With 57 percent of credit union members readily willing to leave for another financial institution for better data security, the rapidly growing industry is potentially at risk for mass defections. But member engagement – especially in the first 30 days of joining – can convince them to stay. In the latest Credit Union Tracker, Brian Knollenberg, VP of Analytics at BECU, discusses the three metrics the institution uses to calculate engagement and detect its own wavering members.
CUs face a host of competition when it comes to retaining members’ business. They not only have to battle fellow credit unions and banks, but also newer FinTech players offering wide-ranging innovations that can entice modern consumers. According to the March 2019 edition of PYMNTS’ Credit Union Innovation Playbook, 57.6 percent of CU members said they would switch from CUs to FinTechs if the latter provided the same level of trust.
CUs need to understand members’ financial needs as early as possible if they want to stay ahead of competitors and retain members, said Brian Knollenberg, vice president of digital marketing and analytics at BECU. In a recent interview with PYMNTS, Knollenberg shared BECU’s strategies and explained how other CUs can cooperate with each other to meet future retention challenges.
Engagement begins immediately
The first 30 days after a member joins the CU are critical to gathering relevant customer engagement data, Knollenberg explained. CUs must focus on seamless onboarding processes, enabling customers to quickly access banking services. It’s also important for CUs to focus on setting up direct deposits and providing debit cards early on in a consumer’s membership. The relationship with the member will continue to grow from there, he pointed out, providing the CU with a plethora of valuable data.
Securely collecting and using customer data is particularly important when it comes to customizing products and services, driving engagement with members and ultimately becoming their primary financial institution (PFI).
“We found that people who have a PFI relationship with [BECU] are much more likely … to come to us for credit,” Knollenberg said.
Measuring member engagement
CUs must not only assess quantitative feedback, but also qualitative feedback if they want to gauge how well its members are engaging. BECU, along with many other FIs in the United States, utilizes the Net Promoter Score (NPS) to determine how likely its members are to recommend it to others. Customers are classified into three groups based on their NPS responses: Promoters, Passives and Detractors.
Knollenberg explained that the CU also sends surveys to a random selection of customers after they interact with the CU for deposits or loan applications, for example, to gather additional qualitative feedback.
“Even something as simple as conducting a transfer might get you a survey,” he said. “‘How was your experience?’ ‘Are you happy with this product and signing up for it?’ ‘Do you understand how to use it?’ We’re always looking at that qualitative information.”
Most FIs determine customer engagement based on two questions: Is the institution the customer’s primary financial relationship? And, how many banking products does the customer have?
BECU, however, uses three factors in its engagement calculation. The first question is the same, but the second also takes into account other forms of engagement, such as mobile app downloads or setting up account alerts.
“If someone is just starting out, [he] won’t be taking on a whole bunch of loans,” Knollenberg explained. “But if [he’s] looking at our emails, using our mobile app or engaging with us to the best of [his] abilities, then [he] should be counted.”
The third factor tracks customers’ financial health. If customers use BECU’s budget tool or have more than $400 in a checking account, they qualify as engaged.
“Some people [meet] all three [factors],” he said. “These people are our most engaged.”
Detecting and preventing attrition
The ultimate goal of member engagement is to keep members invested and prevent them from moving to a traditional bank or FinTech provider. BECU’s NPS data plays a key role in determining if customers are considering leaving — Passives and Detractors are considered flight risks.
“If we get complaints, we try to follow up with those members,” he said, “but we can’t keep everyone.”
The best defense against member attrition, according to Knollenberg, is to team up with other CUs to form credit union service organizations (CUSOs). CUs in CUSOs can combine their resources to gauge the biggest threats to customer retention and determine how best to act on them.
Access to collected intelligence can help the broader CU market understand members’ motives and movements. The ultimate goal of any CU, after all, isn’t to stop members from leaving — it’s to give them reasons to stay.
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