By Ray Birch
LOUISVILLE, Ky.—Reaching out to members early and often when they first join the credit union is the key to driving long-term loyalty, says one marketing executive.
Pat Curran, SVP of marketing and business development for Class Act FCU, says that loyalty and deep product penetration helped the $212-million CU win a CUNA Benefits of Membership award in 2017.
The award recognizes CUs that return superior value to their account holders. According to CUNA, Class Act returns an average of $360 per household.
“CUNA also measures the return for your loyal, high-usage households,” said Curran. “In this category we return an average of $1,651 per household, which is a big number.”
The criteria for defining loyal, high-usage households include households with at least a $30,000, six-month auto loan, a credit card with an average balance of $5,000, a $200,000 30-year mortgage, a $5,000 balance in interest-bearing checking, $10,000 in a one-year CD, and $5,000 in a money market account.
Getting Aggressive
Class Act would not have the account penetration it enjoys today, and would not have won the CUNA honor, if the CU was not aggressive in contacting members via e-mail, regular mail and phone calls in the early stage of the relationship, Curran told CUToday.info.
He said that to ensure the credit union is doing the up-front work, it carefully tracks just how many services members take with the credit union in their first half-year.
“Right now that average number is 6.2,” said Curran. “But that is not 6.2 actual products; it can be products and services. For example, signing up for online banking is one, direct deposit is another…”
Last year marked the second consecutive year Class Act won the Benefits of Membership award. Curran said three products contribute heavily to the giveback total.
“Members get their greatest benefit from us from three products—our Honors Checking account, auto loans and our credit card,” said Curran.
How Account is Priced
Honors Checking pays 4% APY on the first $5,000 if members meet the monthly requirements of 10 or more debit card purchases totaling more than $200, logging into home banking at least once, enrolling for e-statements and 100% direct deposit from payroll or retirement.
Serving local teachers, the credit union promotes the account saying, “Class Act FCU is proud to offer a checking account that is sure to make your money smarter. Earn 4.0 and make the Honor Roll!”
“We have 5,326 of these accounts with an average of $5,000 in each account,” said Curran.
Class Act’s credit card charges 10.5% and is tied to prime. But Curran said it’s the 1% cash back for any purchase, no annual fee and six-month 0% introductory rate that has members using the plastic.
In The Driver’s Seat
“We really make an impact on members’ lives with our car loans,” said Curran.
The credit union offers a low 1.99% APR for four years on the best paper. But Curran pointed out that rate is good for used cars as well.
“Our members do a great deal of used car business with us,” said Curran. “Our average auto loan is $16,000 and we don’t do any indirect.”
Like several other Benefits of Membership Award winners CUToday.info has profiled, Class Act FCU believes that its SEG-based field of membership plays a key role in establishing a close connection with members and great loyalty and product usage.
“We serve 35 different schools, including the University of Louisville,” said Curran. “Being SEG-based allows us to focus more on the educational community, both in how we structure our products and how we give back to the communities we serve. We can be laser-focused on both.”
Paying Attention to Net Worth
And another step Class Act takes that is similar to others that have won the CUNA honor is keeping net worth near 10%.
“We try to keep our capital at 10%—and if we go above that percentage we try to give back more to keep us at 10%,” said Curran, who noted that ROA was 75 basis points in 2017. ROA has been lower in previous years, down to 0% in 2013, according to call report data. “We give back, it’s that simple. A lot of our board is made up of retired and active school administrators and teachers. They recognize our mission, that we are not for profit, so we give back.”