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Building “The Plan” for New and Existing Members

By Jack Kelly Jr.

Screen Shot 2013-11-13 at 10.54.25 AMHow do you construct a plan that is tailor-made for all of your members whether new or existing? You might begin by asking yourself a few very simple questions: Do you provide your members with a financial life plan? When you say no to a new or long time member are you putting the relationship on hold or, worse, are you jeopardizing the relationship altogether? When you say yes to a member are you doing the appropriate follow-up to grow and nurture the relationship?

How you answer these questions will tell you a lot about how much business you’re leaving on the table and how many members you may never hear from again. While these may be tough questions, you need to ask them: once you come to grips with the answers you can move forward to build “The Plan” for your members.

The best time to build new lifetime relationships is whenever a new member joins your credit union. After all, they were motivated enough to drop what they were doing and come see you for whatever reasons—reasons you need to know—and were ready to make a change the moment they walked through your door. Sadly, too few credit unions are taking advantage of this great opportunity. Why?

Welcoming new members

Perhaps your employees are process driven and neither trained nor motivated to look for opportunities. Instead, they are trained to follow procedures and their first new member encounter might begin by checking off the following list of priorities:

  • Are they in your field of membership?
  • Do they have two forms of ID?
  • Will they pay the $25 fee with cash or by check?
  • What is their current and previous address?
  • What is their credit score?
  • Etc., etc., etc.

Instead of focusing on procedures, your credit union staff should be trained in the following:

  • Recognize that every new member represents an opportunity
  • Find out why the member came to your CU
  • Care enough to show how to help save the new member money
  • Begin developing a relationship
  • Conduct a world class interview
  • Look for the positives even when they’re not readily apparent
  • Use credit scores or ratios as tools to help get you to a decision, rather than use them only to say no
  • If today is not the day you say yes then make sure you have a “No, but” solution. For example, “Today the numbers just don’t add up, but I have come up with a plan that I think will get us to say yes in a very short period of time.”

Screen Shot 2013-11-13 at 10.56.02 AMEvery new member brings opportunities that you must learn to capitalize upon. Too often the onus is put on new members to earn our trust before we are willing to take the risk by providing them with financial products and services. What other retail business requires that customers must earn the right to do business with them? The opposite is usually true: good retailers make an effort to get to know their customers, find them products that fit their needs and do everything they can to earn their customers’ repeat business. Too many times and in too many Credit Unions I hear something like this said to new members: “Thank you for joining the credit union today. I was able to get you approved for the $500.00 share secured credit card, but I cannot get the car loan approved until you’ve established yourself with us.” That means that members must prove themselves to the credit union before it even considers taking a risk on them. Doesn’t that sound backwards? Is that how you would like to be treated?

You should be working hard to cement new member relationships from their very first visit. You don’t want their financial needs met elsewhere.

Nurturing the new member relationship

How do you provide new members with enough services to keep them loyal while walking the fine line between offering no services and giving them too many too fast? This excellent question often comes up in my training seminars and I have seen many credit unions struggle to figure out what the right balance ought to be. Every new member represents opportunity but, because they are new, knowing what financial products to offer and how fast you introduce them begins as a mystery. In order to solve the mystery you and your employees must learn to nurture each new member relationship.

Here is a basic outline for information gathering along with some simple questions to ask when determining which products and services might best suit member interest:

What was their motivation for joining the credit union?

  • Why did they decide to open an account?
  • Why did they decide to join a credit union? (Motivating factor)
  • Do they like your savings rates?
  • What about your no fee checking?
  • Do they know about your Loan programs and your competitive rates?
  • Did anyone refer them to you?
  • Have they seen any of your marketing initiatives?
  • Have they come to you as a last resort?

Note:  Your Marketing Department should be sitting with your employees during these interviews to see what has drawn new members to your credit union. This will help them develop marketing plans that best cater to your credit union’s strengths. New members can become big assets in getting the word out that your CU is different and a terrific place to borrow and save.

Where have they been banking?

  • How has their current financial institution fallen short in meeting their expectations?
  • How can you meet and exceed those expectations?

What does their credit history tell you?

  • Is the new member’s credit score headed up or down?
  • Have they experienced some adversity that has affected their credit?
  • Do they understand how credit works?
  • Should you offer them a plan to help them repair their credit?

By asking questions and digging deep to find out new member motivation we can help them out immediately as well as assist them in realizing their long-term financial goals and achieve financial peace of mind.

