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BEYOND THE BRANCH
Published on Nov 19, 2015
Learn how to create credit union member experiences that go "beyond the branch" and beyond basic banking services.
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PRESENTATION OUTLINE
BEYOND THE BRANCH
Drive Loyalty, Wallet Share, and Revenue
My name is Andrew Bank and I'm a co-founder of Larky. Today, I’m here to talk with you about creating member experiences that go beyond the branch, or “outside the box” (because that phrase is just too deliciously appropriate not to use here!)
START WITH WHY
Let's start with why. What is the problem? Why do we need to think beyond the branch? Why do we need to enhance member experience? Why do we need to go beyond basic banking services?
You may be thinking, “my member experience is pretty good. My members generally like the credit union and as long as we have the basic banking services and we keep up with technology, and keep their money safe, they’re pretty happy.”
You may be thinking, “my member experience is pretty good. My members generally like the credit union and as long as we have the basic banking services and we keep up with technology, and keep their money safe, they’re pretty happy.”
Photo by ed_needs_a_bicycle
GOT MEMBER LOVE?
I would answer those questions with another set of questions: “Do your members *love* their credit union? Do they buy most of their financial products from you? Is your credit or debit card at the top of their wallet?”
If your answer is “no” or “I’m not sure”, then the "why" is probably very clear to you.
If your answer is “no” or “I’m not sure”, then the "why" is probably very clear to you.
Photo by blentley
HERE'S THE WHY:
LOYALTY
We need to go beyond the branch and beyond basic banking services in order to boost loyalty.
If you don’t have strong loyalty, you have a problem. If not today, then in the very near future.
If you don’t have strong loyalty, you have a problem. If not today, then in the very near future.
WILL MEMBERS STAY OR GO?
It might be comforting to know that most FIs are in the same boat.
A CapGemini survey of 18,000 people showed that only 51% of banked consumers are confident they’ll have the same primary account in six months.
A CapGemini survey of 18,000 people showed that only 51% of banked consumers are confident they’ll have the same primary account in six months.
RETENTION ≠ LOYALTY
And even if they stay with you, retention does not equate to loyalty. A Bain & Company study showed that 50% of financial products were bought from non-primary institutions.
So half your members are not sure they’ll be around in six months and they’re buying half their financial products from someone else.
So half your members are not sure they’ll be around in six months and they’re buying half their financial products from someone else.
BANKING IS A COMMODITY
"It's just my credit union."
It might be heresy to say it, but banking is a commodity. When you ask consumers how they feel about their credit union, the most common refrain is “it’s just my credit union.”
69% of consumers said they would switch accounts for preferential treatment from another FI.
That’s a very precarious position to be in when there are so many other alternatives vying for their business -- from competitors down the street to technology companies in the cloud that would like to exclude you entirely from the payment stream.
69% of consumers said they would switch accounts for preferential treatment from another FI.
That’s a very precarious position to be in when there are so many other alternatives vying for their business -- from competitors down the street to technology companies in the cloud that would like to exclude you entirely from the payment stream.
Photo by Moga1
WE MUST ADD VALUE
So banking is a commodity and we need to stand out. We need to deliver more. We often need to deliver more for less, because that's often what consumers expect.
But don’t feel you’re alone in this plight. Adding value is one of the perennial goals of every single membership organization that I’ve ever talked to. From credit unions to alumni associations to professional associations to AAA, AARP, USAA, and more. They all live and breathe the struggle of adding value every day.
So back to the "why". If we’re going to weather the storm of competition, changing technology, and who knows what else, we need maximum loyalty.
But don’t feel you’re alone in this plight. Adding value is one of the perennial goals of every single membership organization that I’ve ever talked to. From credit unions to alumni associations to professional associations to AAA, AARP, USAA, and more. They all live and breathe the struggle of adding value every day.
So back to the "why". If we’re going to weather the storm of competition, changing technology, and who knows what else, we need maximum loyalty.
MANY MILLENNIALS
Here's one more set of data points, this one for the most coveted demographic for FIs: millennials.
They are the largest demographic segment in US history: 86M of them, 7% more than the baby boomers.
By 2025, they'll make up 75% of the workforce.
And yet, this is going to be the most difficult demographic to win over.
They are the largest demographic segment in US history: 86M of them, 7% more than the baby boomers.
