In the US alone, the number of credit union members has grown more than 25% since 2013 and with this, the value of the assets credit unions hold has increased by 75%. During the same time, however, the number of credit unions has been reduced by 20 percent.
In a nutshell, business is good, but only for an increasingly smaller number of credit unions, with competition having squeezed out the underperformers.
This, of course, points to a major issue. With more people willing to invest in credit unions, how do you keep your own members engaged so that your financial institution doesn’t become the one that gets squeezed out?
Whither engagement? Why credit unions fail
Decreasing engagement is usually the first sign of trouble which, of course, ends up having a serious impact on member retention. According to Marketing General’s 2020 report, 43% of members don’t renew because of a lack of engagement with their credit union, a number that has grown from 37% in 2018. Engaged members also stay 4 more years compared with non-engaged members.
And while lack of engagement consistently remains the number one reason why members don’t renew, it also affects the bottom line, as engaged members spend 22% more than non-engaged members.
Exacerbating the issue is that, despite its considerable negative effects, credit unions often neglect engagement strategies: 24% do not have a tactical plan to increase engagement.
Or even worse, some credit unions tend to misinterpret engagement as customer service.
To explain, customer service is reactive communication that is often a one-off interaction between members and credit unions responding to their queries or problems. On the other hand, member engagement involves credit unions proactively communicating with members, anticipating their needs, and building a consistent, long-term, one-to-one relationship through value-added interactions.
There’s no way around it. Member engagement is essential for growth, whether through retention or spend, and unhappy members who decide their needs have not been satisfactorily met often churn. Over half of organizations with a member engagement plan reported it helped them increase membership renewals (51%), attendance at events/webinars (50%), annual conference attendance (44%), social media engagement (34%), web traffic (31%), and non-dues revenue (25%).
So, without an active membership engagement plan in place - whether through ignorance or inaction - a credit union will not be able to survive in the increasingly competitive market.
But before settling on a means of securing or boosting engagement, a credit union first needs to examine the makeup of its member base.
It takes all kinds: heterogeneous membership and engagement
One of the main reasons for the failure of a credit union to effectively promote engagement is its inability to fully understand its own membership. When conceiving and building an engagement plan - if they do at all - credit unions often adopt a monolithic approach that treats all of its members as one homogenous group with equally similar needs, giving no thought to the diversity of their interests.
Seeing members as homogenous is more aligned with the customer service mindset mentioned above, and credit unions who do so either push out the same, universal all-encompassing communication to all its members, or individually react to a member’s problems with no thought or way to connect to them to wider patterns of engagement.
Forgotten in this approach is the heterogeneity of the member base, wherein each member has different needs and different levels of participation or interest, each is on their own unique customer journey. There are advocate members with high spend who will be there for life, members who were once satisfied but are rethinking their membership, new members who just clicked on a link for the first time.
For an engagement plan to be successful, credit unions need to understand that different members need to be engaged differently. Long-standing advocates need different messaging than new members, new members need to be handled differently than members whose engagement was once high but now trailed off.
In this reality, a homogeneous, one-size-fits-all outreach approach will never lead to either an improved or efficient engagement strategy because, for all of a credit union’s efforts, no member will feel like their unique needs are being addressed. In a word, a homogeneous approach is not personalized.
For these reasons, credit unions need to better understand their member base in order both to understand the factors that lead to engagement and to identify engagement opportunities. One of the ways to do this is through quantifying engagement and measuring one’s efforts towards increasing it. As we’ll see, though, this is not without its major drawbacks.
The importance – and difficulty – of measuring engagement
Complicating the issue for credit unions, even if they are motivated to build an engagement plan, is that measuring membership engagement is often difficult. And without the ability to properly measure and quantify engagement, credit unions can’t determine the ROI on their efforts and strategize engagement more effectively.
At first glance, member engagement seems relatively simple, but it quickly becomes clear that more sophisticated analyses are needed to grasp its importance and consequence.
Engagement can’t be represented by a single variable, but requires a deeper, more nuanced examination at all the various touchpoints and interactions that go into determining the overall value of a member. If credit unions wanted to quantify engagement as holistically as possible, they would need to include diverse variables from a wide and complete set of transactional, operational, and behavioral data, such as type of members, number of transactions, channel usage and length of association.
