Is “Products Per Member” an Important Strategic Objective?

Products Per Member

Originally published May 29, 2012 on

One of the more prevalent corporate objectives in the credit union community is to elevate the number of products per member/household. The thinking goes that if a credit union defines an objective to improve that number it will result in an institutional “sales” focus, which in turn will drive greater product penetration, usage, etc. As far as big corporate objectives go, this one fails not only to inspire the sales effort but also to drive the level of desired member engagement. Here’s why.

Financial Services Sales is About Need – Not About Sales

There are many mythical stories of great salesmen of the past. These kinds of people, as the saying goes, could sell a glass of water to a drowning man. In some ways, the product-per-member objective is borne of a desire to inspire the kind of sales that these “great salesmen” could drum up: Lots of product sold to as many people as possible.

There are a few problems with this way of thinking, however. For starters, the objective to sell a lot of something to one person relegates the consideration of whether the person actually needs/wants/will use the product to a lower priority – if it remains a priority at all. If you are selling a finished product, such as a burger-fries-drink combo meal, then this is not an issue; once you sell the product the cost of that product is no longer yours to bear. If the buyer doesn’t want all that they bought, they just throw it away – it makes no difference to the seller.

For financial institutions there is a continuing cost for sold, unused products. Selling an unneeded product will simply increase cost without driving offsetting revenue gained through product usage. Statement processing, user license fees, compliance, etc. – these costs become a greater consideration after the sale.

Another problem with this “more sales” thought process is that many people get upset when they are sold something that they don’t need, or that fails to benefit them in the way promised by the salesperson. Yes, your sales team may be able to sell a glass of water to a drowning man, but ultimately that man won’t be too happy about it. Think of the play/movie “The Music Man.” Harold Hill was a traveling salesman because if he didn’t “travel” from town to town he’d be arrested, beaten up, or both! In some way we see a little bit of this going on now with the public reaction to the consequences of being sold something ultimately unaffordable – subprime mortgages. A lingering feeling of being duped, and the resulting anger, should not be the member leave-behind of the sales effort.

Sales is so much more than a numbers-driven exercise. Successful sales, particularly in the financial services arena, is about getting products in the hands of people who have a defined need for that product and/or that will benefit from that product. The number of accounts sold, though an important measurement, is nowhere near as important as the number of accounts used to their full potential.

So why don’t more credit unions have usage-based goals rather than, or as a greater priority than, volume-based goals? One reason is that the industry tends to follow itself in terms of defining strategic objectives. If one credit union has a product-per-member goal then over time most credit unions will be seeking to implement some variation of that goal.

The other reason for lack of usage-based goals is that it is really hard to sell to people based on need and predicted usage because the strategy requires copious amounts of data to be able to understand proper sales profiles… and building that kind of profiling ability requires substantial effort and a fair amount of money. It is much easier to simply say “sell more” and not worry about need and/or actual product usage (in fact, on this point, usage issues for many credit unions are not considered a sales concern at all but a back-office concern to be dealt with when it is proven the account is not being used).

In any case, my main point is this: credit unions would do well to prioritize product-per-member strategic objectives as a long second to product usage-based objectives. By doing so, credit unions will find two new sales-directed mandates emerge that combine to drive more in-depth, long-lasting member benefits. What are these mandates?

  • A mandate to give more attention on developing profitable member relationships at the point of initial sale;
  • A mandate to give more consideration to which products are (or are not) actually being used successfully relative to the sales opportunity in the field of membership.

Consider an experience I had as a teller early in my career as an illustration of what happens when these mandates are suppressed by volume goals. We were told to be more aggressive in selling our credit card. A colleague of mine on the teller line grabbed a substantial amount of card applications, signed his name in the referral line, and began handing them out to every member for whom he processed a transaction.

He was, by some measurements, one of our best tellers. Friendly, engaging, members liked him, etc. Of course they opened this new account he recommended. The only problem was that we opened a lot of accounts that people never used – and most of those were related to his efforts.

There are no doubt many other reasons that contributed to our usage problems, but the start of it all was that we never defined who would use our account and why. We made the assumption that anyone that opened one would be a loyal user, therefore sales volume became the measure of success.

We succeeded – and unbelievably failed at the same time.


1 comment

  1. Tom — Spot on as usual. When people fixate on a number, they tend to lose sight of the forest for the trees. That being said, I would also offer up a couple of additional mandates.

    >> Fish where the fish are biting. You can’t just hang out your shingle and expect to attract the right type of member. As part of the strategic planning process, credit unions need to ask themselves what is the ideal type of member? Where are they located? How can we go about attracting them? You won’t catch too many fish in a 1/2 acre farm pond.

    >> Evaluate your product offering. You might have a poor PPM ratio simply because your offering is either too narrow, outdated, or both. Consumers want contemporary offerings.

    >> Proactively market. Too much marketing energy is wasted with signs and monitors in the lobby. Nobody goes in the lobby anymore. Give me a personalized value proposition and I’ll snap it up. I won’t pay attention to a mailer, e-mail, tweet or Facebook page. When you take a mortgage application you have EVERY bit of personal financial information at your disposal. Do you harvest this information to make a personalized value proposition? BOA sent me a letter about six years ago. It had four sentences. We feel the time is right for you to refinance. We can lower your rate by 1.50% saving you $200 per month on your house payment. There are no out of pocket closing costs. Please sign and return the letter and we’ll get the process started for you. How great is that! Sign and save!

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