By 2025, they'll make up 75% of the workforce.
And yet, this is going to be the most difficult demographic to win over.
"Detached from institutions."
In 2014, the Pew Research Center issued a report saying that Millennials are "detached from institutions and networked with friends.”
So Millennials are not going to be loyal to something as formal as a brick-and-mortar financial institution. In fact, they sound like a group of people who aren’t looking for a branch experience at all.
So Millennials are not going to be loyal to something as formal as a brick-and-mortar financial institution. In fact, they sound like a group of people who aren’t looking for a branch experience at all.
53% don't think their FI offers anything different than the others.
In fact, 53% of Millennials feel that their FI is no different than the next.
1 in 3 are open
to switching FIs
in next 90 days
1 in 3 are open to switching accounts in the next 90 days.
73% are more excited about a financial product from Google, Apple, Amazon, PayPal or Square than their own FI.
73% are more excited about a new financial product from Google, Amazon, Apple, PayPal, or Square than their own FI.
71% would rather go
to the dentist than listen
to their FI.
And this is no joke, it's straight out of the survey, although the researchers must have asked this question just to get a laugh:
71% of Millennials would rather go to the dentist than listen to what FIs are saying.
71% of Millennials would rather go to the dentist than listen to what FIs are saying.
Photo by Dr PS Sahana * Kadamtala Howrah
Untitled Slide
Here are about ten other reasons why we need to focus on loyalty.
These companies and many more see the banking system as ripe for disruption. These companies are aiming for a piece of your interchange revenue, or they are aiming to disintermediate you completely from consumers’ money.
These companies and many more see the banking system as ripe for disruption. These companies are aiming for a piece of your interchange revenue, or they are aiming to disintermediate you completely from consumers’ money.
"FIs are in prime position to benefit from new payment methods and loyalty schemes. Consumers trust FIs with their data more than they trust retailers, tech companies or alternative payment providers."
The good news is that, according to Bain & Company, “FIs are in prime position to benefit from new payment methods and loyalty schemes. Consumers trust FIs with their data more than they trust retailers, tech companies or alternative payment providers.” (Bain & Company, 2013 Customer Loyalty in Retail Banking.)
IDEAS
FOR GOING BEYOND THE BRANCH
So I hope this sets the stage for “why” we need better loyalty and what credit unions are up against. Now let’s talk about some solutions for gaining stronger loyalty.
I’m going to breeze through some ideas that we've gleaned for credit unions to enhance member experience beyond their branches and beyond basic banking. And then I’m going to focus more on loyalty programs because that’s where our expertise lies.
I’m going to breeze through some ideas that we've gleaned for credit unions to enhance member experience beyond their branches and beyond basic banking. And then I’m going to focus more on loyalty programs because that’s where our expertise lies.
Photo by Tsahi Levent-Levi
MONEY MANAGEMENT
Relieve financial stress. Educate. Inspire.
Money management. It’s not sexy, it’s not hugely innovative, but it’s a great opportunity to provide financial relief and that means a huge amount to your members. The majority of Americans are not terribly confident or savvy when it comes to their finances. So if you can be their go-to source for information, if you can help them budget, plan for their future, and reduce financial stress, that’s a huge win for loyalty. These are all good services you can check out and there are many more.
"We have 11 Financial Coaches on staff. They’re our go-to people for members who need a little coaching with their finances, budgeting, etc. It’s been very popular with members. Interestingly, many members start with the anonymous SavvyMoney checkup and then migrate to a Financial Coach. It often leads to increasing wallet share."
--Heartland CU, Madison, WI
Photo by wbeem
PFMs
More than just nice-to-have
PFMs are definitely a part of financial management and education so consider offering one of these if you don’t already. Not only are you providing a great service to members, but again, you’re becoming their go-to source for financial information. You’re turning the credit union into the financial hub of your members’ lives, and that can easily lead to greater cross-sell of other products.
TEACH KIDS HOW TO SAVE
I stress about this constantly because I feel like my kids are never going to get this in school. Of course, I want my kids to be able to make intelligent financial decisions, but just as important, I want them to be independent and self-sustaining so my retirement savings goes toward retirement and not toward them!
So children’s financial literacy is a huge benefit that members will truly appreciate and that goes far beyond what they expect.
