Three Steps to Foolproof Member Engagement | Affinion 2012

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To create a successful marketing strategy for member engagement, there are key factors credit unions should take into consideration. How do you define your target audience? How should you refine your marketing efforts? How do you refocus your strategy to take advantage of those opportunities? Each generation of consumers makes different purchasing decisions and is therefore more receptive to certain marketing efforts. By understanding who your target audience is and their demographic, credit unions will be able to craft specific marketing strategies to become more profitable. Learn more at: www.nafcu.org/affinion

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Three Steps to Foolproof Member Engagement | Affinion 2012

  1. 1. Wayne Conte Executive Vice President Affinion Group
  2. 2. What I’ll cover. . .
  3. 3. Define Your Audience 1
  4. 4. Define Your Audience 1 2 Refine Your Marketing Efforts g
  5. 5. Define Your Audience Refocus Your Opportunities 1 2 3 Refine Your Marketing Efforts g
  6. 6. Define Your Audience Refocus Your Opportunities 1 2 3 4 Refine Your Marketing Efforts g Summary y
  7. 7. Define Your Audience 1
  8. 8. Silent AKA Swing Generation (1933-1945) ContextTHE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 9
  9. 9. Baby Boomers (1946-1964) ContextTHE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 10
  10. 10. Context Generation X (1965-1976)THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 11
  11. 11. ContextMillennials(1977-1994) THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 12
  12. 12. Matrix AKAGeneration Z(1995- ContextPresent)) THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 13
  13. 13. iGen? WiiGen?(2015 - ?) Context THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 14
  14. 14. Take out your cell phones!
  15. 15. How To Vote via Texting THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 16
  16. 16. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 17
  17. 17. ContextMillennials(1977-1994) THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 19
  18. 18. Less satisfied Mobile Security Profitability Cost Conscious Trusted AdvisorIncome up over X 2020 @ 50% Millennials Mill i l THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 20
  19. 19. How Non-Millennials view MillenialsSource: BCG Perspectives “The Millennial Consumer – Debunking Stereotypes” THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 21
  20. 20. How Millennials View Themselves THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 22
  21. 21. Brands that resonate with Millennials THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 23
  22. 22. Brands that resonate with Non-Millennials THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 24
  23. 23. Millennial Attitudes Trust friends more than Premium corporate on speed mouthpieces and convenience More engaged in rating Digital products and Natives services Use the internet to broadcast Fast adopters their of new thoughts technology THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 25
  24. 24. Millennial Behaviors Nearly 60% receive financial 82% are support from pp finding it parents tougher to t h t find a job 47% turn to print 35% follow their circulars for favorite brands shopping on social media research sites Honesty is the More important quality millennials for FI brands aren’t buying homes THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 26
  25. 25. Millennial Behaviors Nearly 60% receive financial 82% are support from finding it parents tougher to find a job 47% turn to print 35% follow their circulars for favorite brands shopping on social media researchh sites Honesty is the y More M important quality millennials for FI brands aren’t buying homes THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 27
  26. 26. Some credit union programs focus on Millennials THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 28
  27. 27. “78% of Boomers are online, and out of these,55% bank online. We have to remember thatBoomers grew up with technology too; g p gyApple computers were not even inventedwhen they were in college, meaning they y g g yhave been using this technology since theearly days.” y y Suzie Mitchell Boomer Expert THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 29
  28. 28. Do you know who your STAR members are? STARS Vulnerable Members Lost Causes Free Riders F Rid THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 31
  29. 29. Define Your Audience 1 2 Refine Your Marketing Efforts g
  30. 30. Millennials & MatrixEvery Generation
  31. 31. How do different generations make buying decisions? Influence THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 35
  32. 32. Generation X and Direct Mail 86% bring in the mail 75% rate 68% have DM as used DM valuable coupons THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 36
