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Credit unions often aspire to increase member engagement. Yet, what does “engagement” really mean?
A Gallup study cited in The Financial Brand defined it as “a rational, emotional, and psychological attachment to the brand.” While this seems like a useful, high-level definition, what are engagement indicators, and what tactics can credit unions employ to boost engagement?
Member Engagement Indicators
What are the markers for gauging engagement? Credit union marketers look to several indicators.
Product Usage
Most members who have multiple product accounts can safely be said to be more engaged than those with single accounts. However, owning multiple products like checking and savings accounts, loans, and credit cards by itself is not enough to always mean strong engagement. It could be that a member views holding these accounts as purely functional and feels a minimal emotional connection to the credit union. It’s probably safe to say that these folks are in the minority and that multiple account holdings indicate a vote of confidence that signals strong engagement with the credit union.
Program Participation
Credit union marketers spend a lot of time and effort attracting member attention through programs and promotions. Members who take advantage of such opportunities might be viewed as more engaged. Yet, how deep is the resulting connection? For example, a member might take advantage of a favorable loan rate and, once the loan is paid off, will shop around for the lowest rate for a future loan. On the other hand, a member who consistently accepts product offers and participates in programs like financial education workshops, community events, or member appreciation activities could be more confidently described as engaged.
Feedback and Communication
Capturing and analyzing member feedback is an essential input to assessing engagement. This data can be gathered via surveys and focus groups, with questions aimed at measuring rational, psychological, and emotional connections. Another means to evaluate member sentiment is by analyzing communications between the credit union and its members in proprietary channels like the company website and public channels like social media.
Account Activity
Genuinely engaged members will likely have higher transaction volumes and more active accounts. On the other hand, a member could have multiple accounts but exhibit a low activity rate in terms of transaction frequency or account logins. While this might signal that they are minimally engaged, it's logical to assume such members will be less common.
Referral and Advocacy
Engaged members are likely to recommend the credit union to family and friends because they have developed trust and connection with the organization. They have come to view the credit union as prioritizing member financial well-being over profit. In this regard, credit unions have a natural advantage over banks since they are local institutions based on a cooperative non-profit model.
Digital Engagement
Digital interaction has added a growing dimension to how members engage with credit unions. One form is activity on the organization’s website or mobile app, which supports two-way communication between members and the credit union. Another channel type is social media, where a member can interact not only with the credit union but also with other members and non-members. Tracking member activity both within and outside credit union digital boundaries can provide clues as to their level of engagement.
Retention and Loyalty
Engaged members are likely to feel loyalty to the credit union and are, therefore, more likely to maintain their membership longer. Longer-term members typically acquire more accounts over time, and retaining such members is much less costly than attracting new ones. As Bain & Company observed:
“Across a wide range of businesses, customers generate increasing profits each year they stay with a company. In financial services, for example, a 5% increase in customer retention produces more than a 25% increase in profit. Why? Return customers tend to buy more from a company over time. As they do, your operating costs to serve them.”
Engaged members will also be more resistant to appeals from competitors since they have an emotional connection with the credit union that would be difficult to establish elsewhere.
Promoting Member Engagement
Once marketers have a sense of how to gauge member engagement, they can deploy initiatives to “move the needle.” The following are among the best practices for doing this.
Personalized Products and Services
Customizing products and services to individuals sends the message that the credit union understands each member’s unique financial situation. However, a prerequisite for personalized offerings is the ongoing gathering and analysis of data about each member. While it can be a significant undertaking to amass a database capable of supporting the ability to tailor products, services, and communications, the data can be used across many initiatives.
Enhanced Digital Banking and Communication Options
Any consumer financial institution needs to make it easy to do business across digital platforms, including mobile. Getting this right might not necessarily boost engagement, but getting it wrong will almost certainly reduce member satisfaction and engagement.
Financial Education and Guidance
Engaged members are those who perceive that the credit union is exceeding expectations. One popular value-added strategy in this regard is to become a financial education resource. Offering workshops, webinars, or online information on topics like budgeting, investing, and retirement planning changes members’ perceptions of the institution from a product seller into a trusted financial expert. Using the member database, invitations to access these resources can be targeted to specific groups to increase the probability that members will find the information relevant.
Governance Opportunities
As member-owned cooperatives, credit unions have opportunities for members to get involved in shaping the operations and growth of their organizations. Inviting members to participate on boards and committees can engender a sense of belonging and engagement.
Community Involvement
Credit unions typically have strong ties within the communities they serve. This can be leveraged by hosting or sponsoring local events. Inviting members to such events as attendees or volunteers can deepen engagement and loyalty by creating additional positive touchpoints between members and credit unions.
Member Rewards and Loyalty Programs
By implementing programs like cashback on purchases, reduced loan rates, or reward points for frequent usage, credit unions can provide tangible incentives for deeper member engagement.
Proactive Communication
The member database can also be used to personalize outbound messaging. This can extend to anticipating financial needs based on life stage and lifestyle indicators. For example, members approaching age 65 can be offered retirement-oriented messaging. Twenty-something college graduates might receive student loan-related material. The aim would be to increase both sales and engagement by creating a feeling that the credit union understands the specific financial needs of each member.
Also, simple tactics like acknowledging birthdays and anniversaries with personalized messages, special offers, or small gifts reinforce the feeling that the credit union values its members.
Digital Channels to Build Community
Among today’s best-in-class marketing practices, using digital channels to engage members ranks among the most effective. Engaged members can then serve as informal ambassadors for the organization by posting about their positive experiences and opinions.
Credit unions can add a favorable digital channel by hosting their own online communities. Using the member database to provide content and interaction opportunities tailored to member interests and preferences, the credit union can create a platform to promote its products and services in the mode of “selling without selling.” Members feel further engaged when they feel the credit union “gets them” when they see relevant content customized for them. The success of such initiatives provides insight into the current level of engagement and is designed to improve members' feelings of connection with the credit union.
Describing member engagement as “a rational, emotional, and psychological attachment to the brand” may feel like an understatement for such an involved subject. However, packed into this brief definition are many fundamental aspects that marketing decision-makers must fully understand to effectively deploy and measure initiatives to increase member engagement.
