DEFY THE TRENDSA Webinar for Credit Union Professionals

Today’s Speakers Kate DunnPresident, Digital Innovations GroupBusiness Strategy Chair, PODi Apps Forum 2008 - 2010Board Member Digital Imaging Customer ExchangeFaculty, University of Richmond Robins School of Business, Executive EducationReviewJohn FrancoExecutive Vice President, Arga MarketingFormer Chairman and CEO of Harbor National Bank of Connecticut

Executive Vice President, Arga Marketing

Former Chairman and CEO of Harbor National Bank of Connecticut

Marketing budgets have been reduced: Added cost of regulation NCUA assessment Corporate credit union bailoutDefying the Trends & Seizing the Opportunity

Need to do more with lessTargeted relevant marketing Cross sell income producing products/servicesBring in new membersToday’s Credit Union Trends

Recruitment of Members – Challenges: Where to find them How to reach them What to tell them to make them respondToday’s Credit Union Trends

Should social media be integrated into the mix to improve resultsHow can social media help us reach our business objectivesBig Question

Where do I get the most bang for my buck? Low hanging fruit Specifically target most likely candidates Get very granular Significantly reduces production cost Greatest chance to maximize R.O.I. How is your credit union chartered?

What can you tell them that will work? Value proposition WIIFM Share profits – Treat you like an owner Safe, Sound & SecureMessaging

What do I sell first?Does it vary by segment?Can I reduce my cross selling expenses?Can I reduce customer attrition?Next Best Product

Credit Union ChallengesUncertainty in national and global markets influences credit unionsIncreased legislation, data security stretch internal resourcesAlmost certain budgetary sacrifices as a result of re-capitalization of NCUSIFMembership which grew through July 2009 will stagnate during rest of year40% of credit union members classify themselves only as “moderately loyal”Wave of job loses make it harder for members to stay current on loans

Credit Union ChallengesAnnual loan growth fell to 3.5% through July 2009; will remain sluggishIncreased cost to recruit net, new membersAs of 2008 the amount stood at $467Increasing rapidly for those with community charters Failure to grow relationships following ‘best rate’ offers increases marketing costsMinimal differentiation in eyes of potential members

ChallengesCommunication clutterTypical American is exposed to 5,000 marketing messages a daynotice 52remember only 4Four or five generations in playVaried levels of comfort and cynicism with technology, advertisingVoluminous amount of informationPersonal and professional duty overloadLoss of personal wealth/employmentAnxious and fearful of future

ImplicationsFailure to cut through the clutter increases marketing expensesFailure to capture additional opportunity from existing members increases marketing expensesUltimate implication is failure of the institutionYTD Decline in number of Credit Unions of 110On pace for 252 closings in 2009

Sacrificing the Long Term for the Short TermOnly 15% of short term sales are the result of marketing, but today’s marketing initiatives are responsible for 85% of long term sales.Source: What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds, by Rex Briggs, Greg Stuart

Really Good News“19% of advertising fails outright and 67% could achieve significant improvement that would require no additional spending.”What to tweak:Messaging – better understanding of customer’s motivationsMarketing Mix – VeriSign found that 10% of spend drove 98% of actions they wantedQualification - 80% of all deals are lost due to a in adequate or non-existent qualification process.ES Research Group Study

In ShortMust capture the loan opportunity that exists todayCost effectivelyEfficientlyFocus on member loyalty will pay offStrengthen relationships with on-line banking, broader product participation, loyalty and referral initiativesImprove resource utilization with automation, tracking and decision supportImprove marketing ROI

Case One: Wallingford Municipal Federal Credit UnionBusiness ProblemLow response and conversion rates on new loan offers from statement stuffers and traditional direct mailSolutionPersonalized direct mail campaign to existing members promoting car loans with attractive rates

Targeted, Simple Personalization with Succinct MessagingBest Practice: Simple offer and call to action “Save Money” & “Get Pre-Approved First!”First NamePersonalization