  33. 33. Generation Y and Direct Mail 87% bring in the mail 75% rate 73% have DM as used DM valuable coupons THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 37
  34. 34. Most viM B rs isited sites: Boomer THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 38 Source: Nielsen Company
  35. 35. MMost vi isited sites: Boomer B rsMMost vi isited sites: Millennia M als
  36. 36. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 41
  37. 37. Define Your Audience Refocus Your Opportunities 1 2 3 Refine Your Marketing Efforts g
  38. 38. Who uses the social web? 0-17 | 15%18-2418 24 | 9% 25-34 | 18% 35-44 | 25% 45-54 | 19% 55-64 | 10% 65+ | 3% THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 43
  39. 39. Information Revealed on Social Networking Sites Birthday Phone (Month & Number Day) High Birthday School (Month, Name Day, Y ) D Year) Email AddressSource: 2012 Identity Fraud Report, Javelin Research THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 44
  40. 40. “Identity Theft” term coined Internet commercialized1964 1969 1992 2011 Frank Abagnale caught 11.6 11 6 million victimsSources: Oxford English Dictionary onlineJavelin Strategy and Research Study 2012 THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 46
  41. 41. Changes in Smartphone Ownership 60% 48% 46% 40% 41% 35% 20% 17% 12% 0% Smartphone Other cell phone No cell phone May 2011 February 2012Source: Pew Research Center’s Internet & American Life Project, 2011 & 2012 THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 47
  42. 42. Category Trends: Identity Theft Peer to DataSocial Breaches PeerDifficult Difficultto to SmartResolve detect Phones THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 49
  43. 43. Do you expect yourfinancial institution tooffer Identity Theft ypprotection? THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 50
  44. 44. Only 17% say 21% Neutral “no” More than 6 out of 10 expect ID theft products from their FI relationshipSource: Affinion Group Identity Theft Product Research THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 51
  45. 45. If your financial fi i linstitution ff di tit ti offered anIdentityIdentit Theft protectionprogram,program how wouldyou perceive them? THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 52
  46. 46. 24% Neutral More than 3 out of 4 will think more favorably of that institution because of the offerSource: Affinion Group Identity Theft Product Research THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 53
  47. 47. Marketplace Examples A number of institutions have already begun to include these types of programs into their checking options Identity Credit Everyday Travel Health & Theft Management Savings Savings Wellness Insurance THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 54
  48. 48. Identity Theft Services Protection Credit Management
  49. 49. Identity Theft ServicesTriple SocialBureau MediaCredit Monitoring gMonitoring Public Underground Records R d Chatrooms Monitoring Identity Risk Score THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 56
  50. 50. Credit ManagementTripleBureau Credit ScoreCredit SimulatorsReports Daily All Clear Credit C dit Notifications Monitoring Triple Bureau Credit Scores THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 57
  51. 51. Consumers have reduced spending Focus on paying down debt Credit Management Trends 35% have a FICO >650 1/3 don’t know their score*Source: American Express Spending & Saving Tracker consumer survey, July 2010**Source: FICO data from April 2010***Source: National Foundation for Credit Counseling, 2009 Financial Literacy Survey, April 2009****PRWeb, August 2010 THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 58
  52. 52. Assisting Millennials with their credit is another opportunity for your FI. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 59
  53. 53. Social Media S i l M di Triple Ti l Financial Monitoring Calculators Bureau Credit MonitoringMillennial job seekers will need to be concerned about identity theft. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 60
  54. 54. Percentage of the top 50 CU’s with CU s a fee rose from 18% to 26% 41/50 have no balance requirement q or monthly checking acct feeBankrate.com 2011 Credit UnionChecking Survey 39/50 offer free. Another 10 will waive it with DD and/or e-statements Avg NSF fee grew to $26.05 in 2011. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 61
  55. 55. 2011 Fee income decreased, while deposits increased 2011 deposits increased by b 800B – or, 8 5% 8.5% 2011 Fee income on deposit accounts p decreased from 36.2B to 34.1BSource: Credit Union Journal, May 7, 2012 THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 62
  56. 56. 2011 service fees on deposit accounts Minimum deposit balances Deposits/ # of checks withdrawals drawn via an ATM Deposit Account Fees Withdrawals from non- NSF/OD transaction accounts t Closing of savings accounts THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 63