Given this complexity, the credit union industry has so far failed to develop a more sophisticated model to measure engagement, and have always fallen back on the more rudimentary, one-dimensional and one-size-fits-all approach that reduces heterogeneity to homogeneity, complexity to simplicity.
For an engagement strategy to accurately reflect the true nature of heterogenous membership and that is at the same time quantifiable and measurable, credit unions need tools that can supply more granular, more specific and better data segmentation, especially if they want to make communication more personalized to increase engagement.
Statflo: the key to engagement
Thankfully, with the host of new technologies specifically designed to open and digitize the banking industry's legacy systems, there are digital solutions readily available to help credit unions execute an effective engagement strategy.
One of the most unique and effective tools is personalized text messaging, which can better engage members of all different stripes and has unique data capturing to provide the segmentation that credit unions need to quantify the effectiveness of their engagement efforts.
Statflo’s one-to-one business text messaging is at the vanguard of addressing and boosting membership engagement in a variety of ways, such as increasing personalization, adding context to customer conversations, and making it easier to dialogue with customers.
Personalization: In order to capture member attention and keep them interested in a dialogue, credit unions need to ensure that their conversations are personalized and relevant: instead of sending the same text message to all members, Statflo helps credit unions send the right message to the relevant member groups, exactly the kind of personalization that increases interest in the conversation.
Adding context to conversations: As part of this personalization, members expect communications to reflect their own history with the credit union, as well as their specific wants and needs. Being able to include information that adds this type of context increases the likelihood of members responding to the communication. Statflo can help segment and customize messaging so that a member’s specific needs, goals and circumstances area always incorporated into communications.
Ease of communication: With access to a host of user-friendly and effective digital tools in many other spheres of their lives, members now expect seamless, instant, and contextual communication with their financial services providers. And not just in one channel - channel preferences are evolving, and members want easy access to services across a variety of platforms. Efficient, accessible communication with credit unions across multiple platforms plays an influential role in determining their level of engagement. As a one-to-one text messaging service, the ease with which Statflo can provide members with information at their fingertips through familiar, user-friendly channels means that engagement always stays high.
Data segmentation and measurement: Statflo can easily overcome the problems posed by measuring engagement by being able to segment data more efficiently and accurately to reflect the heterogeneity of membership. Statflo can integrate with CRMs to pull data and help define segments according to chosen variables specific to the customer journey, and then help create messaging according to those data segments. This way, it becomes easier to see how effective certain messaging or services are for certain members. This feedback loop of data also means that credit unions can continually refine and improve the effectiveness of their engagement strategies.
A brief consideration of some of Statflo’s functions and use cases quickly demonstrates how easy it is to communicate with members and add context with personalized messages, wherein a member is neither being neglected nor subject to a homogeneous, one-size-fits-all approach. From a quick check-in to see if they have any questions or concerns to setting up calls, appointment or portfolio reviews, customers receiving personalized messages are immediately engaged, directly on their mobile devices. Even more so if the messaging arrives to specifically address their immediate needs, like providing customer support to members over digital channels. Or even as something as simple as advice, information, support before significant annual deadlines (e.g. RRSP, taxes) and informing them of upcoming events, like webinars, in which they may be interested.
In each of these instances, Statflo’s one-to-one business text messaging is engaging members in an easy, user-friendly and accessible way that adds context to the conversation and lets them feel that their credit union takes their personal needs seriously, all of which together form a clear path to a long-term engagement strategy.
Engagement rings with Statflo text messaging
There is no doubt that credit unions need to better understand their member base in order to identify engagement opportunities. And the trends and numbers are clear: without an engagement strategy, credit unions will suffer membership loss, membership dissatisfaction and membership spend. From there, it becomes harder and harder to position one’s organization in competition against those who have prioritized engagement and adopted the digital solutions to ensure retention.
Using technology like Statflo helps build connected experiences between credit unions and their members and ensures the member satisfaction that drives engagement. And, given the range of services that can be availed virtually by a system as flexible as one-to-one text messaging, this means credit unions have the tools to adapt to changing customer needs.
Incorporating one-to-one messaging into a member engagement plan will not just boost engagement but will have far-reaching downstream effects in terms of overall retention, customer satisfaction and profitability.