BIRMINGHAM, Ala. — Recession? Deposit and loan balances are up by more than 20% at Alabama Telco CU here, thanks to a strategy of getting to better know members, and then stay in contact.
The economic downturn has driven its more aggressive posture, and the results show the payoff: the number of new loans has increased by more than 90% and new households were up 60% in August over one year earlier.
"It's not business as usual anymore," said Stanton Davis, VP-marketing at the $450-million CU. "And it's not all about rates. We have to know our members' lifestyle, employment status, family and future needs and what we have that matches those needs. We have to know what loans and deposits are maturing and provide the front-line staff with that knowledge so they can be proactive."
Knowledge is delivered to Alabama Telco by Touchon Davis, VP-marketing at the $450-million CU. "And it's not all about rates. We have to know our members' lifestyle, employment status, family and future needs and what we have that matches those needs. We have to know what loans and deposits are maturing and provide the front-line staff with that knowledge so they can be
"One big reason for our growth is our strategic approach to marketing, which is now turbo-charged by Analyzer," he said. Harland provides marketing and data-mining expertise, allowing Davis to focus on strategy.
One of Davis' strategies: sell more to each member household, which also allows him to get into fewer rate-wars with other financial institutions, he said. "Everyone is competing on rates, so I look at what I can do to prevent members from rate-shopping and manage the portfolio without competing on rates. I look at large-volume deposits that aren't completely overpriced."
Analyzer provides Davis with reports on deposits and loans that are maturing within the month, three months-and so on-in his new member households. The CU will then call a member with a $250,000 certificate of deposit that is near maturity, for example, and discuss options.
"That could save us from buying $250,000 in new deposits based on competitive rates," explained Davis. "And we keep our economy of expenses down. The member is already with us, and we know what we can do next for them, so we try to hold on that top-tier member."
Alabama Telco hones in on the 30% of the membership that is most profitable, he added. "Analyzer pulls demographics, breaks accounts down into different points of profitability and triggers campaigns. We can see which accounts we are retaining; which loans are paying off faster; which accounts aren't showing any relationship growth; and which were lost and why. Then we flag them for follow-up calls or mail campaigns."
This "aggressive" approach to examining accounts and contacting members has resulted in the CU retaining a "very strong" 98% of its most profitable members in the past two years and 94% of its new households from December 2008 to September 2009, Davis continued.
Analyzer helped Davis create a member on-boarding program in little more than a month, he said. The CU can see when and where a new member joined and what products the member is using. The system prompts the CU to communicate with the member every month for the first six months to cross-sell or share information.
On-boarding brought the CU 2,400 additional accounts in the 18 months leading up to September-that's beyond the new households the CU acquired directly within its branch network, Davis said.
Whereas Alabama Telco is making the most of existing members, some CUs could do better, said Lee Katker, manager of professional services, Harland. "Most credit unions are spending their money on member acquisition efforts and don't have access to or aren't leveraging the data they've got. The next step is to move from acquisition to growth."
Alabama Telco also uses ListExpert, an Analyzer add-on, to contact and manage member prospects near branches, Davis said. "We can see at what point a prospect turns into a member." That new member is then automatically entered into the on-boarding program.
