What's all the buzz about sales and referral tracking, contact management and setting incentives? Heavy investment in a sales culture technology may be appropriate for other types of financial institutions, but isn't a credit union a cooperative, designed to serve its members rather than selling to make a profit?
Yes. And although credit unions need to make money to provide competitive salaries and the newest consumer technologies, in my opinion, the primary emphasis should be on enhancing a member service culture. If we provide great service and good information to our members, loyalty will follow and so will revenues and profits. But before we can do even this, there are some caveats to consider and hurdles to jump.
Start with the Facts
First of all, even if we use the term "selling" it's not about beating someone over the head to drag them back to the cave. It's about educating members about the services we offer that match their needs, so they can make intelligent decisions about what they want to buy. Establishing a sales and service culture begins with two prerequisites: understanding member information and gaining buy-in.
Understanding member information is to comprehend the profitability of our existing member relationships and of the products and services we offer. At this stage, we are all familiar with the fact that only about 20% of a credit union's members are really profitable. And, 30% to 50% are actually taking advantage of the cooperative yet are unprofitable. We need to know the members in each category. Further, about 70% of the products and services credit unions provide are unprofitable.
If we don't know the profitability or loss inherent in our products and services, how can we cross-sell effectively? These facts certainly set the table for providing better service, which is what the credit union and its employees are all about.
Once we have a handle on our member and product data, gaining buy-in must be established. This can be accomplished with three easy steps, each designed to assure our success with a sales and service culture.
The first step requires that we get complete buy-in from the CEO and senior management. The CEO's role in building or enhancing a sales and service culture is critical. He or she must clearly communicate that the new direction is vital for the organization's long-term success and then back it up with full support and resources.
We also need a passionate champion (step two) who will drive and manage the new culture, with the full and clear backing of the CEO and the board. In the final step, we need a few clear-cut objectives against which success can be measured.
Everybody must be on the same page to do a better job of communicating, tracking and providing incentives for staff to improve on what they've always done-to serve the members. And, getting credit union-wide buy-in is easiest if we don't use the word "sales," which tends to create resistance. Our team is already predisposed to buy into this new culture when we approach it from a perspective of service.
"Credit unions need to draw on their MCIF (marketing customer information file) information to understand who the profitable members are and profile the next most likely service to suggest to a member at the front line," says Nicki Lemmon, President of Lemmon Tree Consulting in Tempe, Ariz., and who has served credit unions for 18 years with marketing, management and market research consulting. "Credit unions may use prompting through the computer system to alert staff to the next likely service for the member in front of them, but the employee is never told why. The front line staff has to know the reason for cross-selling and understand the goal is to serve members better, which in turn benefits the credit union and its staff through better job security and higher salaries."
Implementation begins by building on successes, walking slowly and making sure everyone understands how the new culture is confirming and enhancing what we've done all along. The more successes we have and the more energy they generate, the faster successful implementation can happen on a broader scale.
Use Technology Wisely
Buying referral tracking software to pay member service reps and call center staff is backwards. If we do a good job of serving our members, then how we pay our people follows as a natural evolution. Employees shouldn't be encouraged to sell the products for which they get paid more, but to offer those that most benefit the members. Further, the real value of referral tracking lies not in recognizing who provided the referral, but in tracking the effectiveness of follow-up to keep referrals from falling through the cracks. And let's not create a system of 14 tiers of referrals. Keep it simple and focused on serving members.
Another technology pitfall is buying a program that turns into a ravenous beast. Super-sophisticated programs make employees' jobs more about satisfying a hungry database than about feeding the members. The goal of a database should be to easily share information and then empower people to get on with serving your members' needs. It should be a tool, not a burden.
Set Intelligent Incentives
The purpose of incentives is to reward higher productivity, not to pay people for what they've always done. Performance can be measured on profitability, number of loans, dollar deposits or any other scenario. The most effective measure is that which motivates people to bring in more profitable business. "Incentives do help to change behavior, encouraging staff to cross-sell services that build profitable member relationships," says Lemmon. "It is also key to change performance evaluations that set cross-selling expectations."
Since there's no sense in rewarding sales of unprofitable products, setting incentives requires an understanding of the profitability of the credit union's products. Today's MCIF technology is designed to harness information on profitability, but the data it provides has to be used with the right focus and tone-that it's about service, not selling.
Retaining Profitable Members
Credit unions can't compete with heavily sales-oriented brokerage houses, but they can beat them at the service game. When our salespeople wish to aggressively reach out to our most profitable members, we need to understand who those members are so we can target them for retention efforts.
The problem is that only 20% to 25% of members are coming into branches and only about half may use the drive- through in a given month. And who are the members? Do they also happen to be the least profitable members and not the best targets for cross-selling? To beat the brokerage houses, it's the profitable members we must focus on. Retaining them means building stronger relationships, and that requires information about whom they are and what we can do to serve them better. Even if they never come in, the right technology can track their transaction history and demographic information, predict the services they'll need next and tell us the best ways to reach them-letters, e-mail, phone calls, etc.
"Credit unions can't afford to lose their personal service reputation," says Lemmon. "The goal is a hybrid sales and service culture. Expect to commit to training for up to two years to entrench sales into your service culture to really see an impact."
Goal: Member Loyalty
By understanding our member relationships and the profitability of our products, we can put our attention where it needs to be-on serving members better. We need to communicate that goal throughout the organization so that all employees can help members understand how we can help them achieve their financial goals. A sales and service culture is about reaching out to build great relationships and expanding them, which creates loyalty. Such a culture begins with good information about our members and providing it to front-line staff, along with computerized tools that make their jobs easier, not more complicated. Get the data, get everyone's buy-in, set clear goals, start simply, have successes and go from there.
Jay Kassing is president of sales and marketing for The CentraxGroup, Dallas, which provides the Marquis MCIF/CRM application. Mr. Kassing can be reached at (800) 365-4274, or at jay centraxgroup.com.