I’ve always felt a little guilty when I used my debit card to pay for something like gum at a gas station. Surely, most “normal” people carry enough cash around for small purchases like that; the cashier must be secretly laughing at me for having to pull out plastic for such a small purchase. Turns out, I may be much more “normal” in this regard than I first thought.
We hosted a recent webinar with Discover, the NAFCU Services Preferred Partner for Turnkey Credit, Debit and Prepaid Card Programs, that combed through the 2012 Debit Issuer Study from PULSE, a Discover Financial Services company. According to this study, more consumers are using their debit cards in place of cash, increasing the percentage of debit sales for smaller amounts. The study found that, in 2011, 31% of debit transactions were under $10, 21% were between $10–$20, and 23% were between $20 and $40. Consumers also are using debit more in general. Consumer debit growth in 2011 slightly exceeded issuers’ expectations. For example, for credit unions, 8% growth was projected for 2011 in PIN transactions, and 12% growth was projected for signature transactions. In reality, there was a 9% growth in PIN transactions in 2011 and a 15% growth for signature transactions in 2011. Furthermore, consumer total annual spend for 2011 was 7% higher than total annual spend in 2010. Looks like I’m not the only one who is using my debit card more and more.
For any business, trust is key for retaining customers and attracting new ones. For credit unions, establishing trust is even more important because you are dealing with very sensitive issues—their money and their future. And we’re not just talking about convincing members to entrust us with their deposits in share draft or savings accounts. We ask our members to look to us for everything from financial planning and wealth management to lending to insurance related solutions, all of which drive revenue.
But building a trusted advisor relationship with your members on all things financial is easier said than done. Luckily, credit unions have a head start when compared to banks, not having to dig ourselves out of a ‘trust black hole.’
Many aspects of the credit union business model and brand just naturally lend themselves to building trust—putting members first, our service mentality, and so on. There is always room for improvement, though, so how would a credit approach building an even greater level of trust with their members?
Management guru Peter Drucker once said, “The purpose of business is to create and keep a customer.” It is a “law” of any business: It is more cost effective to keep your current customers satisfied than it is to look for new customers to replace them. A recent Ernst and Young global consumer survey found that 25% of customers changed banks in 2011 due to poor levels of personalized service and branch location proximity. While it would be nice to think that most of them switched from banks to credit unions as part of Bank Transfer Day, odds are that plenty went the other direction too.
Successful credit unions will look at all aspects of their operations for opportunities to retain current members by constantly striving to improve their member experience.
The phrase ‘member experience’ is broad and encompasses practically every aspect of a credit union. There are many ways credit unions can improve the member experience. Loyalty programs, financial education, and community involvement are a few things your credit union may want to look at adjusting. There is another area of member experience, however, that is often overlooked even though it comprises a large part of your members’ interaction with your credit union: ATMs.
As a marketer who really is a geek for marketing, I have a very dear relationship with business analytics. Why? It is (or should be) a part of every step of the marketing process. Analytics allow you to determine which marketing campaigns, outlets and target audiences are the most effective (ie: Is Facebook or Twitter sending more people to our website? Which of our members are most likely to leave? Who is most likely to be looking for a car loan?). Take it a step further, and analytics can even predict which marketing campaigns, outlets, and target audiences will be most effective in the future. How cool is that?
The difference between using analytics and not is the difference between making an informed choice about allocating your scarce marketing resources and an uninformed one. It almost seems a no-brainer which approach makes the most sense, but time and time again we see ‘intuitive’ marketers following their gut instincts and ending up with poor results.