moving," Baker said, adding that the information triggered a campaign to show that even without branches on every corner, the CU's electronic services made it accessible to everybody.
Morison said the biggest challenge throughout the process was "coordinating it with multiple departments, trying to get everyone to understand the importance of member retention." Prior to the plan, backoffice staff in particular didn't consider themselves to have any role in sales and service.
"They were generally seen as the paper-pushers who supported the front line sales forces," she said.
Their focus was redirected through employee training that highlighted consistent recognition of opportunities and incentive plans to inspire the operations staff to cross-sell such things as electronic services and certificate specials, she said.
In addition, departmental meetings were held to share the CU's goals and to educate the staff on how they could have a direct effect on those goals by being more proactive with members, she said.
The branch and operations staff received special training in how to communicate with members that request account closures.
"Because they do get a large number of general phone calls, the operations department manager did a lot more training on their ability to identify certain cues and cross-sell," Morison said. For example, "If a member called in to transfer an IRA, the (operations employee) could mention some of our CD specials." The staff also personally responded to account closure requests from members forwarded by mail or fax.
These techniques have helped Northern Massachusetts Telephone to retain close to 30 accounts since April 2005 that otherwise would have closed, Morison said. In addition, the operations department was credited with bringing in more than $700,000 in new certificate money from May through August of this year.
In April 2005, 1,577 members, identified as being inactive for 18 months received direct mail postcards inviting them to rediscover their credit union.
The campaign had 3.3% activation response rate with a net gain of $34,454 in deposits and $50,388 in auto loans.
Baker said the operations and marketing departments also redesigned form letters so that they focused more on retaining members than providing operational requirements for closing their accounts.
Some Refinements Made
"It took more of a cross-selling approach," Baker said, adding that since then, other operational materials have been similarly adapted using the same concepts. The initial result was a reduction in the number of closed checking accounts from an average of ten per month to five per month.
Morison said while the plan is working quite well, changes have been made along the way. Among them, she said, is that staff are paying closer attention and responding to signs of inactivation earlier than the standard three years.
She said accounts that are inactive after a year are flagged and addressed on a quarterly basis with information to encourage more participation in credit union products and services.