Pinpointing Preferences with MCIF

Cindy Morgan often detects a whiff of "Say what?" in her peers' voices whenever she lets on that her credit unionís finance department routinely uses marketing customer information files (MCIFs), according to Credit Union Magazine.

Then Morgan, marketing manager at New England Federal Credit Union, Williston, Vt., $490 million in assets, shocks them even more: "The finance department uses it more than the marketing department does. It pulls profitability data from it, and other managers also get reports. For example, the branch manager pulls reports to track account openings. Each of our managers knows how to pull and use MCIF reports."

For Morgan, MCIF is such a powerful tool that she can't imagine not getting other departments to use it. But her credit union's approach, as inclusive as it is, isn't the only one experienced MCIF users take, according to Michael Weber, vice president of marketing and public relations at Dupaco Community Credit Union, Dubuque, Iowa, $350 million in assets.

"For us, MCIF is very much marketing's realm right now," he says. "We've talked about rolling it out to senior managers who could use the information, but the biggest issue is training. We've found you can give managers the information without them having to learn how to extract it themselves, and we certainly use MCIF in our strategic planning."

So while many credit unions swear by MCIF and trust in it almost devoutly, there's no one "Church of MCIF" where everyone believes or does the same thing. Still, there's one bedrock notion all MCIF users agree on: Properly used, MCIF almost can be relentless in eliminating guesswork about how to approach members and tracking what works with them.

"Our No. 1 use for MCIF is direct marketing via targeted mailings," says Weber. "Those mailings are supported by the marketing research that MCIF allows us to do. For example, what members are now using a product? MCIF lets us come up with profiles and segment out the people most likely to respond to the same or a similar product."

Weber also uses MCIF to track per-member and per-household consumption of services and products. "It can tell us a lot about a household, and because household members often make financial decisions jointly, MCIF saves us from making duplicate mailings. It eliminates a shotgun approach."

Morgan says MCIF is impressive in "the wealth of knowledge" it produces. "There are so many reports and combinations of data it can generate that although it's effective in targeting the right segments in mailings, it isn't just for direct mail. It's very helpful with relationship pricing and helping us track channel use and profitability."

It also helps her distinguish between similar accounts. For example, she cites two members with almost exactly the same account balances and product use. One is very profitable, the other much less so. "The reason? The less profitable member used a teller 44 times in a three-month period."

MCIF also remains a preferred branch and automated teller machine (ATM) location planning tool. "We used it to help us plan for a new Wisconsin branch by analyzing traffic flow and where people lived," says Weber. "It continues helping us look for further opportunities by making us aware of concentrations of people who might be good targets for a direct-mail campaign."

Morgan says New England FCU uses MCIF's mapping feature to understand where current members live, a big help in selecting ATM locations.

The Service Bureau Approach

With fairly large asset bases backing them up, Weber and Morgan prefer their in-house MCIF. For other credit unions, an MCIF service bureau makes more sense with regard to cost and access to outside expertise.

But the goal is the same, says Amy Walling, marketing director at Oklahoma Employees Credit Union, Oklahoma City, $176 million in assets. "MCIF makes my job much easier in the sense of letting me know who I'm going after. I'm not just guessing.

"We use MCIF as a way to look at trends and help us set goals," she adds. "We can pull out select employee groups [SEGs] and do separate reports on each, and even create new SEGs." The service bureau sends Walling data at the end of each month, which she uses to generate branch activity reports.

Walling, who has several years of experience with MCIF, says reports are easy to generate and understand. "The complexity comes in learning which to look at. MCIF as a concept and process is still pretty open-ended for us-we installed it in 2001-and mere are many possibilities yet for us to explore."

Scott Williams, vice president of strategic marketing at Community Choice Federal Credit Union, Livonia, Mich., $190 million in assets, says MCIF "lets you get more of a total view of your entire membership, such as looking at cross-sell ratios and household balances. We also get ad-hoc reports in addition to usual reports, typically, branch breakouts that indicate progress toward sales goals."

That last point is important: Williams says Community Choice FCU's members are "branch-centric," with 80% of them visiting a branch at least monthly. "Our concern is with brick-and-mortar financial institutions within two to five miles of us, so branch reports are crucial."

A service bureau also can give marketing help, providing mailing lists and calculating return on investment on mail pieces, he adds.

Pinpointing Members

Whatever expanded uses people find for MCIF, targeted direct mail seems to be the main task users assign it. "Direct mail is the primary use for our MCIF data," says Williams. "For instance, we do a new-member recruitment program that involves five monthly mailings to prospects over a six- to seven-month period. And we target homeowners who have equity lines of credit elsewhere or not at all."