ResultsAchieved highest monthly loan activity in history of the credit unionExceeded annual loan target after only four months using the programExtended program to other initiatives

Case Two: On-Line BankingBusiness ProblemLow on-line banking participation increased cross selling costs and contributed to member attritionSolutionUse best practices developed in loan campaign to convert members to on-line banking

Targeted, Simple Personalization and Succinct MessagingBest Practice: Simple offer and call to action “free On-Line Service” & “Call for an application”First Name Personalization

Results17% of membership signed up for on-line banking within six weeks

Effective TargetingCustom personalization using gendering, age or other demographic informationConsider appending data if requiredCompelling Imagery and TextKeep it SimpleZero in on WIIFMClear Call to ActionBest Practices

Why Direct Mail WorksAdd more cost impacting ROISource: Vertis Communications' Customer Focus® survey

It’s the Relevance that CountsRelevance is the single largest lever on response in individualized direct marketing Jupiter research reports:Relevancy improves campaign revenues by 9 times over untargeted broadcast mailingsRevenues are improved by an average of 18 times with relevanceRelevantOver 3x higherPersonalized

Relevance is the single largest lever on response in individualized direct marketing

Relevancy improves campaign revenues by 9 times over untargeted broadcast mailings

Revenues are improved by an average of 18 times with relevance

2007 Vertis Communications Customer Focus® 85 percent of women ages 25-44 read printed direct mail marketing pieces53 percent of all women ages 25-44 surveyed who have access to e-mail, read e-mail advertisements63 percent of all adults indicated the have responded to direct mail collateral offering a percentage discount Women make more than 80% of all consumer purchasing decisionsSource: Source: Mindshare/Ogilvy & Mather

Case Two: Alerus Financial Business ProblemDeclining credit consolidation loan applicationsLow return from static mailingsSolutionTest the use of a personalized and relevant cross channel campaign against static mailingsAge Groups:25 – 3536 – 4546 - 55

Multiple Channels: Direct Mail, Email and Personalized Landing PagesStep One: Direct MailPersonalizedPersonalized Response MechanismProvides TrackingRelevant Copy & Images for each age group

Relevance continuedMessaging Real Estate ExpandedMinimizing cost of mailingInteractive conversation with prospectQuestions capture additional informationThank you structure used to nurture interestStep Two: Personalized Landing Page

3.67% responded to multi-channel version of campaign60% of applicants were new to the institutionResponse Rates by segment for multi-channel25 – 35 3.98%36 – 45 3.23%46 – 55 2.64%Response rate from static mailer < 1%ResultsHighest ROI

The Power of Multiple ChannelsResearchers estimate that 25%-30% of total media time is spent multitasking, and that the more media a person Consumes, the more likely they will consume several channels at onceSeeing a message in more than two channels increases response by 10% to 15%.Sources: eMarketer Multi-tasking Consumers January 2007; DMA Study

Why Personalized Landing Pages?46% of Americans prefer to respond to direct mail on-line.PURLs:increase response by up to 400%provide automated response trackingprovide interactive communication with prospectautomate integration with sales channelsCampaign changes are affordableElectronic messaging real estate is cheaper than print.Source: DMA Study

Why Email as a Channel60% of business decision makers with access to the Internet prefer email as the method to receive marketing messages.Links included in emails facilitate response50% of those receiving permission based e-mail say they are more likely to buy products from the sender in the future regardless of the channelSource: Jupiter Research and Indivia, Epsilon

Why Social Media?1/3 of all American have profiles on social networking sitesThe average LinkedIn user is 40 years oldMost Twitter users are now 35 and olderPeople from 35 to 54 now represent the biggest group of users on Facebook.LinkedIn - business-only has 43 million members in more than 200 countriesSources: LinkedIn: Connecting with Success and Timothy J. Wood, Montgomery County Group Leader of Business Development at OBA Bank, contributed to this article

