New strategies for onboarding your new members
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Maria Del Amo and Steve Miller presented in a webinar sponsored by NAFCU Services new strategies to onboard new members. We took a look at current trends in the creidt union space and offer insight on how to maximize Credit Union's communications efforts to attract, retain and grow their membership.
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New strategies for onboarding your new members
- 1. New Strategies for On-boarding Your New Members First impressions last forever–and drive growth!
- 2. SETTING UP THE STAGE
- 3. It’s Time to Look at Things Differently • The types of members currently recruited. • Current member acquisition costs. • Attrition rates and the way new members are on- boarded. • The way member communications are used to cross sell and create loyalty. • Use of multichannel collaborative efforts.
- 4. The Impact A 5% increase in money-losing members will reduce Net Income by 37%. Source: http://bankblog.optirate.com/bank-and-credit-union-business-strategy-and-customer-life-time- value/#ixzz1yqZpy2Md
- 5. The Alternative Growing profitable member segments by just 5% will cause Net Income to spike by nearly 40%. Source: http://bankblog.optirate.com/bank-and-credit-union-business-strategy-and-customer-life-time- value/#ixzz1yqZpy2Md
- 6. Cost to Acquire Acquisition costs per member typically exceed $350 and with additional incentives can increase to as much as $500. Source: http://bankblog.optirate.com/is-gen-y-a-profitable-customer/#ixzz1lAwCTfBn
- 7. Lifetime Value The average tenure of a member at a Credit Union is roughly 7 years. • Not long enough to recover the accumulated operating losses. Source: http://bankblog.optirate.com/is-gen-y-a-profitable-customer/#ixzz1lAwCTfBn
- 8. What’s your best cost estimate to acquire a new member?
- 9. The Real Story • Data suggests that more than 90% of institutions under-estimate true Customer Acquisition Costs. • Credit Unions continue to engage in member acquisition marketing campaigns that generate operating losses. Source: Andera
- 10. Finding Profitable Members • While creating awareness, mass media does not let you target high potential members. • Finding and adding more unprofitable members has a negative impact on the institution’s health.
- 11. The Big Question What percent of your members are most profitable?
- 12. The Real Value of Members Source: Bank and Credit Union Business Strategy and Customer Life Time Value, September 2011
- 13. A Bigger Question! Why spend $500 to recruit a new member with a high probability of attrition and potential lifetime value of $140?
- 14. Attrition Statistics Annual Account Openings Account Attrition 35% Financial Loss Year One1 10,000 3,500 $1,400,000 25,000 8,750 $3,500,000 100,000 35,000 $14,000,000 1 Assuming $200 to replace account and $200 in lost revenue – A Case for Onboarding, Jim Marous Source: Bank Marketing News
- 15. Changing the Game Annual Account Openings Account Attrition 35% Financial Loss Year One1 Saves with Onboarding 20%2 Financial Gain Year One 10,000 3,500 $1,400,000 700 $280,000 25,000 8,750 $3,500,000 1,750 $700,000 100,000 35,000 $14,000,000 7,000 $2,800,000 1 Assuming $200 to replace account and $200 in lost revenue – A Case for Onboarding, Jim Marous 2 “Consistent customer communication begins with a comprehensive onboarding strategy, which can reduce new-customer attrition by as much as 50%.” – Peppers & Rogers Group Source: Bank Marketing News
- 16. Do Something Different • Communicate with your new members • Show them that you care • Be there for them • Retain new members by building real value: • Additional product revenue • Member satisfaction • Loyalty
- 17. LIGHTS, CA MERA…AC TION! Onboarding 1 1 Your Credit Union 1 6/20/13
- 18. On-boarding Success Communicate now! • Relevance • Channel • Frequency • Cross Sell • Close Loop Marketing • Track and measure
- 19. Discover Your Relevance Discover the reasons to communicate with a new member: • Primary financial goals • Preferred channel of communication • What type of accounts they hold elsewhere •Future communications and product offers
- 20. And Also Fight Attrition 62% of customer defections can be modified if discovered in advance. Source: SearchCRM, "Model modelers in predictive churn," By Michael Lowenstein. June 2002.