Morgan says MCIF's ability to pinpoint nonmembers is one of its great strengths. "We can generate nonmember lists that match member segments. If you understand the key drivers that have brought people to you, you should be able to work them well with nonmembers."

Morgan not only tracks the results of her direct mail pieces, she tries to "prime the pump" by encouraging data input from members. "We send a survey to anyone who has just closed an account or loan, quarterly surveys to about 1,300 members, and an annual survey to all members. Our prime questions are, 'Why do/did you come here, and what is/was the level of service?'"

Respondents' different answers to the same questions help Morgan understand the needs and perceptions of New England Federal's different relationship pricing tiers. The credit union also modifies its questions. No member ever receives the same survey twice.

Weber says that while MCIF allows more frequent mailings to pinpointed, smaller, more defined groups, "you don't want to inundate, but it does take repetition. You're laying the groundwork for when a member decides to buy a new product and thinks of you first." One point of entry Dupaco Community uses is checking accounts. When a member's account reaches a certain dollar amount, the credit union offers them its fee-free "Relationship Checking Account."

Weber is impressed with his MCIF's nonmember management function that allows him to take a mail list and separate out nonmembers. "We then can find out who's close to one of our branches and approach them with a 'Location! Location! Location!' pitch."

Still, MCIF-influenced results have been gratifying, Weber says. "For our younger demographic, we're seeing a 7% to 10% response; for older members, 3% to 5%. Anytime I can get more than 1%, I'm happy."

Weber is debating using MCIF to assist e-mail marketing. "We've gone back and forth on e-mail marketing. E-mail was supposed to be a killer app, but spam has lessened its impact. Also, there's no way to know who's behind the e-mail addresses."

One way around that has been to focus on the 5,000 members who've signed up to receive e-statements, he says. "That tells us they're 'e-sawy' members who like to receive information electronically. So, unless they tell us otherwise, those sign-ups give us permission to send them e-messages once every month or two. This still isn't well-tied to our MCIF, so it's an area we'll continue exploring and developing."

Ultimately, says Williams, the benchmark for MCIF success is how much a direct-mail campaign costs vs. how many new loans it generates. "A $20,000 home equity loan that cost $4,000 in marketing to generate justifies the expense. A product that produces a $4,000 balance should cost proportionately less to generate."

MCIF Shortcomings

MCIF aficionados will tell you what they like about the tool. But they'll also tell you what they don't like: 'Td like the capability to report on how many people in a SEG responded to a specific piece," says Walling. "We can ascertain an overall response to a product but not what inspired it." Her way around the problem has been to assign codes to pieces and ask people to use those codes when signing up.

For Williams, one shortcoming of MCIF is that "as you evaluate the cross-sell process, the idea of household profitability becomes increasingly important. But the data aren't reliable."

Sometimes the complaint is about interfaces. "This isn't a knock on MCIF but on the process itself," says Weber. "Sometimes it's hard to get data from the host system into MCIF that you can trust. Systems can be different in how they treat data. And in a host system, which is a giant database, are all the fields accurate?"

He'd also like to be able to learn data such as how many members used their credit cards last month-how many times and for how much. "Transactional analysis and information are lacking. We can ascertain something like, 'There are 2,000 members with a $0 balance on their credit cards,' but that tells us nothing. Are 1,000 members not using it at all and the other 1,000 paying their debts in full each month?"

Morgan advises credit unions not just to go with built-in segmentation.

"Subsegments within segments will give you better information and means of approach. An 18-to-54 segment can be too broad, while an 18-to-21 or an e-member segment lets you really focus. Your goal is to look at all the segments within relationship pricing and figure out how to move people up the tiers to produce greater loyalty."

Credit unions that lack the time or resources for an in-house MCIF should go with the service bureau option, says Weber. "Otherwise you'll never use it to its best advantage. I look at what I've learned about MCIF over the past five years and am amazed both at how much I've learned and how much there's still to learn."

Williams sees MCIF as a final defense against small things that can add up to big trouble. "Say you're cross-selling at discounts. It can be death by 10,000 small cuts if you're not using MCIF and don't understand profitability. MCIF allows you to benchmark sales success, including cross-selling. And if you're not selling, you might as well just put up a bunch of ATMs and go home."

This story first appeared in Credit Union Magazine in 2004 and was reprinted online by The Point for Credit Union Research and Advice at Reprinted with permission.

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