By Ray Birch
WASHINGTON—There is a single question credit unions frequently ask prospective members that is thwarting membership growth, according to one person, who added the way credit unions also take other steps only make the problem worse.
The culprit question: “How do I join?” said Sam Brownell, CEO and founder of CUCollaborate.
Brownell spoke with CUToday.info about how credit unions can best attract new members and get them on board, and further addressed how the eligibility question is gumming up the process of joining a credit union.
“This is a big point of friction for credit unions with consumers,” said Brownell, referring to the issue of membership eligibility, which he said also markedly raises the acquisition cost for new members. “Credit unions have a much higher abandonment rate than banks when it comes to consumers joining an organization online.”
Brownell’s insights are being shared as part of a new series in which CUToday.info is digging deeply into why credit unions continue to trail banks in a well-respected national consumer satisfaction study. As CUToday.info reported, CUs have fallen behind banks for three straight years in the American Customer Satisfaction Index (ACSI) study. The study’s data reveal the primary reason is digital—banks have used their deeper pockets to invest in mobile apps perceived by consumers to be better than similar credit union apps.
Changing Definition
What the ACSI study has found is that how consumers define “excellent service” has evolved from the long-time credit union strength, the in-person, friendly face, to preferences for a strong mobile app that offers a great experience.
As part of the series, CUToday.info has been asking where, specifically, credit unions can improve the digital experience? What steps in the mobile app, such as logging on, overall speed, ease of use, interface etc., can be better?
But before getting to those steps, Brownell reminded credit unions have another challenge.
“As CUNA’s latest awareness initiative shows, 40% of people don't think they're eligible to join a credit union,” said Brownell, whose company offers CUs consulting, marketing and software services.
Brownell said the time is right for credit unions to reduce the friction for consumers considering joining.
Abandon (Member) Ship
Citing data from his company, which helps CUs improve their new account opening process, Brownell said, “I can tell you that 84% of the applications that are abandoned within credit unions’ online shopping or account opening processes happen on the step when a person is asked if they’re eligible to join.”
Brownell explained a credit union’s online new membership process should find ways to discern if the member is eligible to join through information gathering questions asked during the account opening process, such as their home address, where they work, etc.
“Have a decisioning engine that can make the determination itself, so consumers never have to be asked if they can join the credit union,” said Brownell. “And if you don’t do that, at least put the question about eligibility at the very end of the process to reduce abandonment rates.”
Brownell said data further show the big problems credit unions are facing—just 16% of consumers complete a new membership application form online, whereas 36% of people who want to sign up to become a bank customer complete the process.
Sam Brownell
High Acquisition Costs
The clunkiness of credit union processes overall are leading to very high acquisition costs for new members, according to Brownell.
“The average acquisition cost for new member for a credit union in $562.50,” said Brownell, noting data show banks’ cost to be about half that figure. “Again, the first thing credit unions ask in their digital account opening solutions is, ‘Look at our field of membership and figure out how you're eligible to join.’ In this new world today where everything is going digital and it’s all about convenience, this is really an inconvenient thing to ask a consumer to do. I encourage credit unions to mitigate the friction point and take this question off the consumers’ plates.”
Not surprisingly, most credit unions are not willing to pay for growth to the degree many for-profit institutions will, contended Brownell, basing his conclusion on discussions he has had with executives at financial co-ops.
That means, he stressed again, “Credit unions need to find ways to streamline this friction in the account-opening process.”
Wrong Question at the Wrong Time
Brownell said if credit unions don’t remove the eligibility question from the front of their online account opening process, they will “never learn enough about a potential new member” so the CU can either eliminate the eligibility question altogether, or place it at the end of the process.
“You will never know where they live, what they do for a living, what products they may qualify for,” he said.
One of the best ways to seamlessly determine if a consumer can join and then make better decisions on potential products to offer is to take their home address as soon as it is keyed in, and then have the online solution briefly step outside the CU’s system and determine the county the person lives in and also geocode their address to garner census tract data. The credit union can then quickly step back in.
“Credit unions have been failing right from the start here,” said Brownell. “They have been asking the wrong question at the wrong time.”