Four Ways Credit Union Leaders Can Leverage Member Data to Drive Growth and Retention Strategies

By Karl Dahlgren04.13.2020

When facing down a recession, credit union leaders must seek every competitive advantage they have to retain membership and gain new members. The uncertain economic scenario currently facing the United States means that every piece of member and prospect data needs to be leveraged to maximize efficiency and member experience.

How well do credit union leaders know their members? For most the answer is truthfully that they know plenty about their members. Credit union leaders have access to plenty of member data – transactional data, demographic data and credit data are just some of the information credit unions collect on members.

Although leaders are awash in member data, the strategic challenge is how they use this data to build a stronger credit union. All too often a credit union’s member data is fractured in different silos, with any insights generated not shared across the organization. The transaction data may be stored separately from loan performance data. And digital banking usage numbers may not be tied back to the core system to connect member behavior with their account data.

To break down the barriers, credit union leaders should think about how they want to strategically collect and analyze member data to drive organizational growth. This requires evaluating what data is currently available and how that data can provide actionable insights.

Prioritizing Data Strategies

The first step credit union leaders should take is to create a strategy for how they want to use member data. The vast amount of data can be overwhelming if taken in all at once, and different strategies will require different types of data. For example, member data can provide predictive insights for future services or be examined reactively to enhance fraud or risk protections.

Some member data is best leveraged to understand member channel and service preferences, while other data points can help credit union leaders segment prospective members to make marketing more effective. Other departments may be best served by using member data to create a full picture of existing members to identify retention opportunities and loss threats.

Before credit union leaders dive into their member data, they need to build a strategy for how the data will be used. They should identify a clear business problem in need of solving, establish a vision of an end state and confirm that the proposed approach fits in with the organization’s broader strategic priorities.

While every credit union leader will have a different set of specific priorities for their organization, there are four strategic areas member data can make an immediate impact: member acquisition, member service, relationship development and member retention.

Member Acquisition

The first area leaders can use data to grow the credit union is in developing and implementing an effective member acquisition strategy. While it is valuable to learn about members after they’ve joined, leveraging insights into prospects can help marketing and sales leaders enhance their efforts by using data to improve the sales process.

Credit unions leaders can target their prospects more effectively by identifying potential members and matching their business objectives using market research, market surveys, psychographic profiles and analytics tools. With more targeted messaging, leaders can determine the most effective offer available to those prospects by setting optimal product terms using scoring and segmentation tools.

They can also examine the data from prospects who visit the website to identify if there are common obstacles or drop points for prospects interested in applying for loans or opening accounts. This can identify problem areas, such as a difficult online loan application process, that can improve the conversion rate of potential members shopping for services.

Member Service

Once members join a credit union, the challenge shifts to how best to service them. Credit union leaders can collect and analyze member service data to optimize how they segment and target their members to achieve a bigger share of wallet. They can utilize social analytics, contact center data and unstructured data to develop sophisticated models for sales and servicing.

This data can then be used to answer key questions:

  • How often should we contact a member?
  • Through which channels should we service this member?
  • What products will be of most interest to this member?

While individual organizations will have unique responses, there are some broad level trends shaping member service needs. In a survey of financial services leaders, BAI’s Banking Outlook: Trends in 2020 reported that in the next three years, channel usage is projected to trend overwhelmingly towards digital with 67% of all interactions expected to be digital. To serve members effectively, credit unions leaders must plan for the continual and ever-increasing shift to digital service channels.

Credit union leaders can use channel data and transaction history to provide engagement for education, member service and customer experience. They can also use the data to segment members based on shared characteristics that can be used to enhance their experience.

Relationship Development

Developing an in-depth relationship is a critical component in the member lifecycle. That’s when casual relationships begin to solidify, transforming members from a single relationship into loyal members for life.

Credit unions start building in-depth relationships when they demonstrate that they know enough about a member to offer the required services at the desired times. Does the credit union know when a member might be ready to buy a car or a house? Do they need student loan or college savings programs?

Credit union leaders already possess hundreds or thousands of data points on their members. And the younger generations provide more data due to their embrace of digital and online financial services tools. BAI’s Banking Outlook Report reported that Millennials have on average more than 70 interactions per month with their main financial services provider, while GenXers have only an average of 60 and Boomers have fewer than 45.

Leveraging this data helps credit union leaders know when and what to offer a member. Targeted offers are a less expensive proposition compared to less targeted tactics, and they have a higher success rate. Members will also likely show loyalty, based on factors other than price, if they feel they are receiving personalized service.

Member Retention

Creating and implementing member retention strategies should be near the top of the priority list for credit union leaders. The cost of acquiring new members versus the cost of retaining existing members can be multiple times higher while understanding member needs and exceeding their expectations will drive life-long loyalty.

Much as data can be used to segment prospects, member segmentation can also be used to identify those members at risk of quietly leaving due to a lack of engagement, high-priority members who need to be courted and those who might leave due to dissatisfaction. Leaders can then leverage this data to create appropriate initiatives to retain these valuable members.

Using insights generated by analytics, credit union leaders will develop the ability to integrate lead delivery across multiple distribution channels, making it easier to decide which prospective members to attract and how to most effectively meet their needs once they’ve joined. While it can seem overwhelming, the best place to start is small. Identify a clear business problem in need of solving, establish a desired end point, identify the data that can best provide insights into the challenge and then build the models and analytics needed to implement a program.

By leaning into the analytics, credit union leaders can approach each new strategy with insights gained from member interactions and build for future success.

Karl Dahlgren is managing director of BAI, a nonprofit independent organization that delivers the financial services industry’s most actionable insights. For more information, visit www.bai.org.