Customer Behaviors in the Credit Union Market

Customer behavior is both a fascinating topic and a frustrating one - because, in reality, there are an infinite number of actual behaviors. For our purposes, we want to find a way to simplify how we think about those behaviors, so we can come up with a limited number of market segments.

Here are a few of the most common classes of members:

1. Rate Shoppers
2. Convenience Buyers
3. Social Members
4. Linked Members
5. Service Shoppers
6. Multi-buyers

The simplest behavior to identify and segment is the pure commodity member. This person is joining your credit union to get the best rates and fees, period. The positive thing about the Rate Shopper is the he or she is easy to get - just make sure you have the lowest rates. The bad thing about that, of course, is that it's easy to end up losing money on these members, and they are likely to switch to another financial service provider the minute they see a better deal.

Convenience buyers are a bit more tricky, since different things create convenience for different people. The most obvious convenience factor is location - a CU that is on the way to or from work is likely to attract a lot of convenience members. These folks don't switch as readily because changing credit unions is, of course, somewhat inconvenient. The downside is that it's hard to get them to switch from wherever they belong now.

Social members join a credit union for the social activity of the branch they frequent. This can be as simple as the people behind the counter, the other members who frequent the branch at the same times they do, or more organized activities around the credit union. While it's a little more difficult to attract these members, they are also very loyal, because they view the credit union as part of their network of friends.

Linked members are very similar to Social Members, in that they join because of some outside relationship - a friend who works for the credit union, for example. They do not, however, view social life at the branch as a value. Linked Members tends to be a small group, but a very loyal group - as long as you keep employing their friend.

Service shoppers are like rate shoppers, except that they value service over other factors. If you provide excellent service, this group will be loyal and profitable, but they tend to be demanding and may switch if they become dissatisfied.

Multi-buyers are members who have multiple accounts at your credit union, and may choose to join because of their experience with the other accounts. The most common example of this is someone who has separate accounts for their personal and business finances. These members tend to be affluent, and quite profitable, since the multiple accounts increases your convenience value for them.