Member Retention: Why is it Important? And How Can Your Credit Union Improve?
By: Web Finance Direct
The credit world is extremely competitive. Today, consumers have more options than ever before to choose from when making auto or boat purchases. Because of this, it is crucial that your credit union prioritizes member retention. Simply finding new members to replace those that might have left will not lead to growth in membership retention rates, making it difficult to meet profit goals.
Providing a valuable service to your existing members is always an important first step. In this blog, we’ll talk about member retention strategies that can help improve overall retention and even make your institution more competitive in attracting new members as well.
Why is Member Retention Important?
It’s one thing to develop a base of clients. It’s another to keep them happy. The competition in the credit industry can be cutthroat. If consumers believe your credit union isn’t providing them the best service, your member retention will likely suffer as a result as your members may seek out competitors. According to a study from The World Council of Credit Unions, or WOCCU, credit union membership saw a global growth of 29% year-over-year. This means there is a major opportunity to grow your business, along with that growth, member retention becomes even more relevant.
The Credit Union National Association, or CUNA, also reported that between August 2020 and August 2021, over four million people joined credit unions. You’ll likely see a dip in your membership retention rates if your competitors provide better service or more services. The most successful credit unions understand that member retention is one of the most important aspects of profitability. So, what can you do to ensure your organization does not fall behind?
How to Improve Member Retention
There are many things you can do to make sure your credit union provides the kind of service that keeps people coming back. From communication to utilizing the digital space, here are a few tips to improve member retention.
Focus on Good Communication
This is a big one. Nobody wants to be kept in the dark, especially when it comes to their money. People will want to learn more about your institution and how it benefits them. Maintaining a consistent line of communication with things like personalized messages, emails that explain your services, and even feedback surveys to give members a meaningful voice can keep your members engaged, happy, and develop better trust between parties.
When the time comes for them to make another big purchase or even refer friends and family to your services, open communication goes a long way. Continuing your relationship with those that make your institution special should always be a top priority.
Offer Fast Services
Whether providing support through live chats or optimizing your website’s performance, speed is king in today’s tech-driven age. In a survey conducted by CFI Group at the end of 2019, it was found that 81% of credit union members had visited their union’s website within the previous 60 days.
That stat reinforces the need to have a website that users enjoy exploring. Your members will pay bills, transfer funds, and learn about what makes your credit union unique. Slowing them down would not be ideal. For unions hoping to better their member retention, providing a fast, friendly, and positive experience is a great step in the right direction.
Go the Extra Mile With Your Digital Platforms
One of the top member retention strategies for credit unions is to provide a more diverse range of options for its members. You’ll want your institution to be more than just a place to make payments or check balances. With the advancements in technology, developing an app or upgrading the user experience on your website are both great ways to keep members engaged.
The ability to apply for loans, make deposits, and so much more at our fingertips revolutionized the way consumers interact with banks and lenders. Going that extra mile to make sure your members actually enjoy logging into their accounts will take time but potentially become a major selling point as you strive for better member retention. Plus, it’s one of the best ways to gain an advantage over other credit unions that may not place as much of an emphasis on their digital platforms.
Finding New Members Through Indirect Lending
We’ve talked about good practices for retaining members, but it’s always important to position your credit union in the right spot to find new members. A great way to do this is through an indirect lending program. This is where Web Finance Direct can take help you take your credit union to the next level. Indirect lending is a partnership between lenders and an intermediary, typically a dealership or retail location, that sells loans on the lender’s behalf.
This form of lending is a great way to build your loan portfolio as it expands access to a larger consumer base, with low risk .If your credit union offers more services at competitive rates, customers will be more likely to choose your offer, boosting your revenue. The new members also play a key role in bettering your union’s membership retention rates.
Web Finance Direct’s established dealer networks can connect your credit union with qualified applicants in your desired markets. Contact us to learn more.
Member Retention FAQs
How do credit unions retain members?
Credit unions achieve higher member retention when they go the extra mile for their members. From consistent communication to utilizing the power of the digital world, credit unions can create a more engaging platform that keeps people coming back.
What is a good retention rate for membership?
The banking industry averages a 75% membership retention rate. Financial services are slightly higher, averaging a 78% retention rate. It should be your credit union’s goal to match or better this number.
What is membership retention?
Membership retention measures a company’s ability to hold onto existing customers. The rate is calculated by observing how many new customers were acquired versus how many existing customers were lost. This can be done over long or short periods of time. It is important to develop the right member retention strategies to make sure your credit union does not fall behind.
How do I track my retention membership?
The best way to track your membership retention rates is to always keep a close eye on the behavior of your members. You can calculate your retention rate with this formula:
[(# of customers at the end of the period – # of customer acquired during the period) / # of customers at the start of the period] x 100