The Power of Personalization in Credit Union Marketing

In 1993, Don Peppers and Martha Rogers published The One to One Future, a book that predicted today’s pervasive presence of marketing personalization. In a 2020 LinkedIn post, Peppers remarked:

“…although Martha and I thought we had written a book of business science fiction, just a year after The One to One Future’s publication, the first commercial web browser, Mosaic, gave birth to the Worldwide Web, and science fiction soon became reality.”

Marketing personalization is defined as “…when seller organizations use data to tailor messages to specific users’ preferences.” Earlier marketing techniques could, at best, target consumer segments. However, with the growth of the internet, marketers were able to capture immense volumes of consumer data that allowed marketing messages to be customized to the individual level.

A Marketing Revolution

The effects of personalization can scarcely be exaggerated. Experts estimate that it can

• reduce customer acquisition costs by up to 50%
• Increase revenues 5-15%
• Increase marketing ROI 10-30%

For credit unions, personalization aims to yield numerous advantages.

1. Member Experience
   
   
   1. Tailored Interactions – Credit unions can use their internal data to discern member needs and preferences by analyzing their demographics andalong with past buying behavior. Augmenting internal information with commercially available supplemental data could allow the credit union to provide an even more meaningful and relevant banking experience.
   2. Increased Member Satisfaction – Consumers increasingly expect personalized experiences. A 2021 McKinsey survey found that:
      
      
      1. 71% of consumers expect companies to deliver personalization.
      2. 76% percent get frustrated when it is missing
      Credit unions that personalize their marketing efforts can expect higher member satisfaction, which leads to heightened loyalty, retention, and increased wallet share.
2. Improved Financial Solutions
   
   
   1. Refined Financial Products—By understanding individual members' unique financial circumstances, products can be designed to specifically address their diverse challenges and goals, such as personalized loan rates or specialized savings programs.
   2. Proactive Offers – Uniquely tailored messaging allows credit unions to offer solutions before members even realize they need them. For example, a member checking auto purchase options can be presented with vehicle loan content.
3. Deeper Relationships
   
   
   1. Trust Building – Trust is essential in a banking relationship. Aside from simply safeguarding funds, members expect their credit union to promote ongoing financial well-being via personalized advice and solutions.
   2. Increased Wallet Share—Credit unions that personalize their marketing messaging have a much better chance of capturing a larger share of each member’s banking business. Personalization can instill within members the sense that the credit union cares about them as individuals and has their best interests at heart. This makes the member more confident in a decision to consolidate an increasing diversity of financial products with the credit union.
4. Business Growth
   
   
   1. Increased Engagement - Personalized marketing content drives increased engagement because members are likelier to read and act on messages relevant to their needs. In this regard, the McKinsey study referenced above also found that:
      
      
      • 76% said that “receiving personalized communications was a key factor in prompting their consideration of a brand.”
      • 78% said “such content made them more likely to repurchase.”
   2. Higher Conversion Rates - Personalization can lead to higher conversion rates on offers and applications for new accounts or services because the recommendations align more with the member's immediate needs and interests.
5. Competitive Differentiation
   
   
   1. Unique Value Proposition—Credit unions have long been able to differentiate themselves from banks by leveraging their non-profit status, conveying a perception of trustworthiness and altruism. However, market forces over the past few decades have led credit unions to be viewed as closer to banks than ever before. With personalization, credit unions can reclaim differentiation points by tailoring marketing messages to specific member interests, emphasizing non-profit integrity, honesty, and sincerity.
   2. Member Advocacy – Members possess a sense of belonging within the credit union movement that bank customers can never match. As a result, members are more apt to view their credit union as their advocate in achieving financial well-being. Personalization reinforces this perception of advocacy when members receive individualized marketing messages.

Credit unions must leverage the latest technology innovations when competing in an ever-evolving financial services environment. Personalization is one of the premier tools they can employ to drive growth into the future.