- 21. Check the following activities that you use to onboard a new member: - Telephone follow up - Personal letter - Survey - Postcards - Email
- 22. Channel Importance Right Message-Right Channel- Right Time
- 23. What Keeps You From…
- 24. Communication Strategies • Data Modeling • Segmentation • Targeting Studies show that email follow-up to a direct mail campaign can enhance results by as much as 30 percent. Javelin Strategy & Research, “New Account Onboarding Communication” (2007)
- 25. Frequency “The first 90 days is crucial for making or breaking a new member relationship” Kevin Roland FedChoice FCU Lanham, MD
- 26. Touch Campaign Week Cycle Month Activity Purpose Note Response Trigger 1 week 1 (7) 1 CEO Letter Appreciation Welcome and thank you for joining PURL- with a reward offer or premium 2 week 2 (14) 1 Branch Letter Appreciation Thank you! Meet our team and a listing of all available products variably driven by products that the member already has. PURL- with a copy of their newsletter or convenience coupons. If no response was recorded from Touch 1, present again the offer. 3 week 3 (21) 1 Email w/Offer Offer We are here for you…appreciate your business…product offer Content Page-with offer base on entry. Include a form as response mechanism. 4 week 4 (28) 1 Postcard w/Offer Offer Determined by the client PURL- with a reward offer or premium 5 week 6 (42) 2 Email w/Fin Info Financial Literacy Offer as determined by earlier response Web Page-with offer base on entry. Include a form as response mechanism. 6 week 8 (56) 2 Postcard w/Offer Offer Offer as determined by earlier response PURL- with a reward offer or premium 7 week 10 (70) 3 Email w/Survey Appreciation New Member Survey: List of product and services and measurement of customer service Web Page-with survey form 8 week 12 (84) 3 Postcard w/Fin Info Financial Literacy Offer as determined by earlier response PURL- schedule a branch visit The first 90 days…
- 27. Cross Sell Opportunity Response to Cross Sell Efforts Source: BAI, The Ninety Day Opportunity
- 28. Make it “sticky”
- 29. Reduce Attrition & Cross Sell • You have a 50/50 chance of keeping a member who has only a savings account with your credit union active in the first year, but… • 10 times more likely to keep a member who has both a checking account and a savings account. • 18 times more likely to keep a member who has a checking account, a savings account and an installment loan. • 100 times more likely to keep a member who has a checking account, a savings account, an installment loan and a safe deposit box. Source: Effective cross-selling: How to build revenue https://www.cuany.org/access_files/.../ConnectionMarch12.pdf
- 30. A Big Question Check the top three products that you would offer in an on-boarding program?
- 31. The more you know… Static Personalized Highly Relevant 10x lift Right Time Learning Response Rate 20x lift 20% lift 5x lift Right Message 2x lift Right Individual Source: Caslon & Company
- 38. Closed Loop Marketing Data Messaging /Channels Trackable Response Nurture Activities Revenue Best Practices Capture Information
- 39. Proof Point • A $1.6 billion credit union in Texas developed a monthly campaign based on next product potential, value score segments and P$ycle codes. • Incorporated the ability to track response and areas of interest. • Integrated hand off to sales. • Results: • Loans and deposits of targeted members improved by 50% in first five months. • The personal loan initiative alone generated $2.5 million in new loans, with a 534% ROI. Source: Credit Union Business, The Lending Issue, Cross-Selling: 1 + 1 = 3 By Tony Rizzo July 2011
- 40. “Process” Not a “Program” • Attract by knowing your members • Relate by on-boarding • Retain with effective cross-selling • Engage in regular communication • Reduce attrition and revenue loss • Grow membership life time value
- 41. ENCORE!
- 42. What Is Required to Realize this Opportunity? • Relevance audit of existing acquisition strategies • Identification of top 10% of profitable members • Analysis of current member data to determine key opportunity areas • Set realistic goals for return • Execute, review, modify and analyze • Repeat
- 43. Steve Miller Dir., Financial Services Communications smiller@cathedralcorporation.com 800-514-0546 Thank You! Maria Del Amo Dir. New Market Development mdelamo@cathedralcorporation.com 877-451-2463 NAFCU Annual Conference Uncover the Secret Within: Using Member Data to Strengthen Your Bottom Line o Data mining o Member Segmentation o Targeted Multichannel Wednesday, July 10th, 2013 @ 2PM
Editor's Notes
- Slides 2 – build the case for targeting high potential prospects with relevant direct marketing.
- Most members want or need only a small number of products.Members with balances less than $500 lead to operating losses.In a typical financial institution, nearly 80% of customers generate non-recoverable operating losses.Industry Average- Customer Life Time Value of approximately $140.
- If the messaging is irrelevant, account holders will see their financial institution’scommunications as a nuisance (or the dreaded junk mail) which, not surprisingly, negatively impacts retention aswell as up-sell and cross-sell opportunities.
