The profile of a loyal consumer: Strategies to retain credit union members

Today, there is an overabundance of technology products in the financial services market. If consumers find their credit union’s offerings to be inadequate or if they are unhappy, they can easily switch to a different institution. With more than half of financial consumers switching their primary institution at some point in their lives, and 53% switching more than once, credit unions should focus on ways to retain and upsell their current members.

In our newest report The Secret to Consumer Loyalty: Relationship Banking, the top three reasons consumers cited for why they left their previous financial institution were: convenience of services, quality of services, and cost of rates and fees. Similarly, these were also the top three reasons they chose their current institution. An inadequate lack of financial education tools and services was also listed as a reason for leaving by one third of consumers.

In order to retain members, you must first understand the profile of a transactional consumer and the profile of a loyal consumer. Here are the two types of consumers we discovered in our recent survey:

The Transactional Consumer

Transactional consumers are those who see their financial institution(s) as a service to be used only when necessary, without seeking out any extra benefits. They appreciate high quality, but they just want the basics–checking and savings accounts, mobile check deposit, simple online banking. At 79%, the majority of consumers fall into this category.

The Relationship Consumer AKA The Loyal Consumer

Relationship consumers make up the 12% who do want extra benefits. They typically use 1-2 more products and services than transactional consumers and are more satisfied with their financial institution. Relationship consumers are twice as likely as Transactional consumers to take a financial education course provided by their bank and 56% of those who do are more likely to use products and services after. Relationship consumers tend to be more confident, more satisfied, and more engaged with the products and services from their financial institution. The deep roots they establish make them much less likely to leave. While this subgroup is significantly smaller, its value is potentially much greater.

So, how does your financial institution secure more of these coveted relationship consumers? Through high-caliber products/services plus sufficient promotion to both relationship and transactional groups. Ensure you’re optimizing opportunities with your existing relationship consumers while working to convert your transactional consumers, too.

First and foremost, make sure you have compelling products and first-rate services that truly meet needs. Remember: convenience, quality and cost are the top three categories to consider regarding retention and acquisition. Financial education is also a top consideration: two-thirds of relationship consumers said it was an important factor when considering what institution to bank with. Providing online, interactive financial education that can be accessed whenever your consumers need it is a perfect solution for engagement. The best education programs serve to both improve a consumer’s financial capability and provide insights to your bank. This can advise the best ways to interact with your consumers and build relationships.

Then, make sure you sufficiently promote those offerings—a key step that is often underestimated: 38% of relationship consumers and 64% of transactional consumers aren’t even aware their institution provides financial education. This is a sizable portion of credit union members and a powerful opportunity to promote more to your highly receptive relationship consumers and convert some historically transaction-based consumers into relationship-based ones. Providing financial education to your bank’s employees can also go a long way to improve the expertise of your staff and, in doing so, encourage more valuable customer experiences that may lead to increased engagement and relationship-based consumers. You can also promote via an email marketing strategy—sending out curated information about specific products and services by member segment.

Relationship-based consumers comprise a loyal, high-value member base: financial institutions with more relationship-based consumers have better consumer retention and more product usage and upsells. Put in the time to strengthen ties with your existing relationship consumers and cultivate new ones from the transaction consumer category. The majority of Americans switch banks or credit unions at some point in their lives. Be the credit union they go to, rather than the one they leave!