The importance of member retention in growing credit unions
Photo by RDNE
Ever since credit unions were established, building a strong membership has been deemed crucial for their long-term sustainability. In recent years, credit unions have experienced impressive growth in memberships, solidifying their position as popular financial alternatives.
According to the National Credit Union Administration (NCUA) 2022 annual report, credit unions in the United States witnessed a significant increase of 5.7 million members (4.4%) from 2021 to 2022. The Canadian Credit Union Association (CCUA) also reported a member growth of 103,296 (1.7%) during the same period. Globally, the World Council of Credit Unions (WOCCU) statistical report revealed a remarkable 29% global growth in credit union membership year-over-year.
However, as credit unions focus on member acquisition, it is essential not to overlook the importance of member retention. Acquiring new members is a costly endeavor, with each new credit union member typically requiring an investment of $350 to $700 according to CU 2.0. It takes an estimated two years for a member to generate enough revenue to cover that initial cost. Unfortunately, statistics indicate that 25% of new accounts churn in the first year, and the average attrition rate stands at 11%. In other words, over 40% of new accounts may leave before they become profitable, resulting in significant financial losses for credit unions.
To protect their investment and foster long-term success, credit unions must prioritize both member acquisition and retention. Establishing and nurturing strong relationships with members is the key to sustainable growth and profitability.
Here are four effective strategies for retaining members and strengthening relationships:
Harness digital advancements and leverage technology: Develop a user-friendly website and robust online presence. Utilize technology to streamline processes, enhance efficiency and improve member experience through automation, self-service tools and convenient services like online banking and mobile apps.
Personalize member offerings: Leverage data and technology to understand member preferences. Provide tailored financial solutions that align with their interests and goals. Personalization fosters member engagement and loyalty.
Seek member feedback and act on it: Actively engage with members through surveys, focus groups and open communication channels. Analyze feedback to address concerns, implement improvements and demonstrate value. Building a feedback loop strengthens relationships and trust.
Empower through financial literacy programs: Enhance members' financial well-being by offering educational resources, workshops and tools. Improve financial literacy to enable informed decision-making. A financially literate membership base fosters engagement and loyalty.
Finding the right balance between member acquisition and retention is crucial for credit unions. It's important to attract new members while also strengthening relationships with existing ones. By implementing member retention strategies, credit unions can achieve sustainable growth and unlock their full potential in the marketplace.
Tim McAlpine is the Founder & CEO of Currency Marketing. He is best known for developing the It's a Money Thing Financial Education Program that credit unions from around North America are using to connect with new young adult members. He is also a driving force behind CUES Emerge, an emerging leader program that combines online learning, peer collaboration and an exciting competition component.
