Tips to Increase Member Penetration

Higher member penetration was the focus of two issues of Connection in 2001. We talked with state leagues to get their advice for credit unions wanting to increase penetration. Their suggestions are featured in the First Quarter 2002 issue. Here are comments from two experts regarding what credit unions are doing to increase penetration and the impact of H.R. 1151.

What credit unions are doing to increase penetration

Christopher Kennedy
Vice President
Credit Union Affiliates of New Jersey

Although New Jersey occupational based credit unions have good member penetration, there is still much to be done—that is the first key to success, never rest on your laurels. There is always more service that can be rendered. The second key to the majority of these credit unions success has to do the simple laws of reciprocity. Most credit unions cry from their rooftops about all the products and services that they have to offer, and there’s nothing wrong with that.

What sets many of our credit unions apart is that they have figured out that you also need to give back. For example, a credit union sponsor may have an annual picnic or golf tournament. Perhaps your sponsor holds a certain charity or pet project near-and-dear. By being proactive and showing goodwill and support toward those projects, the credit union can build a strong base of loyal members. This philosophy can really work, whether your credit union offers every product and service under the sun or it participates in the endangered practice of being plain vanilla.

Steven Liberto
Member Services Consultant
Louisiana Credit Union League

Many of our credit unions that are single-sponsor-based are located on the premises of the sponsor. The professionals running these credit unions have been able to forge excellent working relationships with the decision makers at the sponsor organization. As a result, the sponsor truly sees the credit union as a benefit that it offers employees. In turn, credit union personnel work closely with the HR department. Each new hire, in addition to receiving an orientation packet from the sponsor, receives a credit union promotional packet that introduces products and services and explains how to join. Some of these credit unions even hold on-site orientations. These credit unions also have interoffice/interplant mailing systems and can send marketing and promotional materials to every employee.

Many of our school credit unions are either taking advantage of the NEFE program or developing their own in- house education programs to take into schools and attract youth (their future borrowers). Some have even been able to forge excellent relationships with superintendents and principals, which in some cases has led to the placement of credit union branches/offices in these schools.

Some of our school credit unions have also signed on with MFN (Members Financial Network) through CUNA Mutual Group. Due to an excellent retirement fund, many retiring teachers have accumulated large sums of money. With MFN, credit unions can offer investments and financial planning tools to attract these individuals and their funds.

Other credit unions with various fields of membership—from chemical plants to state workers to paper plants—have found that simply making their products and services more convenient has increased penetration. These credit unions have undertaken new products and services such as service centers, ATMs, and debit cards. Many of these credit unions have realized (through membership propensity studies or otherwise) that their membership base is widespread, and in order to attract some of these members they had to make doing business with the credit union convenient. Service Centers, our league shared-branching unit, has made this possible. If you want to learn more about shared branching, please visit our website at www.lcul.com and select the credit union cooperative branching button.

Impact of HR 1151

Kennedy: Overall, there have really been some benefits to the occupational-based credit unions. For instance, the NCUA has now really streamlined the approval process for a credit union to acquire a SEG. What used to take weeks or even months, now happens within hours.

A downside to H.R. 1151 is the restriction on business and commercial lending. For the most part, occupational- based credit unions aren’t going out there and looking to make multimillion dollar loans on office buildings and supermarkets. On the contrary, most business-related loans are along the lines of small business, start-up, mom & pop stuff. This is an issue that will eventually have to be confronted if our credit unions are to truly follow their philosophy of serving member financial need to their fullest.

Liberto: I think the impact of H.R. 1151 in our state has been more positive than negative. Yes, it has created some competition between credit unions. But, the majority of our credit union people (CEOs, managers, supervisors, etc.) are deep rooted in credit union philosophy and understand the dynamics of credit unions and their purpose. This helps keep the competition between credit unions for members at a minimum.

Many credit unions that have, still are, and will continue to benefit from H.R. 1151. They have actively pursued SEGs and have been able to provide credit union products and services to individuals who are not able to get financial services from any other financial institution.

I can see where H.R. 1151 could have a negative impact in the future (if you want to consider competition negative), when new, young leadership comes into the credit union movement. These new leaders may not understand the dynamics and philosophy of credit unions. If we as national associations, state associations, credit union professionals, credit union employees, and credit union members do not educate these young leaders or they don't buy in, then competition (without regard for other credit unions) may pose a threat to the credit union movement. But, to generically say that competition is negative or unhealthy, I don't believe that to be the case. Competition is what makes us all do our jobs a little better and continue to provide the products and services that our members want and need.

Tools to Increase Penetration

Stuffer brochures for sponsor group or community distribution:

• Why You Should Belong to a Credit Union
• Join Us!
• There’s Nothing Like a Credit Union
• Credit Unions Still No. 1
• Las Cooperativas de Ahorro y Crédito

Home & Family Finance Resource Center, Web site content that promotes your products and services.

Home & Family Finance quarterly print magazine, to reach potential members.

Programs and products for youth to welcome the next generation of members.

CUNA Marketing Council Conference to learn from successful peers.

Create an In-School Branch

You can do it, too! Creating your own in-school, student-run credit union branch is relatively easy. Start small and set up just one office to see how it will work for you. You don't even need to have computers at first. You can always provide written receipts and process the transactions back at your main office.

Here are the steps to successful student branch operations:

1. Seek information from other credit unions that have in-school branches. You'll find contact information in CUNA's online directory.

2. Speak with your credit union staff, who may be able to help you identify a school in your community that would like to participate in such a program.

3. Prepare a preliminary proposal of your program and include a check-off sheet to cover subjects such as, branch location, security measures for the school branch, as well as the names of school staff with whom you'll make direct contact.

4. Get both school and credit union board approval.

5. Conduct classroom presentations to the students you are targeting to operate your branch with volunteer worker information along with membership information.

6. Select, hire, and train your student staff.

7. Conduct classroom presentations throughout the school to bring membership information to the entire student body.

8. Oversee the setup of your school branch (if needed).

9. Prepare a partnership agreement certificate to validate your joint commitment to the relationship established between the school and your credit union.

10. Have a partnership kick-off assembly as a grand opening celebration. Invite the school staff and students and key credit union personnel such as the CEO/President.

11. Open your school branch for business and continue to promote membership and the importance of saving throughout the school year.