Technology

Data Analysis Improves Relationship Pricing Programs

Business intelligence software can unearth treasure trove of member data.

November 18, 2013
/ PRINT / ShareShare / Text Size +

It’s no secret that credit unions are under constant pressure to retain their members and generate revenue. The challenge many face is how to provide members with competitive products that encompass the individualized, one-on-one focus that is the cornerstone of their mission.

The solution to this dilemma is analytics. By using business intelligence/analytics software to mine the treasure trove of member data they already possess, leading credit unions are successfully deploying products combining market-leading features, tailored member benefits, and an attractive revenue model.

How are these credit unions accomplishing this? Let’s look at relationship pricing initiatives as an example.

Tyson Nargassans
Tyson Nargassans

Every financial institution covets primary financial institution relationships. But few analyze their member base to identify the current percentage of single-service members to understand the issue.

By narrowing in on those members, credit unions can further analyze their transaction history, including automated clearinghouse and bill pay activity, to identify incoming deposits or outgoing payments to other financial institutions.

At a minimum, these members are at least tempted by relationships with other financial institutions. And at worst, the exit transition is already underway. Analytics help identify the problem and the severity of it.

In addition to helping identify these who intend to leave, analytics are the basis for developing targeted programs to retain—and hopefully expand—these member relationships.

If a credit union wants to encourage single-service members to broaden their relationship, the solution is not necessarily to offer them a loan or savings product. Instead, it should use the data available to identify the right products for members’ specific life stages and develop a communications program to make sure the institution is at the forefront of members’ minds when they are looking for new products to fulfill their lives.

In the end, a credit union can’t create a member’s need for a new product. But it can identify when the need may be present—and position the credit union to be the first choice when the member seeks to fulfill it.

As a result of a targeted communications program based on analytics, a member may have selected a share certificate or loan with the credit union, expanding the relationship with the institution. But eventually the certificate will mature or the loan will be paid off.

When that happens, the member may not fit the guidelines of the previous relationship. With analytics, credit unions can determine if a member reverts back to being a single-service member, for example, and use that knowledge to adjust pricing accordingly.

Finally, analytics are the key to making member relationships more profitable. Segmentation analysis comparing members with long retention histories versus those who have recently left has identified that high levels of electronic transaction use drive long-term relationship retention and account profitability.

With this information at hand, an institution can develop and implement relationship-pricing programs that allow members to have select fees waived or rebated in exchange for performing a desired type or number of electronic transactions each month.

One of the most effective opportunities a credit union has to create additional value comes from using business intelligence/analytics tools to monetize the data they have available at their fingertips. By leveraging analytics solutions to analyze this untapped wealth of member information, credit unions can gain powerful insights into their members’ behaviors and needs.

Armed with this intelligence, they can create customized relationship expansion and pricing programs that simultaneously create high member satisfaction and drive critical incremental revenue for their organization.

TYSON NARGASSANS is president/CEO of Saylent Technologies Inc.

Post a comment to this story

heroes

What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive