The Latest On BrightLeaf Financial
5/5/2009
An ongoing frustration for full-service credit unions is the difficulty they face in trying to deliver a broad range of financial products and services to their members. Consultants and experts have tried to figure out the cause of the frustration and concluded that a key reason is that credit unions have been unable to effectively generate “qualified referrals” from their members.
Just what is a qualified referral? In the credit union business, a qualified referral usually means a member that meets two basic criteria: first, the need or desire for a particular service and, second, the required income or assets to purchase. Seems simple enough, right? Well, not really.
It’s very difficult for credit union employees to determine if a member meets these two criteria without spending a significant amount of time profiling them. But branch employees like tellers and customer service representatives face serious time and information constraints that limit their ability to make quality referrals. To make matters worse, the service rep’s information about the member’s financial situation is limited to credit union holdings – no income or non-credit union asset data.
At the same time, an entire segment of credit union members, who we’ll call “remote members” – rarely use the branch system at all, relying instead on ATMs, Web and online banking to access credit union services. Branch-based referral systems completely miss these members.
Current Efforts
Many credit union executives understand the qualified referral problem and have taken some positive steps to address the first part of the problem. At the branch level, credit union leaders have invested heavily in employee training, referral incentive programs and have streamlined referral processing to equip service reps. They also have stepped up direct and in-branch marketing to increase member awareness of the credit union’s suite of services.
Despite these efforts, which have made some in-roads, credit unions still struggle with the quantity and quality of branch referrals they receive. The transactional nature of branch business, high front-line employee turnover and the difficulty of instilling a sales culture in front-line employees all conspire against the credit union’s best efforts.
At the same time, there are no formal referral mechanisms for remote members, other than predictive data modeling, advertising and direct marketing initiatives. Credit unions have begun exploring Web-based marketing initiatives, but most of these efforts have been stand-alone with little or no coordination with existing referral channels. Not surprisingly, these initiatives have been disappointing to most credit union leaders.
A Technology Solution?
If credit unions have learned anything during the past 15 years, it is that stand-alone technology services, like ATMs and online banking, cannot replace existing service channels. However, online services that integrate with traditional offline channels (like Web-based loan application feeds) have been very successful.
A good retail example is the car-buying process. Most buyers now conduct online research and analysis prior to buying but then go to a traditional car dealership to buy the car. In response, many dealerships have integrated online services with their traditional dealership process so that customers can profile themselves and decide what they want before ever stepping foot on the lot.
The most forward-looking car dealerships have begun offering walk-in customers onsite access to research tools (like Edmunds and CARFAX) to encourage a self-profiling process. This has had the dual benefit of increasing their referral pipeline while reducing the amount of face time their sales people expend on unqualified prospects (I call them “lot walkers.”)
I believe a similar opportunity exists for credit unions. By offering online tools that allow potential clients to effectively profile themselves and articulate their financial goals, credit unions have access to three integrated methods for addressing the “qualified referral problem” they face:
1. For in-branch members: Tellers and customer service reps can offer them online tools (either on- or offsite) and then use the output to feed the qualified members to the appropriate producer, yielding new revenue without incurring significant member acquisition costs.
2. For face-to-face members: Producers can offer them online tools (or use the tools with the collaboratively) and then use the output to sell additional solutions.
3. For remote members: The credit union can offer members these same online tools as a Web-based solution, opening up a targeted marketing process for feeding new, self-profiled members into needs-based product sale solutions.
The well-known business truism says that every problem creates an opportunity. The “qualified referral problem” is no exception. Like banks, credit unions have overcome many of the external challenges they initially faced when attempting to implement and deploy technology solutions. Now, the problems they face are primarily internal, making them more closely akin to Pogo’s classic observation: We have met the enemy, and he is us.
Credit unions can leverage online technology solutions to more successfully deliver a broader range of services to their members but only when they integrate those solutions with current sales-and-service model. I believe that stand-alone, “magic bullet” technologies are a risky proposition at best; therefore, only those online tools that function as clear complements to current service models merit consideration and investment.
Bryan Link
Managing Director
BrightLeaf Financial Network
About the Author
Bryan Link is the managing director of BrightLeaf Financial Network. Bryan’s responsibilities at BrightLeaf include developing the high-level strategic direction of the company as well as managing the CUSO’s direct sales effort. He can be reached at bryan.link@brightleaffinancial.com or (336) 766-0821.
About BrightLeaf Financial Network
BrightLeaf Financial Network is a CUSO that was created by MEMBERS Development Company and a group of credit unions with a mission of meeting the financial planning needs of middle-income Americans. Through BrightLeaf, credit union members have the ability to create a custom financial plan using a set of easy-to-use, secure online tools and then be referred directly to their credit union for help with putting their plan into action. BrightLeaf is based just outside of Winston-Salem, NC. For more information, visit www.brightleaffinancial.com.
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