LAKE FOREST, Ill.—One economist is contending that most credit unions should rethink their approach to one-to-one member marketing and implement aggressive staff sales compensation programs that are on par with banks.
That strategy may be counter to the philosophy in place at some credit unions, but it’s an approach that is necessary for credit unions to remain competitive in 2016 and the years ahead, asserts Michael Moebs, economist and CEO at Moebs $ervices.
“Sales incentives mean true dollar compensation for all sales staff, including call center reps, branch personnel, loan officers and even tellers,” said Moebs, noting that competitive pressure is forcing many more CUs to adopt a strong sales culture.
Moebs said that banks, known for their aggressive sales cultures, are far ahead of credit unions when it comes to implementing advanced sales incentives.
Moebs reminded that CU sales personnel are those who are directly involved in getting a consumer to become a member or selling an existing member another service.
“They are not production or operation staff. A good sales person has one focus—to get the sale. The most successful sales people are motivated by money as a measure of performance. They want to be the top dog and will concentrate on selling the service that provides the greatest financial compensation,” said Moebs. “This can be selling 10 services with a commission of $10 for each, or one service with a $100 commission.”
A true sales compensation structure is where incentive pay is 50% or more of total compensation, explained Moebs.
“However, this type of compensation structure is often met with resistance by many presidents of credit unions,” observed Moebs. “The typical response is, ‘Why should I pay more for someone doing their job—they should be happy to have a job.’ This type of thinking is archaic.”
As the credit union movement continues to “modernize,” it is facing greater changes in compensation structures that it never anticipated, asserted Moebs.
The First Step
“The first step is to develop a job description for each sales position,” he explained. “The key is to remember this is sales and not member service, operations, or production work. You want your sales staff to be focused on selling 100% of the time.”
The next step, according to Moebs, is to budget revenue for each service sold and align incentives.
“This entails determining the volume of sales to meet revenue objectives. Target just above what is realistically achievable, and tier progressive sales incentives for meeting objectives beyond the target,” outlined Moebs. “This may require several reiterations to get right. Third, determine how that volume can be measured and attained weekly, monthly, and quarterly. An option is to measure in profitability—not count, fees, rates or balances.”
Compensation needs to be structured with base salary and associated benefits such as medical and 401(k), added Moebs, with incentives paid at least quarterly and possibly monthly.
“The lack of properly designing sales positions, followed by sales goals, and then rewarding with proper compensation is a major missing link in elevating credit unions to compete on a level playing field with banks, investment firms, and insurance companies,” Moebs concluded. “Members want a competitive credit union to provide all their financial service needs.”