Here are some important questions you should ask yourself:

  • Have we laid enough groundwork so the new member will know when they should come back for additional credit? By this I mean, have we scheduled or created the motivation for a future appointment?
  • Have we educated them on how credit works?
  • Have we clearly explained to them how to improve or repair their credit?
  • Have we given them a copy of their credit report to take home? Are you sure that you’ve made it clear that it should now be part of their everyday thought process?

When you must say no.

Try as hard as you might, there will be times when you have to say no to one of your members. There will be instances when a member is in such dire need that you will want to give them anything they ask for even if it means giving them money out of our own pocket. But you have to remain realistic. Any time you must say no to a member you should make it your goal to educate them, help them create achievable goals and establish a reasonable timeline to achieve these goals so you will be able to say yes to them in the future.

  • Education:  Unfortunately, a large percentage of your members are not aware of their credit status. Whenever we ask members what their credit score is we are usually told—if they’re at all knowledgeable of the FICO scoring system—a number that is way off their actual credit score. We see credit reports for lots of young people with no score at all, multiple collections or even judgments against them. You must take the time to teach each of your members how the FICO system works, what their score is, what it means and, most importantly, how they can improve it. They should have a basic understanding of how the model works before they get up to leave. If it’s allowed, they should take their credit report home, review it with their spouse and bring it with them for use in future visits to gauge their progress.
  • Goals:  Give members the knowledge they need to understand credit and how important it is to their financial future. Help them establish reasonable, achievable goals to improve their credit standing. If they are saddled with credit card debt help create a program for them to pay down their highest interest credit cards first while making minimum payments on their other cards. They need to regain or establish control of their credit. Remind them that they will become empowered and motivated to work even harder to get out of debt by setting and achieving goals.
  • Timelines:  Creating effective timelines requires something many credit unions do poorly: develop ongoing follow up programs. You need to set up a realistic timeline for members to achieve mutually agreed upon goals, which will require you to follow up with members periodically, whether over the phone, via email, or in person. This is so crucial to turning a member’s financial life around that you must make it a priority. We all have calendars, you must mark yours with the next day and time that you want to talk to or meet with a member. If the member is coming in make sure you pull a new credit report and have them bring in the old one so, together, you can chart their progress, reeducate them or—best of all—offer them the loan!

I recently had the opportunity to work with a young woman who had just turned 18 when she came in to join the credit union. She wanted to open an account by giving us $5.00 and two forms of identification and then call it a day. When we asked her for permission to pull her credit report she said sure, but it was obvious that she wasn’t quite sure what we were asking. It was no surprise that her report showed no credit score due to insufficient history. We took the time to teach her how credit works and to tell her how important it was for her to start out her adult years with a good credit history. We opened a shared secured savings account and gave her a shared secured Visa card with a limit that we both felt she could manage. We also let her know that we would be following up with her over the next six months to see how she was doing and told her that if she handled the credit card responsibly we would make it an unsecured credit card. Nine months later I followed up with the MSR who told me that she was indeed doing very well and they were able to give her the unsecured visa card as well as her first car loan after the six-month probation period. Follow up is the key to any plan and in this case we were able to start a young member on the right financial path and a lifetime relationship.

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When you say yes!

The fun part comes after you’ve done all of the necessary work, the member has a good credit score and you are able to tell them that they have been approved. That’s when you’ll find yourself on the right path to a lifetime relationship. What happens when you don’t follow up with the member and run the risk of letting the relationship deteriorate? Do you think you will still be their first choice the next time they need a loan?

You need to have a Plan for the times when you say yes just as much as you need to have a Plan when you say no. I work with a few credit unions that implement a 2, 2 and 2 plan.  They will make a follow up phone call two days after closing a loan or opening an account; another call after two weeks and a third call two months after the loan closed or the account opened. The calls range from asking members whether or not they have received their checks or debit cards, if they were satisfied with the level of service they received or even how their new car is working out. I overheard one MSR ask a member to send him a picture of the new house we mortgaged. The key to credit union success is building and maintaining relationships so that you become every member’s primary financial institution for a lifetime.

Remember, you typically get just one opportunity to make the best new member impression possible so make it your goal to give every member a positive experience they will never forget. 

Jack Kelly Jr. is Vice President for Lending Solutions Consulting Inc. (LSCI) 

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