Strategic Link Partner, Vetter, Shares Insights on the Cost of New Member Acquisition for Credit Unions
May 21, 2019
For credit unions concerned with growth, finding and adding members is the key to stable expansion. According to Strategic Link partner, Vetter, deploying strategies to capture new members comes with costs that aren’t always clearly defined. The issue isn’t that credit unions are incapable of finding how much it costs to acquire new members; rather, calculations will vary by methodology.
Vetter helps credit unions stay competitive in the financial services marketplace. With sophisticated data analytics to target specific consumers through proven digital marketing strategies, they offer a turnkey strategic growth solution.
“Vetter helps credit unions find prospective members who are more likely to deliver high conversion rates,” said Northwest Credit Union Association Vice President of Strategic Resources, Jason Smith. “Their solution matches members with credit union offers that are most relevant for the member at the most appropriate time in their life.”
In figuring cost of member acquisition, one credit union might consider the cost of advertisements, banner ads, newspapers, and so on. Another credit union might include the cost of employees’ time, including compensation toward the cost of new member acquisition. Depending on methodology and account type, Vetter has calculated the average cost of acquiring a new member at $400 to $700.
Additional New Member Cost Factors
Even when your methodology changes, the numbers aren’t static. Prospective members are attracted to things like checking accounts that produce interest — credit unions that offer one are going to have an easier time acquiring and setting up such a prospect, and it may take only a few hundred dollars in cost.
On the other hand, prospective members looking for a less competitive service, such as a car loan or a mortgage, might take more effort to attract. As a result, it may cost more money to woo these prospects. If the goal is credit union loan growth, prepare to see higher member acquisition costs.
The cost of acquisition between the two scenarios doesn’t tell the whole story. A member who opens a checking account will not be nearly as profitable for a credit union as a member who takes out an auto loan. While one member may cost more to acquire than the other, the more expensive member is the better long-term investment for the credit union.
Why This Information is Important
Whether membership growth or loan growth is a priority, credit unions should ensure they don’t onboard an overabundance of unprofitable members. A smattering of $5 checking accounts looks okay on paper, but such members may actually hurt a credit union’s bottom line.
Knowing a credit union’s acquisition cost measurements can help marketing efforts target qualified prospects. These factors determine effective strategies for bringing in new, eligible, and profitable members.
A credit union that knows its member acquisition cost is well on the path to growth and may benefit from the following strategies to reach new members:
One of the best methods of finding new, eligible members for your credit union is to begin a digital marketing campaign. The benefits of digital marketing campaigns for credit unions are numerous. They can be less costly than traditional marketing avenues. As the country — and especially younger generations — find increasing utility on smartphones and tablets, digital marketing ensures that everyone’s phone can double as a mobile advertisement space. They can also leverage the wealth of information in online databases to better target potential prospects.
Credit unions offer members a multitude of benefits over other financial institutions, including better rates, lower fees, and outstanding service because they are not-for-profit cooperatives owned by their members. Nonmembers may be reluctant to join, or aren’t aware of their eligibility. Fortunately, credit unions have several good options to help grow membership by embracing digital technology, offering financial planning and wealth management services, and increasing exposure to target markets.