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Marketing to Reg E


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Thoughts on how to minimize the impact of Reg E. From segmentation to communications tips.

Published in: Business, Economy & Finance
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Marketing to Reg E

  1. 1. Reg E is not the E nd of fee income
  2. 2. Reg
  3. 3. Reg veryone is in a panic
  4. 4. Reg It’s the nd of fee income
  5. 5. Reg yes All are on Marketing to make it better!
  6. 6. Discussion Overview <ul><li>The Reg E Reality </li></ul><ul><li>What Members Want </li></ul><ul><li>Getting the Message Across </li></ul><ul><ul><li>Targeting </li></ul></ul><ul><ul><li>Communication </li></ul></ul><ul><ul><li>Training </li></ul></ul><ul><li>Measurement </li></ul><ul><li>After the Reg E Deadline </li></ul>
  7. 7. Reg E Reality
  8. 8. The Basics <ul><li>Reg E goes into effect for new accounts on July 1 </li></ul><ul><ul><li>Existing accounts on August 15 </li></ul></ul><ul><ul><li>Members must respond by August 11 </li></ul></ul><ul><li>Checking and ACH transactions not impacted </li></ul><ul><li>Only involves Debit/POS and ATM transactions </li></ul><ul><li>Members must opt in for Overdraft Service </li></ul>
  9. 9. The Basics 27.4% of CU non-interest income comes from NSF/Courtesy Pay Source: Callahan & Associates’ Non-interest Income Survey <ul><li>The remainder is from: </li></ul><ul><li>Debit/Credit Card Interchange </li></ul><ul><li>Lending Fees </li></ul><ul><li>ATM Fees </li></ul><ul><li>Etc. </li></ul>
  10. 10. The Basics NSF Transactions by Transaction Type Source: FDIC Callahan & Associates estimate that roughly 56% of your total Overdraft Revenue will be in flux.
  11. 11. The Basics NSF Transactions by Transaction Type Source: FDIC The income at risk is driven by about 12% of your member-base
  12. 12. What do Members Want?
  13. 13. What do Members Want? <ul><li>Members want complete transparency </li></ul><ul><li>Communication should be simple to understand </li></ul><ul><li>Options should be painfully obvious </li></ul>Many members will gladly pay for convenience, but the choice must be theirs. And the options must be clear.
  14. 14. So how do we get the message across?
  15. 15. Targeting <ul><li>Your High Overdraft Users Are The Key </li></ul>Remember, about 12% of your members drive this revenue.
  16. 16. Targeting beyond initial contact to all effected <ul><li>Primary Target: All Members with 10+ ODs in last 12 months </li></ul><ul><li>Secondary Target: Model Primary Target </li></ul><ul><ul><li>Checking account balances </li></ul></ul><ul><ul><li>What is the average low balance of the month </li></ul></ul><ul><li>Everyone else </li></ul>Option 1
  17. 17. <ul><li>Primary Target: All Members with 10+ ODs in last 12 months </li></ul><ul><li>Secondary Target: 1-10 ODs in last 12 months </li></ul><ul><li>Everyone else </li></ul>Option 2 Targeting beyond initial contact to all effected
  18. 18. Communication Educate Motivate Get a Response
  19. 19. Educate Stick to the basics What is an overdraft and what will be different on August 15
  20. 20. Motivate Help the Member make an informed decision Provide “real world” examples with and without opt in
  21. 21. Get a Response Make it easy for the member to opt in Always provide a means to act Opt in form on Letter Secure form on Website Link to form from eMail Phone & URL in Statements Tools to Front Line Staff Outbound Calls if necessary
  22. 22. The Message
  23. 23. Intro Letter <ul><li>EDUCATE: Reg E basics. Keep it simple </li></ul><ul><li>MOTIVATE: Real World Examples with and without opt in </li></ul><ul><li>GET A RESPONSE: Include the form with self-address and postage indicia. Make it easy. </li></ul>
  24. 24. Intro Letter What is an Overdraft? What are the standard Overdraft practices? Real World Examples with and without opt in Form with opt in AND opt out options What fees will be charged if CU pays Overdraft? I want it! How do I authorize this? For a copy of this letter, email
  25. 25. Other Media <ul><li>Use this same messaging and methodology for all other forms of communication. </li></ul>Educate Motivate Get a Response
  26. 26. Staff Training
  27. 27. Staff Training <ul><li>EDUCATE </li></ul><ul><li>Reg E basics </li></ul><ul><li>Cheat Sheets </li></ul><ul><li>Real World Examples </li></ul><ul><li>MOTIVATE </li></ul><ul><li>Teach basics of fee income to CU bottom line </li></ul><ul><li>Consider small incentives for ANY response </li></ul><ul><li>Set goals and report weekly progress </li></ul><ul><li>GET A RESPONSE </li></ul><ul><li>“ Hit Lists” by Branch (High Overdraft Users) </li></ul><ul><li>Buck Slips with real world examples </li></ul><ul><li>Train to ask the right questions </li></ul>
