Areas of Interest

With the maturation of Generations "X" and "Y" into key borrowing years, member segmentation will be critical to attraction and retention, according to a lending expert during a session of CUNA Mutual Group's eighth annual Discovery Conference held in Florida in July.

Felicia Schoenenberger, CUNA Mutual leading education consultant, reminded credit union staffers that not all members of a generation are alike. Donning pink hair and simulated body piercings, Schoenenberger played a "Gen-Xer" against "Baby Boomer" Bill Klewin, CUNA Mutual lending assistant vice president. The skit showed that the two may be different in ages, but they both have children the same age. The result is they have a lot in common: soccer games, school programs, community events and borrowing needs.

"Many parents Bill's age aren't looking to buy a van or save for their daughter's college education," Schoenenberger said. "If he walks into his credit union and the lending staff make assumptions based on his ‘Boomer' status, they'll miss lending opportunities." Segmentation is part of a process that will ensure members' lending needs are met, she continued. It turns a staff "order-taker" into a lending consultant, creating the "WOW Experience."

By identifying members and their varying segments, the "WOW Experience" leads to loan growth, increased product participation and new product development.

Training credit union staff to become lending consultants can also:

· Increase fee income (even more important when rates are low);
· Increase product penetration;
· Increase member satisfaction through tailored products and services regardless of generation;
· Attract and retain members;
· Deliver an excellent member experience;
· Enhance member relationships;
· Assist in moving credit union culture from transaction to relationship focus;
· Let members gain a better understanding of product and services;
· Better serve members because their true lending needs are met by lending staff who serve as "private financial consultants"; and * Offer a customized lending solution with a complete package of products and services.

In market segmentation, a credit union splits members and potential members into different groups or segments. Members of each segment have same or similar lending requirements that can be satisfied by a distinct marketing mix.

"There are many ways to segment," Schoenenberger said. "We often think of demographics but there are geographics, life stage, product and service needs, and unique customer needs as well. What is important is that credit unions segment from a customer point of view. Members are looking for a lender that will meet his or her unique borrowing needs."

The segmentation process has three stages. In stage one, credit unions seek to know their market. Stage two centers around members and transactions. "Ask yourself who buys, what is bought, and who buys what," she said. Stage three actually segments the market when credit unions determine member needs, such as why an item is purchased. At this stage, like-minded members are combined.

Reprinted with permission from CUNA's News Now.