Mastering the Metrics

July 2015: Vol 38 No 7
by Bryn C. Conway

Measure your members' engagement.

ROI up arrow graphWhen marketers talk about metrics, often the thought is to put marketing measurements in place to assess your team’s performance.

However, with the right metrics in place, you can also assess how your members are performing over time, which could be more important to your credit union’s long-term success.

Every CEO, chief financial officer and senior executive wants an excellent return on investment.

The key to growing your return on investment year over year is member engagement. Member engagement is the level of affinity your members have for your credit union.

Member engagement is the measure of how likely a member is to forgive you for making a mistake. It will tell you how likely your members will refer a friend or family member to your credit union—as it is only highly engaged members who will speak out on your behalf to their communities.

Engaged members will use your credit union for their next financial product or service, even though a competitor may have a lower price or a more convenient location.

Marketing is all about growing the credit union’s top line and that growth comes in increments. This article is intended to give you tools that will measure how you are doing today and discover the strategies that will help you improve each year.

Member engagement can be hard to quantify if you don’t have the appropriate measures in place.

However, know that it can be measured and it does have definite financial implications to your credit union.

To understand member engagement, you need to first ensure that what you are measuring is actually helping you make marketing decisions that can increase your response rate, determine perceived value and increase loyalty for reasons other than price and convenience.

Commit to the Long Term: It’s a Marathon, Not a Sprint

As a credit union leader, you need to develop and implement a long-term strategy that will ensure your credit union’s continuing success.

Understanding that you are responsible for long-term strategy means you are training for a marathon not a sprint, and although you need to measure your time for short distances, it is more important that you measure how you are improving over the long run.

In addition to measuring your various product promotions over the short term, you need to look at measures that will help you understand why your members choose to do business with you and their satisfaction with the experience you are creating.

This will help you develop your brand, your messaging and the experience you are providing to your members.

To see if you are being successful, you also need to have member engagement measures in place to evaluate growth increments annually.

Isolate Variables: Measure Reaction to Efforts, not Price

A key challenge facing many credit unions is how to avoid becoming a commodity in a marketplace flooded with financial service alternatives. Credit unions are known for having great rates and reasonable fees, but very few credit unions relish the idea of competing on price alone. We all know that members will respond to lower prices, but if this is your only strategy for growth, you are swimming in shark infested waters with competitors who have larger economies of scale and can beat you at the low-price game. To really grow long term, you need to establish metrics that measure your members’ response and affinity beyond price.

To truly ensure you are measuring the effectiveness of your marketing efforts, you must take price out of the equation. This doesn’t mean you shouldn’t have competitive rates. Nor does it mean you shouldn’t have “specials” where you promote a lower rate.

What it does mean is that you should have a consistent pricing strategy with a consistent positioning of your rates and specials over time. This way, when you are measuring response rates, you are comparing the response to your message and your members’ level of engagement, not their response rate to your price.

Committing to a consistent price strategy takes a deliberate determination by your key stakeholders and it takes discipline year over year.

In its simplest form, have your CFO define what he or she would consider a “market” rate for a particular product. The market rate could be based on an average rate of your competitors or it could be set using the Treasury yield curve. 

Once you establish a market rate, decide where you want your regular pricing position to be compared to this rate. For example, your credit union could set its pricing strategy to always be five basis points below the market rate for a given loan product.

Next you should decide where you want your rates to be when you have specials. Continuing with the example, your credit union could choose to always be 20 basis points below market when you are having a loan special. 

The more you stick to your pricing strategy year over year, the better you can master the metrics of your marketing and your members, because you have isolated price as a variable.

There are many brands and products in the marketplace that do this if you take a moment to consider them. One example is Apple: iPads and iPhones are priced consistently in the marketplace year over year. Apple does not lower the price of its products to increase sales; Apple focuses on its marketing efforts and innovation.

The valuable benefit of consistent pricing is that you can learn how much members are reacting to your marketing efforts instead of your price.

Define Your Community: Who Do You Serve? Who Do You Want to Be?

Most credit unions are in various stages of developing their brand. Credit unions in the advanced stages of brand development know who their target community is and they are focusing their message to that community to enhance the affinity those members and potential members have for their credit union.