  57. 57. "These findings suggest the potential forfee income from traditional services isgradually diminishing. Institutions needto start offering value-added servicesthatth t consumers want and need and are t d d dwilling to pay for." Dan Geller, EVP at Market Rates Insight THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 64
  58. 58. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 65
  59. 59. Why Prepaid Debit (GPR)? 42% are Boomers SUB 47% will ill POINT use if 60 offered million by their under FI banked SUB POINT Prepaid Cards 21% earn between 36% of likely $66k- users earn $100k between $35k- $65k Activity will increase to $442B by 2017 14% earn over Supplement $100k lost revenue THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 66
  60. 60. Consumers are getting GPR cards from a variety of sources THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 67
  61. 61. Target Member Segments Checking Account Turn-Downs  Industry experts estimate that a typical financial institution turns away approximately 20% of all members wanting to open a checking account  Chexsystems verification  Drivers License verifications  Less than favorable credit circumstances  Length of residence  Out of town applicants Small Business and Commercial Members  Effective budgeting tools for expense management  Versatile funding vehicle for letters and lines of credit and convenient/control- able disbursement  Payroll solutions Teens and College Students  Parental driven funding options for students and teens  Effective spend accountability  Transactional reporting tracking spending Outstanding way to revitalize stagnant overlay programs THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 68
  62. 62. Product Concepts: Two core prepaid card products: Gold  ToggleGUARD™  RxAdvantage  CardPatrol Platinum  ToggleGUARD™  RxAdvantage  CardPatrol  Emergency Roadside Assistance  Get Gas Rewards THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 69
  63. 63. ToggleGUARD™…ToggleGUARD™ is the ultimate infunds security…→ “Hey, can I have a double skinny latte mocha frappachino with extra WHIP please?”?→ “Sure, that will be a gazillion dollars”→ Swipe card, and by the time your low calorie drink is ready, you l l i d i ki d have the following text THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 70
  64. 64. What and Why “merchant funded”? Consumers:  Rapid increase and convergence of coupon usage, daily deal adoption, online shopping and mobile  Expecting more value from their debit and credit cards, particularly in light of fee- based account programs  Shop with whom they trust Merchants:  Seeking new ways to acquire, retain and grow members  Applying greater use of data analytics and targeting to stretch ad dollars  More open to cross-pollination of members p p Financial Institutions:  Striving to increase card utilization and member loyalty, while minimizing costs  Expanded focus on growing share of other products and services  Seeking to mitigate impact of Durbin Merchant- Merchant-funded loyalty is at the intersection of all three trends THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 71
  65. 65. Shopper’s Assistant reminds members to always get cash back Credit Union branded browser extension member to always shop through the CU Credit Union‐branded browser extension member to always shop through the CU  Downloaded by user at enrollment or post‐enrollment and sits/viewed in browser  Immediately deploys when user lands on in‐network merchant site  Reminds members to shop through earnings site every time a merchant is recognized  No redirecting, no hassle, easy to use, clickable browser extension   C b l Can be leveraged to distribute ongoing Credit Union communications and offers – all  d t di t ib t i C dit U i i ti d ff ll through the browser   One‐of‐a kind, Affinion patented THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 72
  66. 66. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 73
  67. 67. Sample Merchants THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 74
  68. 68. U.S. VEHICLE SALES (in Millions)17.4 17.1 17.3 17.4 16.9 17.0 16.4 13.5 12.8  13.0 (projected) 11.8 10.6 10 62001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  69. 69. 11 yearsAverage age of cars on the road4.54 5 yearsAverage length of time owners keeptheirth i new/used cars / d
  70. 70. The cost of owning and operating a vehicle Finance  Depreciation Gas Insurance g Charges Tax, License,  Maintenance Tires Registration POINT POINTSource: AAA 2012 “Your Driving Costs” study 
  71. 71. 2011’s biggest expense was gas. Finance  Depreciation Gas Insurance Charges Tax, License,  Maintenance Tires Registration POINT POINT
  72. 72. “Auto lending has always been a Auto challenge. The competition is for new autos. We re autos We’re surrounded by dealers in the areas we serve.” Brian Thornton, senior vice president and chief lending , p g officer at Stanford Federal Credit Union in Palo Alto, Calif.Source: “Auto Lending: Players Vie for Same Members Traditional CompetitorsHave Lock on Market” – Credit Union Times Magazine, May 30, 2012 THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 79