Why Social Media?Affluent working women with family incomes of $75,000 or more are growing in number94.3 percent access the Internet during an average monthAbout half are considered heavy users of the Internet.Heavy use of radio, television, newspapers and direct mail has declinedWomen make more than 80% of all consumer purchasing decisionsSources: comScore, May 2009, BMS Media, January 2009 survey, Mindshare/Ogilvy & Mather

Why Social Media?US Population18% create content25% critique content12% collect information posted by others25% joiner on-line communities48% are considered spectators44% are currently inactiveSource: Groundswell by Charlene Li and Josh Bernoff

The Future of Social NetworkingPeople from 35 to 54 now represent the biggest group of users on Facebook99% of Gen Y have one or more active profiles on social networks such as Facebook or MySpaceSource: strategy Labs; PMN together with the Interactive and Direct Marketing lab at Pace University’s Lubin School of Business, May

Examples of Social Media IntegrationFirst Tech Credit Union, Portland, ORInternal social network helped create a sense of communityStriving for more committed and engaged employees who will carry that to customer interactions

Examples of Social Media IntegrationVerity Credit Union, Seattle, WAInternal social network for employeesAllows employees to tap into institutional knowledge for handling customer service issuesAdvantage Federal Credit Union, Newport News, VAInternal social network includes CEO blog and employee home pages, Wikis for sharing of institutional information

Case One: Tinker Federal Credit UnionBusiness ProblemLow enrollment of Gen Y customersBusiness SolutionCreated a multi-channel campaign “Buck the Norm” as a rallying cry for young people to get over what everyone else was doing and to get smart with their money.

Solution ComponentsNew web site relevant to Gen Y audienceVideo Scholarship Contest for EngagementRingtone, Wallpaper, Buddy Icon downloadsTV and Direct Mail MarketingReinforce with social media using Facebook, IM, Twitter, online voting, local bands music players, and contests“Save the Buck” promotional cards given out at college hangouts and coffee shops that would cover their billAttendance in community events geared toward young adults

Multiple Channels: Direct Mail, Web Site, TV, Video, Social Media

Results35,000 web site visitorsAverage of almost 4 pages viewed per visit‘Buck the Norm’ video on YouTube viewed by almost 1,500 peopleFacebook event page for the scholarship contest visited over 3,000 times

5,000 Member Credit Union in Northeastern USBusiness ProblemStatements which were labor intensive, inflexible, and prone to quality errorsCall center activity disproportionately high due to errors and the confusing statementBusiness SolutionRedesign of statement with highlight color to improve readability and incorporate cross channel tracking in promotional messaging

Solution ComponentsHighlight color statementTargeted promotional messaging based on member’s existing relationshipReinforcement from social media using blogs, facebook page and tweets

Results30% of customer base converted to e-electronic statements saving the credit union $30 per memberApproximately $45,000 per year initially18% of members are following credit union’s tweetsEstimated reduction in other marketing expenses of $30,000 per year

ReviewNew technologies exist to improve the efficiency and effectiveness of marketing efforts67% of what you are currently spending could generate better results by modifying the tactics19% of what you do fails outrightOpportunity exists to capture opportunity without increasing spend

Combine direct mail or statements with targeted messaging relevant to the memberReinforce direct or statement marketing with emailUse links to relevant services to track changes in behaviorReinforce strategy and social media presenceEncourage members to share reasons for their satisfaction turning them into ‘promoters’Email and landing page tracking allows you to capture and integrate best practices quickly for maximum ROIReview

Review your current member data% of emails and current baseline deliverability statisticsOpensBounces (hard and soft)Click ThroughsDevelop a fun way to capture emails from membersDetermine best segments given current economic climateStart thinking about right social media to useCommunityBlogEtc.Read Groundswell by Charlene Li and Josh BernoffFirst Steps

You’ll receive a survey following the webinar, once you complete it you will be sent a copy of today’s presentation and a link to download a white paper called Defying the Trends, Grow Revenues in 2010Questions?

Thank You!