The New MIA: Missing Income Analysis Profit Risk

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LAS VEGAS — Understanding member profitability is about more than knowing the members the credit union has — it's about knowing the members the credit union could have.

"It's what connects finance to marketing to member service, and it can't be detached," said Sam Kilmer, VP-market development with Harland Financial Solutions. "For credit unions, it may not be about incremental profits, but they do need to know where their concentrations (of profitable members) are so that they don't lose it."

What's instructive, stressed Kilmer in an interview with Credit Union Journal, is in knowing where the credit union should be focused, including the channel mix.

Scott Hanson, EVP-product development, noted that Harland's Touche solution helps identify member profitability, including by household. "Household data is interesting, but what is most valuable is understanding the behaviors that lead to profitability," said Hanson. "Knowing who is profitable leads to knowing who CAN be profitable. And maybe at one point the member was profitable, but they have moved on. They match the profile of a profitable member, but they do not have their business with you."

The larger point, said Kilmer, is the importance of understanding more than demographics, as behaviors might not match the demographic stereotype. "Which members have the potential to build out the relationship? Don't make assumptions. It takes business intelligence."

Profit segmentation, said Kilmer, can be viewed as good member service in that it supports the brand promise and doesn't deliver poorly targeted marketing (and from the CU's perspective, the related wasted dollars).

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