Among many innovative credit unions, there's a new found affection going around for member profitability segmentation - finding out which members are "most profitable" to your non-profit cooperative (and presumably purging the rest!). I was listening recently to a CEO who had bought into the concept "whole hawg" and was now a firmly convinced, true-believer.The segmentation finding which really caught my eye from that Credit Union's most recent profitability analysis ( the consultant's name was Right-On or Raddish, something like that, can't remember exactly!?), revealed that a long-term Board member was "the most profitable member" of the Credit Union! What a splendid distinction! The highly pleased CEO, in fact, had ordered an elaborate recognition plaque to present to the Board member at the upcoming Annual Meeting.
Umm-mm-m, let's see here......
If that Board member is the "most profitable member" of the Credit Union, what exactly does that mean? Should the CEO really be so proud of that fact? Should the Board member be grateful for the recognition?
Doesn't being "the most profitable member" of the Credit Union imply that "someone" is being overcharged or under-rewarded (or both!) by the Credit Union? From the member's perspective, does that "most profitable member" distinction mean that you have personally won - or lost - the lottery?
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| Local credit union announces "Most Profitable Member"... |
Would you be really pleased to see your smiling little face on the front page of your hometown news-rag with the caption: "Credit Union's Most Profitable Member"!!!
(Nah, me neither.....)
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| D-de-D-D! |
4 comments:
Kind of like all those credit unions that raise their Courtesy Pay fees to $30, $35 just as soon as all the banks down the street do so they can increase their profitability. They have problems making loans so they just "fee it up" to earn their net income. Wow, what a courtesy to their members!
Never a fan of Rubbish analysis. Members are opportunities to serve. When the quest is just for profitable accounts, credit unions blow past a lot of opportunities to serve and do so covering costs. Credit unions waste enormous amounts of member dollars on marketing to potential accounts that are allegedly immediately profitable. This misguided adventure in marketing caused by profitably analysis is a general waste of time and money because of the sticky relationship people have with their primary financial institution.
A focus on serving members presently in your credit union is more cost effective and will provide for a better ROA.
OK so we want the real truth. Many credit unions, not all, are no better than banks. They treat members poorly, are discourteous to them and charge ridiculous service fees. Even good members with large balances in their share accounts or who hold jumbo certificates do not get any special treatment. The tellers don't know their names and the CEO never gets off his ass to say hello, how are you and are we doing a good job. Some credit unions are great. They understand their purpose and mission. Others couldn't tell you the difference between them and the guys credit unions love to hate.That it how it really is.
The profitable members are on the RADar Screen. It is a RADical idea. It is like pimping your members for profit.
Funny this Rad Vendor can sell the goods to a bunch of CEO's that actually drink the kool aid and pay the big bucks for this mis-guided approach at pimping the membership.
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