MADISON, Wis. (12/22/11)--Credit unions looking to build the value of their memberships must look beyond revenues and expenses and instead understand each member's contribution to the credit union, according to a new CUNA Operations, Sales & Service Council white paper.
"Building Member Lifetime Value" discusses strategies used by credit unions to leverage member lifetime value to drive revenue and profitability.
Member lifetime value (MLV) is a measure of each member's contribution to the credit union based on margin, retention rate and cost of capital.
Author Jeff Rendel explains that credit unions can improve their capability to grow more profitable member relationships by:
- Calculating each member's profitability and their lifetime value;
- Measuring and increasing the membership-retention rate;
- Increasing the sales-based engagement and results of frontline leaders;
- Making the most of on-boarding and outbound marketing programs;
- Increasing the loyalty of members already loyal to your credit union; and
- Benchmarking the credit union's sales culture, functions and results.
Rendel provides real-world examples of credit union successes and shares the tools each credit union used to build its MLV model.