How much does it cost your credit union to add a new member?
That’s a question that could generate much debate. Ask three different experts, and you’ll get three different answers. It’s kind of like asking, “how much does a house cost?” It depends on the house.
For starters here are some typical industry standard costs of new customer acquisition, meaning the amount of money each company spends on average on marketing and advertising to acquire just one new customer:
- Travel: Priceline.com: $7
- Telecom: Sprint PCS: $315
- Retail: Barnesandnoble.com: $10
- Financial: TD Waterhouse: $175
How can you quickly come up with a rough estimate for your credit union? Simply divide all the costs invested in acquiring new members (marketing expenses) by the number of members acquired in the period the money was spent. For example, using an easy round number, if your credit union spent $100 on marketing in a month and gained 100 new members in the same month, the cost to acquire a new member is $1.00.
Now that you’ve done the math on your credit union’s marketing, you may feel a little heartburn. Choosing to ignore the heartburn is a bad decision. Here are two opportunities for you:
- The old rule of thumb is that it costs 5X more to get a new member than it did to keep an existing member. If you’re spending all of your resources on new member acquisition, you’re leaving a huge door open for your existing members to walk out! Think of how many resources you spent to bring that member in only to watch them walk out the door. Devote some of your time and credit union marketing budget to serving your existing members and building that relationship.
I think of the credit union with which I recently completed my mortgage. They wooed me in and gained my mortgage – never to be heard from again. No thank you, no offer to assist me in other ways. With no relationship, it’s easy for me to see an attractive refi offer in a few years and not think twice about moving that mortgage.
- Spend some time on clearly crafting your value proposition. You now have about two seconds to gain a potential member’s attention, so how are you going to accomplish that? It’s like playing “Name That Tune” and naming that tune in two notes. Not easy, but not impossible. Flashback to this YMC blog from the summer of 2020for some ideas on how you can blow up your existing credit union marketing message and be more concise and member-focused to gain their attention quickly.
If you’re not happy with the cost of acquiring a new member at your credit union, you have options. In addition to the two ideas above, outsourcing your marketing may be a solution to decrease the cost of acquiring a new member while being more efficient as well.
Want to explore this option? Let’s spend 30 minutes together and talk through your current situation. Email me and let’s get your credit union on the road to success in 2021.