Alternatively, many credit unions in the early stages of developing their brand are still trying to define their community.

Defining your credit union’s community can be challenging. Your credit union may have started with a particular select employer group, and then grew through mergers or charter expansion into other groups that have nothing to do with your original membership. The more diverse your membership, the more difficult it is to discover the common bond that can tie these groups together.

However, you must do this so your members understand who you are and why they should choose to do business with you. It should be understood that the clearer your community is to everyone, the easier it will be to develop your messaging which leads to more affinity and engagement.

A community could be an area of geography, a profession, an industry, a cause, or a philosophy, for example, but you need to be able to identify your community in a single sentence. “We serve …”

Set up Your Benchmarks: Learn Where Affinity Comes From

To recap, you need to decide on your pricing strategy to isolate that variable and you have to define your community to understand the target market where you are trying to grow.

Now you need to understand the primary reason this target market does business with you so you can craft your future messaging and measure your marketing performance. 

This can be done simply with an annual member survey. Ask your members what is the most important reason they do business with you. If the answer doesn’t align with your core purpose and strategy, you need to re-tool your message. 

You may already have an idea why your target market does business with you, but you want to make sure your marketing messages are resonating. There is a lesson in statistics that correlation does not equal causation. In other words, just because two things are correlated, one might not be caused by the other.

Set up metrics that measure results and then carefully research what messages are causing the desired responses from your target market. See p. 40 for a list of metrics that assess the impact of your various messages and ways to measure the effectiveness of your marketing.

Delivering on Your Promise: Member Experience

Experience is the attribute of the member relationship that is most important for developing a favorable impression, and it will determine whether your members use you out of inertia rather than engagement.

The experience you create in your call center, your online banking, your branches and your mobile app must be consistently favorable compared to their expectations in order for your marketing to be effective.

In parallel to your marketing efforts, you must carefully define what you want the service experience to be and then measure to ensure you are providing it at every member interaction.

Service delivery must consistently complement your messaging, not define your messaging.

There are a host of great metrics for service delivery that are beyond the scope of this article, but the key takeaway is that marketing does not operate in a vacuum and the credit union’s service delivery must be congruent with the brand message to achieve positive results for the organization.

ROI: The Meat of Your Metrics

Credit unions might be not-for-profit cooperatives, but the point of successful marketing is to grow your bottom line by growing your top line.

Ultimately, your measure of successful member engagement is whether member activities are ever increasing their contribution to revenue. 

However, getting down to actionable specifics will help you and your team to understand their effectiveness. Following, is a list of metrics to measure the overall effectiveness of your member engagement efforts.

  • percentage of members with active checking accounts;
  • percentage of members with direct deposit;
  • percentage of members with consumer loans or credit cards;
  • percentage of members with mortgages;
  • percentage of online or mobile banking users;
  • percentage of checking accounts using bill-pay;
  • percentage of accounts using e-statements; and
  • percentage of accounts using mobile deposit.

As you look at the results, you need to be looking for root causes for success or failure. It could be the messaging for one product area is falling flat.

Additional Marketing Metrics

It could also be that the service delivery of a particular product is preventing success.

Year over year, you will clearly see where you are making progress and where you are not. You will use the results of these metrics to understand your credit union’s effectiveness over time.

Engage Your Members: Let Them Market for You

Member engagement is the intersection of a member using your credit union, having an affinity for your credit union and feeling compelled to advocate for your credit union.

Measuring beyond results of a specific promotion and even the usage of your products and services is necessary to measure member engagement.

To truly measure your marketing’s effectiveness and the extent of your brand’s awareness, you need to measure your members’ engagement level.

If you are not striving for this, you are certainly leaving money on the table and not reaching your potential.

Members are not customers; they are owners. And effective marketing will engage your members at a level where they are actively advocating and selling on your behalf.

You will prove this value over time when your metrics increase without relying on price and convenience.

Bryn C. Conway, CUDE, principal of BC Consulting, LLC, is based in the Washington, D.C., area, is a lover of all things “credit union” and has helped CUs increase member engagement and marketing effectiveness.