So children’s financial literacy is a huge benefit that members will truly appreciate and that goes far beyond what they expect.
FREE MUSEUMS AND MORE
Has anybody heard of Museums On Us? This is a great perk so let’s try to ignore that it comes from...
FREE MUSEUMS AND MORE
...the big gorilla.
Anybody with a BoA or Merrill Lynch credit or debit card gets free access to about 150 museums across the country on the first weekend of each month. What a great idea and couldn’t you copy this in your community?
Anybody with a BoA or Merrill Lynch credit or debit card gets free access to about 150 museums across the country on the first weekend of each month. What a great idea and couldn’t you copy this in your community?
ENABLE FUNDRAISING
This is another topic that many Americans find challenging. I’ve actually done a lot of research on this for a side project and what I found is that people really do want to give to charity. But either they don’t have a lot of money, or they don’t have a lot of time. But above all, they want to make a difference. So if you can facilitate an easy and safe way to give to a worthy cause that delivers impact, then you're going to help your members feel good about their giving, that’s another win for loyalty.
JUST ADD PASSION
CafeGive is just one company that can do most of the work for you. I call it “just add passion” and the system does a lot of the work for you.
“Give Local is an annual fundraiser for a
non-profit that has an interesting story to tell. It’s all done via social media and the content is compelling which helps it go viral in the community and among our members.”
--Heartland CU
Photo by Funchye
CONNECT WITH MEMBERS.
Every day.
Within their daily routines.
Ok, we covered the “why”, and we covered some research, and we breezed through a handful of ideas to build loyalty. Now I want to talk about card-based loyalty programs, the kind that offer something to your members in the way of points or cash back or discounts in return for using their credit/debit card.
In our view, most of these programs have become indistinguishable from one another. They use delayed rewards, rather than instant savings, or have confusing point values, and they offer little or no branding attribution for your credit union, so very little loyalty building. These programs don’t do much to keep your cards top-of-wallet.
We believe that a loyalty program built on context will be much more powerful.
We build FI-branded, point-of-sale discount programs that offer compelling discounts at local merchants and we use location-based services to alert users when they are physically near a discount. We call this “contextual engagement” and the power of context cannot be overstated.
In our view, most of these programs have become indistinguishable from one another. They use delayed rewards, rather than instant savings, or have confusing point values, and they offer little or no branding attribution for your credit union, so very little loyalty building. These programs don’t do much to keep your cards top-of-wallet.
We believe that a loyalty program built on context will be much more powerful.
We build FI-branded, point-of-sale discount programs that offer compelling discounts at local merchants and we use location-based services to alert users when they are physically near a discount. We call this “contextual engagement” and the power of context cannot be overstated.
72% said
"I know I deserve some discounts, but I'm not sure what they are or how to get them."
72% of consumers told us in a survey “I know I deserve some rewards, but I don’t know what they are or how to get them.” And those users also told us in large numbers, “I want to get my rewards, but I don’t want to change my behavior.”
30% of account holders didn't know their FI had a loyalty program.
And remarkably, Accenture Global Consumer Survey revealed that 30% of account holders did not know their FI had a loyalty program.
So the old method of making discounts or rewards available and simply hoping that people will use them is dead. The most effective way to help members get these incentives is to use contextual engagement to integrate rewards into users’ daily routines.
So the old method of making discounts or rewards available and simply hoping that people will use them is dead. The most effective way to help members get these incentives is to use contextual engagement to integrate rewards into users’ daily routines.
CONTEXTUAL ENGAGEMENT
- Attitudinal
- Situational
- Behavioral
Contextual engagement means using contextual cues gathered from your members to better serve their needs. Contextual cues can be things like:
> Attitudinal indicators (their preferences about something, or even their age or demographic)
> Situational details (like time of day, location, or what they're doing)
> Behavioral cues (like where they purchased from in the past, what other apps they use on their phone).
Much of this data can be gathered from basic activities that they conduct on their phones and it can be done while still respecting their privacy and confidentiality.
Using contextual engagement, we can do things like deliver personalized 1:1 offers and messages to your members. So let me show you an illustration of this.
> Attitudinal indicators (their preferences about something, or even their age or demographic)
> Situational details (like time of day, location, or what they're doing)
> Behavioral cues (like where they purchased from in the past, what other apps they use on their phone).