  28. 28. Buck Slip Sample
  29. 29. Buck Slip Sample Educate That means… Fee details Get a response Educate That means… How this is different Get a response
  30. 30. The 7 Right Questions It’s about being Consultative and taking an Advisory Approach.
  31. 31. The 7 Right Questions 1. Do you use debit cards frequently to make purchases because it’s convenient or you often do not have enough cash or other forms of payment with you?
  32. 32. The 7 Right Questions 2. Do you often get close to a zero balance on your account by the time you make a new deposit?
  33. 33. The 7 Right Questions 3. Are you often not sure of your account balance before making a purchase or cash withdrawal?
  34. 34. The 7 Right Questions 4. Do you often use your debit card when you are out of town and away from a XYZ Credit Union branch?
  35. 35. The 7 Right Questions 5. If you need to use your debit card for an emergency or unexpected purchase, would it be important for that transaction to be approved regardless of your account balance?
  36. 36. The 7 Right Questions 6. Though you do not anticipate taking your account to a negative balance, would you consider paying a fee for the convenience of completing a transaction if it took your account to a negative balance?
  37. 37. The 7 Right Questions 7. If you were trying to make a purchase for an amount of more than what is left in your account, would you rather pay a fee to avoid the embarrassment of being declined?
  38. 38. The 7 Right Answers 0-2 “Yes” No real need to opt in 3-4 “Yes” Don’t plan to use but may be nice 5-7 “Yes” Definitely need to opt in
  39. 39. Measurement
  40. 40. Measurement <ul><li>Set Goals: </li></ul><ul><ul><li>% of High Overdraft Users </li></ul></ul><ul><ul><li>% of all others </li></ul></ul><ul><ul><ul><li>Measure opt in AND total response if possible </li></ul></ul></ul>Report weekly to management and staff
  41. 41. Sample Report Total # # of Opt ins % opt ins # of Opt outs % opt Outs Total Reponses % Responses Goal High Users 170 75 44.1% 30 17.6% 105 62.0% 90% Medium Users 300 90 30.0% 80 26.7% 170 56.7% 80% All D.C. Members 1,000 400 40.0% 300 30.0% 700 70.0% 70%
  42. 42. After August 15
  43. 43. After August 15 <ul><li>Proactively communicate with members that opted out when you decline their debit transaction </li></ul><ul><ul><li>Explain that you acted according to their wishes </li></ul></ul><ul><ul><li>Provide an opportunity to opt in </li></ul></ul><ul><li>Prepare the front line staff and call center </li></ul><ul><ul><li>Reiterate the Reg E basics </li></ul></ul><ul><ul><li>Arm them with a list of all Reg E materials that members received </li></ul></ul><ul><ul><li>Provide them the tools to Opt members in for future transactions </li></ul></ul><ul><li>Add to On-Boarding Program </li></ul>Despite your best efforts, you’ll be amazed by how many complaints you’ll receive when transactions are declined.
  44. 44. After August 15 <ul><li>Cross sell / pre-qualify members for other options to protect against overdraft like Savings Sweeps. </li></ul>What about those members that opt out?
  45. 45. This is an opportunity <ul><li>Have “ The Talk ” with members </li></ul><ul><ul><li>How to create and keep a budget </li></ul></ul><ul><ul><li>“ Whether you opt in or opt out, there’s NEVER a fee if you don’t overdraft. Don’t spend what you don’t have.” </li></ul></ul><ul><ul><li>Avoid debt </li></ul></ul><ul><ul><li>“ Just say ‘NO’ to credit cards.” </li></ul></ul><ul><ul><li>ID Theft </li></ul></ul><ul><ul><li>“ NEVER provide information to someone that contacts you.” “eStatements are safer than paper statements.” </li></ul></ul>We can differentiate ourselves from our for-profit counterparts
  46. 46. This is an opportunity <ul><li>For those companies that may decline cards at POS </li></ul><ul><ul><li>Educate about possible effects of Reg E (In-house seminars) </li></ul></ul><ul><ul><li>When your members are declined at POS: </li></ul></ul><ul><ul><ul><li>Provide retailer with opt in tools (phone numbers, online, etc.) </li></ul></ul></ul>What about our commercial friends and SEGs?
  47. 47. Wrap Up <ul><li>Run EVERYTHING through compliance </li></ul><ul><li>Keep ALL COMMUNICATION as simple as possible </li></ul><ul><li>Provide the Member with smart options </li></ul><ul><li>Educate … Motivate … Get a Response </li></ul><ul><li>Use all of your touch points </li></ul><ul><li>Measure and Report </li></ul><ul><li>August 15 is only the beginning </li></ul>
  48. 48. Eric Gagliano MarketMatch SVP, Client Management [email_address] 866-501-2233 x 106 Thank You