3 Reasons to Focus More on Marketing to Existing Members

I was recently interviewed by Credit Union Journal regarding my forecasts for marketing budgets for the second half of 2012 and also for 2013.  I shared my belief that budgets for marketing, sales, and business development functions will continue to gradually increase during that time period.  I also suggested that credit unions put more effort into cultivating their relationships with their existing members rather than trying to attract new ones.  A couple people called me and wanted to know why I would suggest that credit unions not make efforts to get new members.  That’s not exactly what I said and after I clarified this with the callers, they were my friends again.  In no way was I saying that getting new members wasn’t important.  What I was saying is that credit unions may be missing some opportunities by not reaching out more to the members it already has on the books.

So I thought it would be a good idea for me to give some reasons why it is wise to focus on existing members.  Here are 3 such reasons:

It costs less.  You’ve already got them in the door.  They are already invested in the credit union.  It costs nothing to have conversations with members that come into the branch about them using more of your services.  It costs next to nothing to implement and use an effective e-mail marketing campaign.  There is minimal cost (if any) to use online banking and bill-pay platforms for marketing and business development.

Existing Members Will Answer Your Phone Calls.  Caller ID is a wonderful thing.  Think about it….if your ID shows “Unknown Caller,” “800 Service” or “Out of Area” do you pick up the phone?  Of course not.  Chances are that your credit union members have a Caller ID feature on their phones.  So when they see “ABC Federal Credit Union” appear on their ID, chances are also pretty good that they will pick up the phone.  Why?  Because they know you, trust you, and will be naturally curious why their financial institution is calling on them.  Chances are also pretty good that they will be willing to speak to the credit union employee on the other end of the phone about whatever it is that they want to discuss – including the fantastic and exciting loan promotion that is coming up, the new mobile banking feature being rolled out, the _________(you fill in the blank.)  Cold calling stinks.  So why put your people through it?  Let them call on people that will at least take the call.

It builds rapport and good will.  If you continue to show your existing members that you are willing, able, and motivated to help them, they will continue to do business with you and they will be more willing to refer new those new members to you.  Referrals come only if the referrer has a significant amount of trust that you will do right by the person who they refer.  So, in essence, this achieves two goals – increasing the amount of business from your existing members AND will serve as a source for acquiring new members. And what credit union doesn’t want these things?

So focus on the people who already like and trust you.  Make them like and trust you more.




About Your Full Potential, LLC

I am the President of Your Full Potential, LLC and the Founder of ABSURD! Leadership. I am a professional speaker and have addressed thousands of people throughout the United States and internationally on the topics of leadership, sales, service, business development, marketing, and strategy.
This entry was posted in Building Relationships, Business Development, Credit Unions, Cross-Selling, Loans, Management, Marketing. Bookmark the permalink.

6 Responses to 3 Reasons to Focus More on Marketing to Existing Members

  1. Mark Arnold says:


    You make some great points. I would also add a fourth reason to market more to your existing members is that it makes your credit union more profitable. Nothing increases your bottom line more than having more products and services per household. For those that also want new members, using your existing members is a great way to get new ones too. My guess is that not everyone in the household is a member of the credit union (think youth accounts and reaching teens). Market on, my friend!



  2. Sean – Interesting view however, allow me to explain why existing members are probably the worst demographic for incremental marketing.

    1. Most consumers do not need anything more than a checking account, debit card, maybe billpay and maybe a savings account from their Primary Financial Institution (PFI). Incremental marketing into such consumer segment is a near total waste of money and time.
    2. Most consumers will not meet the credit policy guidelines for lending products. As a quick anecdote, a recent study found that 75% of consumers do not have enough savings for just 6 months of expenses (http://money.cnn.com/2012/06/25/pf/emergency-savings/index.htm). Only those Credit Unions that want to enter the loan sharking business will find this demographic to be attractive.
    3. Yes, existing members may answer your call but only because they are concerned that the Credit Unions screwed up something related to their account. Credit Unions will find it very difficult to engage in a serious cross-sell opportunity in this context. Fundamentally, consumers do not want to engage with their PFI unless the PFI is proactively helping to address one of their problems. Cold calling a current or prospective member about a checking account is absurd… How would you feel if you were to receive such a call?

    In general, the objective of marketing should focus on engaging with consumers who become members with multiple deposit, lending and value added services. Costs of such activities are clearly important, yet they only speak to one side of the equation. It is much more critical for Credit Unions to understand the revenue potential of its potential members. For example, a Credit Union should be willing to spend $500 to acquire a member who generates revenues of $2,500 annually, rather than spending $5 to acquire a member that will generate operating losses for the foreseeable future. In fact, industry averages suggest that the top 20% of members generate 250% of profits; said another way, 80% of members create operating losses to the tune of 150% of profits. Credit Unions should focus on growing the 20%… rather than increasing the membership that will continue to pressure their costs up and their viability down.


    • Serge,

      Appreciate your comments. At this point, credit unions are primarily interested in generating more loans and thus, interest income. When I advocate cross-selling to existing members, I am not talking about acquiring more liabilities (checking accounts, savings accounts, etc.) For the most part, credit unions do not need any more deposits.

      I disagree with your premise that existing members will only answer the call if they think the credit union made a mistake on the account. I have personally made hundreds if not thousands of calls to existing credit union members and with very few exceptions, the members have been happy to talk to me. Also, I think that your assertion that “most consumers will not meet the credit policy guidelines for lending products” is a bit short-sighted. There is plenty of opportunity for credit unions to get more loans from existing members either through new lines of credit or by refinancing loans that the members may have at other financial institutions.

      Again, I do appreciate your comments – even if I disagree with them!



  3. Sean,

    I have printed out this blog post and distributed it to our senior management team. This is exactly our strategy and is working very well for us. We not only market to our existing members we have also shifted to a member appreciation approach that we know is resulting in a ton of positive word-of-mouth. Using the 80/20 rule we’ve identified the 20% of our members that use the Co-Op the most and are rewarding them. They in turn feel valued and are recommending us to their friends and family.

    We use the Net Promoter Score tool to gauge the key drivers of our promoters and what breeds detractors. This growth, in my opinion, is more organic and sustainable than a bribe to get new members in the door.

    Oh, and to Serge. There’s a reason the word “credit” is in our brand name. According to Rex Johnson (Univeristy of Lending founder) a credit union should be approving 75% of the applications they receive. If they’re not – we’re not doing our job.

    Thanks for the post!


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