  73. 73. The Facts• Americans take 1.1 billion trips a day – 87% of daily trips take place in personal vehicles1• U.S. daily travel averages almost 40 miles per person per day1 − Complete Auto360 SM coverage is comprehensive – covers members and their family Auto360° − Coverage follows the individual – not the vehicle – so members are covered in any car when needing roadside assistance − Nationwide roadside assistance is available 24/7 with over 30,000 participating service providers• Average annual cost of maintaining a vehicle is $6902 − With discounts of 10%-50% off, members can save hundreds on annual maintenance and repairs• 70% of car owners neglect regular car maintenance due to confusion about what services need to be performed or are concerned about being scammed by a service provider3 − ASE-certified mechanics are available to assist members with auto inquiries and validation of repair estimates1) National Household Travel Survey - http://www.bts.gov/programs/national_household_travel_survey/daily_travel.html ) y p g p g _ _ _ y y_2) Bureau of Transportation Statistics - http://www.bts.gov/publications/national_transportation_statistics/html/table_03_14.html3) Carjunky.com - http://news.carjunky.com/car_maintenance/neglected-car-service-costing-motorists-cdh602.shtml THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 81
  74. 74. Complete Auto360°SM Overview Dent Guard® Auto Protection Plan • Paintless dent repair coverage for metal dents and door dings • Interior repair including fabric tear and scratches • Windshield repair Emergency Roadside Assistance with NEW LocateMe® GPS Technology • Roadside assistance, home and auto lock-out protection 24-hours a day, 7-days-a-week • Members are covered for up to 3 events per year, up to $80 per occurrence • Nationwide network of over 30,000 road-service professionals • LocateMe GPS technology makes requesting emergency assistance easier and quicker Auto Maintenance Discounts • Point of sale discounts of 10%-50% on most automotive maintenance and repairs • Over 15,000 participating service centers nationwide • Search by zip code to find the nearest participating service center ASE-Certified Mechanics Helpline • Toll-free repair and maintenance information • Certified mechanics on staff to answer member questions • Instant diagnostic help in real time Gas Rebate Rewards • Members receive up to a $40 rebate per calendar year for gasoline purchases at any gas station in the U.S. • Members submit gas receipts quarterly and receive up to $10 back per quarter*If product is being marketed as a retail product (via direct mail, etc.) then $1,000 AD&D Insurance is included in the product. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 82
  75. 75. Credit Union Success Story – Fee Income / AcquisitionClient Data – Western Credit Union Business Result:Assets $620 Million  20% cross-sale ratio in the first two monthsBranches 20 (account launched in April)Members 56,000  Nearly 20% of all new checking accounts have at least one value-added package (year-Client Need: end goal 50%)To develop a brand new checking account designed tocreate a competitive advantage, drive non-interest advantage non interestincome, and attract new members/accounts - all while  Program is trending 100 brand new checkingproviding a valuable product that members want and can accounts / weekdesign themselves.Affinion Solution:  “C dit P k “Credit Package” as b ” been th most chosen of the t h f all package optionsCreate 6 different “Packages” ranging from credit andidentity theft services to travel and shopping discountsand services.  National media exposure: Forbes, Yahoo Finance, CNBCLet members design their own account by choosing thepackage(s) they want, for a nominal fee, to add to theiraccount.Leverage bank’s strong sales culture as an opportunityto maximize revenue and program penetration. THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 83
  76. 76. Personal FiP l Financial Management (PFM) i lM t 1 Online Banking 2 Revenue Generating Products g 3 THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 84
  77. 77. Define Your Audience Refocus Your Opportunities 1 2 3 4 Refine Your Marketing Efforts g Summary y
  78. 78. Credit Unions have high service levels ATM Access A Online Mobile Banking Banking THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 86
  79. 79. Banks and Financial services are the two l t least trusted tt t d industry sectors for the second year in a row. Technology, for the sixth consecutive year, is the most trusted. t t d 2012 Edelman Trust BarometerTHE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 87
  80. 80. & s
  81. 81. Wayne Conte EVP, Affinion Group 400 Duke Drive Franklin, TN 37067 615-764-2537 wconte@affiniongroup.comhttp://www.linkedin.com/pub/wayne-conte/a/117/915 THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 89

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