Understanding your most valuable members with a multi-dimensional view of member engagement

Here’s some bad news and good news.  The bad news (which comes as no surprise): the U.S. is officially in an economic recession. The good news?

Following every economic crisis, from the Great Depression of the 1930s to the Great Recession of 2008, credit unions have increased both their membership numbers and the quality of those relationships. In fact, credit union membership has grown steadily during the last decade since the last economic collapse and has created a new challenge in itself:

How can credit unions better understand their membership in order to identify the most valuable engagement behaviors and develop strategies around them?

At a high level, the three prongs of an engagement-driven approach include:

  1. Identifying your most-engaged members
  2. Reactivating your least-engaged members
  3. Acquiring the “right” new members

What is Member Engagement?

The term “member engagement” can mean different things to different credit unions. Often it is viewed through the lens of narrow, single measure, such as the number of relationships or income generated. At CU Rise Analytics, we believe it must be specifically defined, and take a multitude of factors into consideration.

With a standard view of member engagement, a member with a sizeable mortgage loan or CD might receive top billing. The income generation would classify them as a valuable member, but in reality, it doesn’t reflect how much interaction is actually occurring between the credit union and member.

When factoring other criteria, a highly-engaged and valuable member may look a lot different. It might be a member with just a checking account, but this member has multiple ACH/POS transactions, regular payroll deposits, and uses online banking frequently. Every time the member transacts, the credit union’s brand is reinforced, and loyalty is built incrementally. When there’s a need for a new banking solution, the credit union will be top of mind.

On the surface, member engagement is a simple idea – but a more complex analysis is needed to fully decipher it. Insights need to be derived from a complete look at transactional, operational, and behavioral data. Quantifying it requires a more sophisticated approach that includes defining the variables and building a statistical model to perform the analysis.

The picture of engagement should include a view of relationships, type of relationships, number of transactions, channel usage and length of association. It won’t be a single indicator like profitability, but a deeper look at the touchpoints and interactions that determine a member’s value.

So far, the CU industry lacks a sophisticated mechanism to enable this multi-dimensional approach. Click here to read further about this approach on CUInsight.