- According to J.D. Power & Associates, satisfaction goes up when more attention is given to the new account holderas shown below. In addition, cross-selling success is also impacted.If done correctly, the initial stages of the onboarding process should enhance the overall account holder experience,showing account holders that we know them, understand their needs, deserve their trust and are willing to rewardthem for their patronage.
- What’s keeping you from mixing it up? Combining the power of your data and relevant marketing to transform the results of your acquisition strategies from mixed member potential to a predominance of high potential members?
- The following processes are used to further enhance messaging:• Segmentation: Grouping account holders into mutually exclusive segments based on a common set of characteristics• Predictive intelligence: Predicting which products and/or services an account holder has the greatest propensity to purchase• Targeting: Positioning content to account holders in a way influences certain behavior (“active targeting” reaches account holders or prospects in a personalized way that is meaningful to them)
- Make the Most of “Sticky” Products and Services- An essential characteristic of a successful onboarding strategy is its ability to engage account holders to utilize “sticky” products and services when they are most willing to buy
- Engaging new account holders with sticky products and services makes it more difficult for them to defect.Account holders that are ‘engaged’ with their financialinstitutions’ products are also shown to have a much greater profit potential over time as shown below.
- Checking account Share Account Debit Card DDP Credit Card Bill Pay Loan Product
- The first step is to determine relevant benchmarks that will illustratethe difference between pre- and post-onboarding programs. These measurements include cross-sell metrics aswell as information pertaining to the level of satisfaction an account holder has experienced with his or herfinancial institution.Ultimately, the measure of true onboarding success is reflected in the improvement in return on marketinginvestment, increases in fee and interest income, and the overall account holder experience.
- The first step is to determine relevant benchmarks that will illustratethe difference between pre- and post-onboarding programs. These measurements include cross-sell metrics aswell as information pertaining to the level of satisfaction an account holder has experienced with his or herfinancial institution.Ultimately, the measure of true onboarding success is reflected in the improvement in return on marketinginvestment, increases in fee and interest income, and the overall account holder experience.
- The first step is to determine relevant benchmarks that will illustratethe difference between pre- and post-onboarding programs. These measurements include cross-sell metrics aswell as information pertaining to the level of satisfaction an account holder has experienced with his or herfinancial institution.Ultimately, the measure of true onboarding success is reflected in the improvement in return on marketinginvestment, increases in fee and interest income, and the overall account holder experience.
- The first step is to determine relevant benchmarks that will illustratethe difference between pre- and post-onboarding programs. These measurements include cross-sell metrics aswell as information pertaining to the level of satisfaction an account holder has experienced with his or herfinancial institution.Ultimately, the measure of true onboarding success is reflected in the improvement in return on marketinginvestment, increases in fee and interest income, and the overall account holder experience.
- The first step is to determine relevant benchmarks that will illustratethe difference between pre- and post-onboarding programs. These measurements include cross-sell metrics aswell as information pertaining to the level of satisfaction an account holder has experienced with his or herfinancial institution.Ultimately, the measure of true onboarding success is reflected in the improvement in return on marketinginvestment, increases in fee and interest income, and the overall account holder experience.
- The first step is to determine relevant benchmarks that will illustratethe difference between pre- and post-onboarding programs. These measurements include cross-sell metrics aswell as information pertaining to the level of satisfaction an account holder has experienced with his or herfinancial institution.Ultimately, the measure of true onboarding success is reflected in the improvement in return on marketinginvestment, increases in fee and interest income, and the overall account holder experience.
- The first step is to determine relevant benchmarks that will illustratethe difference between pre- and post-onboarding programs. These measurements include cross-sell metrics aswell as information pertaining to the level of satisfaction an account holder has experienced with his or herfinancial institution.Ultimately, the measure of true onboarding success is reflected in the improvement in return on marketinginvestment, increases in fee and interest income, and the overall account holder experience.
- Make Onboarding a ‘Process,’ Not a ‘Program’Onboarding is not a program that can be started and left alone. It is an ongoing marketing process whereoffers should be tested, timing of communication reviewed, new formats introduced and performance analyzed.
- Provide a Single Point of ResponsibilityThe success of an onboarding strategy is based on the ability to communicate the right product at the right time, tothe right account holder — not a messaging sequence that is pre-set by the financial institution. This takes a singlepoint of reference outside product silos, with specific, measurable goals for achievement.Additionally, financial institutions should ensure their marketing communication partners thoroughly understand thefinancial services industry, as well as the complexities associated with marketing to and servicing account holders.Every onboarding component should be in complete compliance with and strictly adhere to all security, confidentiality,legal and other requirements that affect financial institutions.