Improve the Use of Your Credit Union’s MCIF

Sharon Sumner and Richard L. Sandenaw
November 25, 2008 | COMMENTS

Let's face it—you are in a business that sells commodities. The financial products and services you offer are essentially the same as the offerings from the bank across the street or the credit union across town. The banks and credit unions in your market may have different names for their products, but what is the real difference to the consumer? Probably not much!

To differentiate yourself, you may have placed emphasis on excellent member service. Your larger credit union competitor may have more branch locations. The large bank competing with both of you may have more electronic service options. The race is on to attract and retain more depositors and borrowers. This latter point is especially true when faced with an aging member population. Which institutions will be the strongest in your marketplace in 10 or 20 years?

What can a senior management team do to distinguish your credit union from its competitors? One answer is to improve the use of your Marketing Customer Information File (MCIF). Some credit unions use their MCIF for an occasional analysis and other credit unions use theirs for selecting members for promotions. But it is probably safe to say that few credit unions really optimize the use of their MCIF. Often it is a tool that simply gets overlooked.

It takes a trained employee to use an MCIF effectively. And, it takes a commitment by senior management to instill the discipline to use the MCIF to its potential. How will the MCIF help in competitive differentiation? One answer is that it will help you target members for the products and services that they are most likely to use. Another answer is that it will help you track the results of each campaign. Both factors will help you refine your marketing efforts and messages. Over the long haul, your members should find your promotions more personally useful and therefore more valuable.

Think about the mail you receive at home. How much of it goes in the trash unopened? Why? What are the reasons some marketing materials get opened? You may open a marketing piece because it is from a company you know and respect. Or, you may open something because the outside tag line and graphic design are intriguing. Over time your likelihood of looking will decline if that company continually offers you something that misses the mark. For example, your more affluent twenty-something members probably have a 401(k) at work. Are they likely to respond to a promotion for a higher rate share certificate? But, if you just introduced unique new electronic services through your website, these are the members who might be first in line to sign up. Your new electronic services will be an improvement you highlight in your newsletter but the message may get a better response if it is targeted to the high potential users.

The marketers reading this article will think this is basic marketing 101. And senior managers know that a targeted message has a higher potential for getting through the advertising clutter. So what is the credit union doing to do to optimize the use of its MCIF? Is someone fully trained to optimize this system? Do you have plans for when and how the MCIF will be used? Have all the members of the senior management team been given access to and trained on the many uses for an MCIF? Have you developed a schedule of MCIF-based projects for each month of the year? The following is a starter list of uses for your MCIF.

1. Initiate programs to up-sell single service households. Use your MCIF to identify single service households. How many members do you have that have only a share account as their rainy-day fund or so they can cash their paychecks? Identify these members and create a contact list so your staff can call them to discuss opening a new account. Or, send them a welcome package with an incentive for them to open one or more additional products. If you further segregate your single service households by age range, you should be more effective marketing specific loan and deposit products.

2. Target households for specific products/services. Use your MCIF to identify households for specific products and begin a series of marketing campaigns. For example, mail a $50 bonus offer to open a checking account to those members without a checking account. Identify members with large deposit balances in a savings or a money market account and cross-sell your share certificates. Contact members with maturing certificates to renew into a new CD with better rates or terms.

3. Profile members for like products/services. Use your MCIF to identify which members are using a particular product (like an auto loan), analyze the demographics of that group, and then identify members with similar demographics but currently without that target product. This newly identified group should be contacted with a specific marketing campaign for that target product.

4. Offer pre-approved loans/credit cards. Use your MCIF to identify members with loans that will be maturing soon and your members with no loans. Develop a data file that meets the requirements for a credit bureau to conduct a credit score pre-screen to the specifications of your lending program. When the file is returned from the credit bureau, use the targeted member list to send an offer for a pre-approved loan or credit card.

5. Track the results of each marketing campaign. After identifying a member group for any marketing campaign, tag those accounts in your MCIF before the campaign. After the campaign is done, compare the targeted accounts' use of the promoted product or service before and after. The number of new products and/or services for members in the group will be an indicator of your success. This should become a standard practice so you know what works best. And, when you find something successful, plan to do it again.

6. Identify branch/ATM locations. Use your MCIF, coupled with mapping software like Microsoft MapPoint, to determine 1) where your members live, 2) where the concentration of deposits and loans are, and 3) the greatest number of services. This can be used as a method for determining the best locations for new branches or ATMs. This also produces useful presentations for board and staff meetings.

7. Research member account usage. Use your MCIF to identify how many members used their credit cards last month, how many times the cards were used, and for what amounts. For example, do your members use their cards for small recurring purchases such as gasoline or do them use their cards a few times per month but for larger purchases such as lodging. This information will be useful for developing credit card promotions.

8. Acquire new members. Consider acquiring a potential member list from a sponsor group or a data warehouse. Eliminate existing members, and use the remaining file to send credit union promotional product and service information to the others. This approach provides a good opportunity to develop a special offer for membership. It is recommended that multiple mailings be sent over a period of several months.

9. Analyze member demographics for product development. This use of your MCIF is limited only by your imagination. It is recommended that you use your MCIF to segment your members by age and other relevant categories. For example, you can determine how many members you have under the age of 18, and to determine their balances and account types. This information should help you in developing a youth account. Another possibility is to increase revenues by repackaging or re-pricing products for specific customer segments, also known as relationship pricing. For example, analyzing the value of member households with a checking and mortgage loan may motivate you to offer a discount on checking fees for members with mortgage loans to encourage multiple products per household. Or, similarly to offer a better rate for households with combined balances over a certain level, say $20,000. This will encourage more of those members to bring you more business.

10. Analyze delivery channel usage. Use your MCIF to learn which members are using your remote banking services, call center or drive-thru teller lanes to help you decide if these channels need to be tuned to meet the demands of particular demographic groups. You can, for example, target members who use your lobby with an incentive to use your nearby ATMs or call center to reduce lobby traffic.

11. Analyze household profitability. Use your MCIF to identify your most profitable members so you can send letters thanking them for their business. You can also use this method to invite them to a special seminar on wealth building alternatives. Your MCIF can also be used to identify your most unprofitable accounts so you can cross-sell other products and services or use the information to make fee adjustment decisions.

12. Identify member proximity to branch locations. Use your MCIF to identify member households within two to three miles of a branch that are either unprofitable or low users of services. They should be targeted for specific cross-selling campaigns. These members are more likely to use the credit union than those living farther away.

13. Push the MCIF out to other departments. The MCIF is such a powerful tool, other managers will surely benefit from it. The finance or accounting department can use it to pull profitability data. The audit department can use it to look at recently closed accounts. The branch managers can use it to track new account openings and acquired balances. Even if “non-marketing” managers don't have the wherewithal to use the MCIF, they can be made aware of the many standard and custom reports available that will help them do their jobs.

Sharon Sumner is partner and Richard L. Sandenaw is managing partner for Strategic Mark LLC, a credit union consulting firm. Contact Sandenaw at rsandenaw@strategicmark.org.