Offering Online Services Has Become a Necessity

thePoint
June 16, 2005

Credit union marketers no longer view offering online products and services as a means of differentiating themselves from competitors, but as a necessity for doing business, according to a recently released study on online marketing trends. The study also found that individuals who use online services are the most desirable members for credit unions.

The findings were included in "Online Marketing: Effectiveness and Impact on the CU Industry," a study commissioned by CUNA, the CUNA Mutual Group, the CUNA Technology Council, and the CUNA Marketing & Business Development Council. The University of Wisconsin E-Business Consortium conducted the research.

The report, which is available in The Point's Research Vault, found that members using online services are proving more valuable to credit unions than members who don't use these services. Online members are more profitable, have higher loan and deposit balances, respond better to marketing, and cost less to serve. They also have more assets, higher incomes, and better credit scores than their slightly older offline counterparts.

Respondents indicated they prefer to promote their online services using offline marketing tactics, including branch staff, call centers, print newsletters, and statement stuffers.

"This could be part of the answer as to why some credit unions struggle to gain online members," says Marc Gagne, CUNA Mutual's marketing campaign manager. "Websites were ranked high as a channel, but e-mail marketing was not nearly as common.”

The study's findings are based on a national survey of credit unions of all sizes and a focus group of marketing executives who provided insights and validated the findings, says Eric Gagliano, vice president of marketing with River Valley Credit Union, Miamisburg, Ohio. Gagliano is a member of the CUNA Marketing & Business Development Council executive committee and participated on the study task force.

"The survey results provide great insights into the online marketing trends among credit unions," says Gagliano. "Clearly, credit unions of all sizes said their members expect banking services to be available online. Not too many years ago, offering online products and services was a way to differentiate a credit union from the competition. Now, it's become a business necessity.”

Consequently, credit unions are placing as much emphasis on online marketing to retain members as to sell products. Yet, results indicated almost three-quarters of smaller credit unions did not notice a decrease in turnover among their online members. In contrast, the majority of larger credit unions report lower turnover.

"This could be a result of larger credit unions having more experience offering online services and, therefore, a larger time period to evaluate the results," Gagne suggests.

Despite the increase in importance and effectiveness of online marketing, credit unions of all sizes cited many challenges, including:

• Raising member awareness of online products and services
• Increasing member access to the Internet
• Assuring privacy and security
• Building an accurate e-mail database
• Devising targeted email campaigns

Paul Jaramillo, chief operations officer of DocuMatix, Salt Lake City, Utah, urges marketers to learn as much as possible about phishing, including how to spot a phishing e-mail, and the CAN-SPAM Act.

"Today, 65% of all e-mail is spam, and there's a concerted effort by companies and individuals to limit the receipt of these nuisance e-mails through spam filters,” says Jaramillo. “Unfortunately for credit unions, legitimate e-mails are sometimes suspected to be spam. That's why it's important for credit unions to know how to avoid having e-mails get caught in these filters.”

This article was prepared by the staff at the Point for Credit Union Research and Advice and is published online at http://thepoint.cuna.org/. Reprinted with permission.