Play the long game with members
Obtaining members is essential, retaining members is critical. Current research uncovered that “emotionally connected” customers (of banks) and members (of credit unions) provided six times the lifetime financial value over a “satisfied” customer or member. Emotionally connected customers and members use fewer financial institutions, hold more products per institution, and have lower attrition rates (conversely, higher retention rates). The lead factors in what creates an emotionally connected customer or member? Products per member (or household) and retention. The most telling cause? Retention.
Period-over-period membership growth rates help you distinguish members served at a point in time. Membership retention rates provide a better sense of membership longevity and an idea of the lifetime value of your membership. An increased lifetime value leads to a continuous timeframe to serve, market, and strengthen relationships. Many credit unions embark on their understanding of retention with a year over year comparison, e.g. “Of members who joined our credit union in 2021, what percentage remain members in 2022?” You can extend this into longer periods, as well, to gain a sense of the value your credit union provides over the long haul. Quite simply, the higher your retention rate, the more opportunity to regularly market across a member’s life stages. Top of mind leads to increased share of wallet.
“Member retention steers our marketing and membership loyalty measures,” described a CEO from Texas. “We measure membership growth, products per household, indirect conversion, members with a particular product, and more. But, member retention allows us to market to our members’ lives, across many stages. In the past, we trusted 90-day onboarding rates to measure our relationship success. We learned that most members don’t bring all their business in the first 90 days. In fact, they seldom bring all their business. Our members hear from us through continuous 90-day marketing periods. Over time, we have some of a member’s business all the time. That’s where member retention becomes the leading indicator of long-term value.”
Reliable communication, education, and marketing is certainly valuable for business development. Even more, member satisfaction is highest with regular communication. J.D Power and Associates recently revised research that gauged consumer satisfaction levels with their bank or credit union based on the number of times an institution communicated with a member for marketing and education purposes. The highest levels of satisfaction occurred with four to five messages each year (supporting, at least, quarterly outreach). The lowest level of satisfaction occurred with zero communications.
Your members want to hear from your credit union. Their satisfaction levels will be high, their product usage and holdings will grow, and their attrition rates will fall. When attrition is low, retention is high. And, retention is the leading determinant of lifetime financial value. The longer your members remain at your credit union, the more opportunities you have to serve, deliver outstanding experiences, and create shared value between your members and their credit union.
