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An annoying problem most credit unions face is the dormant member. While the exact definition of dormant varies by institution, generally, it means a member who has not had any account activity or little/no interaction with communications or digital engagement for a specified period, perhaps 12 to 24 months.
It would be easy to assume that dormant members are likelier to eventually leave the credit union than those who are more active. Since it can cost as much as five times more to acquire a new member than to retain an existing one, re-engaging dormant members can be a cost-effective growth strategy.
Why Members Become Dormant
Members become dormant for several reasons. One could be that the credit union is not their primary financial institution. For example, some consumers may take out an auto loan with the credit union based on favorable rates but do the rest of their business elsewhere. If they need further credit products, they again shop based on rates with no guarantee the credit union will retain their business.
Others may have joined based on the belief that credit unions had advantages over banks or fintechs but ultimately did not feel sufficiently engaged to use their accounts actively.
Both these examples raise the question of what caused these members to become inactive. Was it a lack of communication while onboarding or during the rest of their first year? Was it a lack of compelling financial products? Was there an unreported customer service lapse?
Getting to “The Real Why?”
A logical first step to re-engaging these members is to clearly define what it means to be “dormant.” All internal stakeholders must agree on who falls into this category before devising solutions.
Once the dormant group is defined, it’s time to discover what drives their lack of activity. The best way to ask them is with surveys, focus groups, or one-on-one interviews. While surveys have the advantage of identifying broad trends across a large population, focus groups and interviews can get at the nuances in dormant member attitudes and behavior that might not be otherwise obvious.
A best practice is to conduct interviews and focus groups first and then use the results to craft the survey questionnaire. This increases the probability that the questionnaire will cover the most relevant topics. Also, it’s important to ask not only “Why are you dormant?” but also “What would motivate you to become more active.” This means that during the interview and focus group phase, efforts should be made to discover what marketing actions the credit union could take to increase respondent activity levels.
Once the survey results are available, the analysis should include a search for clusters based on characteristics such as demographics, number of products owned, length of dormancy, and transaction activity. Any clusters thereby identified can be translated into member segments to be targeted with remedial action. Concerning transaction activity, it would be wise to contrast dormant members' patterns with those of more active ones. This could guide decisions about when and how to execute re-engagement initiatives.
Creating a Re-engagement Plan
After uncovering the root drivers of dormancy and the popularity of potential re-engagement actions, marketers can design a program to address the issues. The resulting initiatives should be tailored based on the underlying differences between segments identified in the survey analysis.
Practical tactics include the following.
- Communications Campaigns—These would be print, digital, or a combination thereof. The content might focus on segment-specific or personalized messages highlighting products and services that survey respondents said might interest them. These campaigns can also be extended as ongoing programs to help minimize new dormant members in the future.
- Update the Product Line—In the current financial services environment, credit unions must stay current with product and service innovations to keep members engaged. Banks and fintechs may be “out-innovating” credit unions by offering new options. For example, “Buy-Now, Pay-Later” programs are offered more frequently in the marketplace. Keeping pace with such emerging products will likely motivate members to engage in additional activity and avoid dormancy.
- Exclusive Offers or Incentives – Dormant members can receive special promotions like cash-back offers or loan-refinancing deals. Another idea is to launch programs that reward these members for word-of-mouth referrals to bring in new members.
- Educational Resources – Offering value-added opportunities like webinars, financial health check-ups, or retirement planning tools could stimulate inactive members to engage more deeply with the credit union.
- Preferred Communication Channels—The survey analysis must discern the most effective channels (email, text, direct mail, phone) to reach each member. Revising communication protocols will increase the probability that these members will experience the intended impact of re-engagement actions.
- Personalized Financial Advice—Credit unions can offer personalized financial advice to dormant members to spark more significant engagement. This has two benefits. First, members may appreciate the extra attention paid to them by the credit union. Second, the credit union has an opportunity to better understand the members in terms of what would motivate them to do more business.
- Marketing Automation Tools—Marketing automation technology can make efforts to re-engage dormant members immeasurably easier. Automated communications kick in with offers to increase account activity when inactivity reaches a predetermined threshold. An important feature of marketing automation is tracking results to measure messaging performance. For example, if two different messaging versions were sent to different dormant groups, which version more strongly correlated with increased account activity? Results from such A/B testing can help sharpen the effectiveness of further communication waves.
