It’s the Process of Getting More from Less.
There are a couple of compelling statistics that provide the rational for what you are about to read. There are over 100 million US households and about 90 million credit union members with a 10% share of wallet. These facts describe an industry that has too many part time members with low balances and infrequent use patterns. In good economic times, credit unions can afford to subsidize these relationships. But the bursting of the credit bubble, along with new regulations, has forced the issue for the industry. That’s why Data Based Marketing has stepped up with an innovative program designed to improve the operating profit of any credit union.

In a traditional definition, demarketing is a process that limits the purchase or use of a limited resource, commodity or product. For credit unions, this limited commodity is new income volume. Credit Union De-Marketing maximizes operating efficiency by minimizing waste.

The first step is to accurately assess profitability. Sadly, MCIF systems are not useful in this role. They fail to accurately work with current variable and fixed costs at the member level. What’s needed is a profitability module that balances precisely to the credit union’s general ledger every month. That is exactly what our Income & Expense Balanced© reporting accomplishes. This is Data Based Marketing’s proprietary process of reverse engineering the credit union’s income and expense statement. This, along with database supplied income and expense items, is tagged back to each member record. The result is an accurate picture of what is happening now.

The second step is warehouse the monthly data. This insures that we have truly identified those relationships that consistently are unprofitable.

The third step is to reach out to the unprofitable members. A matrix of robotic phone calls, print and electronic mail is produced and distributed in month one. The following month two is used to observe behavior. Those that remain unprofitable by month three receive a final, personalized appeal to become involved. While special offers are made, these members are also officially notified of upcoming policy changes that will eventually fee-close their membership. This announcement includes a withdrawal slip so the individual can avoid this scenario.

A key aspect to Data Based Marketing’s De-Marketing program is its ability to identify the required policy changes that will minimize the unprofitable member relationship. This is accomplished by having a complete understanding of the account and service mixes that are hurting the credit union the most.