Much of this data can be gathered from basic activities that they conduct on their phones and it can be done while still respecting their privacy and confidentiality.
Using contextual engagement, we can do things like deliver personalized 1:1 offers and messages to your members. So let me show you an illustration of this.
DAY IN THE LIFE
Here is our vision of a "Day in the Life" of a credit union member using a loyalty program built on contextual engagement.
This is Della. She's a married mother of two young boys. Della is solidly middle class. She doesn't pinch ever penny or stress over every expense, but she does look for and appreciate companies and services that help her save time and money. She's also a member of the (fictional) People's Credit Union.
This is Della. She's a married mother of two young boys. Della is solidly middle class. She doesn't pinch ever penny or stress over every expense, but she does look for and appreciate companies and services that help her save time and money. She's also a member of the (fictional) People's Credit Union.
Untitled Slide
She wakes up this morning to this alert on her phone. Half off a smoothie at her favorite smoothie shop. She’s already having a good day!
Untitled Slide
She gets the kids ready for school and drives them over. When she approaches school, she gets another alert telling her about a free kids breakdancing class in the gym after school. Win! Now she can take a couple extra hours after school and get ready for her birthday dinner.
Untitled Slide
She makes one more stop before work -- at the smoothie shop to get her half-off smoothie. She pays with her People's CU debit card and the cashier gives her 50% off right there at the register. Instant savings! Thanks People's CU!
Untitled Slide
When she gets to work, Della finally gives herself the birthday present she’s been eyeing for a while: new running shoes. She searches Google for the best prices and discovers that People's CU has negotiated discounts for her at EastBay.com and Finishline.com. What a surprise!
Untitled Slide
At lunch time, Della heads out to test-drive a new car. When she gets to the car dealer, she gets an alert on her phone letting her know that People's CU has special rates on car loans this month. And, if she finances with them, she gets her first five oil changes free. Thanks People's CU!
Untitled Slide
On the way back to work, she drives by an People's CU branch and another alert comes up on her phone inviting her to come in for free cider and doughnuts and a visit with their new financial planner. She stops in and they hit it off. She schedules a time to come back later with her husband.
Untitled Slide
Later that afternoon, she schedules a trip to the zoo with her mom and kids. She puts it into Google Calendar and then receives an automatic email reminding her to use her People's CU discount at the zoo.
So People's CU has become a trusted friend to Della. They "walk with her hand in hand" and show her opportunities to save money. They have truly become more than just a credit union.
So People's CU has become a trusted friend to Della. They "walk with her hand in hand" and show her opportunities to save money. They have truly become more than just a credit union.
WHAT TO EXPECT
Let's look at what you can expect when you boost engagement and loyalty.
An Ernst & Young study asked 32,000 consumers, "What would you be willing to do if your credit union offered a better experience?"
An Ernst & Young study asked 32,000 consumers, "What would you be willing to do if your credit union offered a better experience?"
Untitled Slide
The two that stand out here are highlighted. If you reward members for being loyal, or find ways for them to save money, there is a potential 65% increase in wallet share.
Acquiring a new member can cost 5-10X more than retaining an existing member.
Member acquisition simply costs more. So you typically get more bang for the buck by focusing a larger portion of marketing budget on existing members.
Increasing retention by 5% can increase profits
by 25-95%.
A Bain & Company study showed that increasing retention of your most profitable members can increase profits by 25% or more.
Loyal customers buy 14% more than non-loyal customers.
And the same Bain study concluded that loyal customers (those who give their FI an NPS >9) buy 14% more products than non-loyal customers.
TAKEAWAYS
- We all need stronger loyalty
- Expand your "jurisdiction"
- Be "more than just a credit union"
- Connect with members *in context*
So here are some takeaways and I’d love to hear individual feedback after the session.
Our members are probably not as loyal as we think and we could all use stronger loyalty.
Think beyond the branch and beyond banking and expand your jurisdiction.
Ask how you can be “more than just a credit union” to your members.
The most effective kind of loyalty is that which uses contextual engagement and integrates into users’ daily routines.
Our members are probably not as loyal as we think and we could all use stronger loyalty.
Think beyond the branch and beyond banking and expand your jurisdiction.
Ask how you can be “more than just a credit union” to your members.
The most effective kind of loyalty is that which uses contextual engagement and integrates into users’ daily routines.
