How Analytics Combats Attrition At CEFCU

CEFCU ($7.9B, Peoria, IL) brings together analytics and artificial intelligence to solve one of the industry’s most persistent challenges: account attrition.

Despite the credit union posting slow, organic, long-term growth in its checking portfolio, attrition was a persistent issue that Jennifer Flexer, vice president of data governance, strategy, and analytics at CEFCU, likened to a steady drip from a faucet.

Combine that slow burn with the fact that downstate Illinois isn’t a rapid growth market and it was clear the credit union needed a solution.

Identifying At-Risk Members

Share draft penetration at CEFCU has hovered in the 51% range for several years, roughly 11 percentage points below both its $1-10 billion asset-based peers and the industry as a whole. Those sticky accounts are critical growth avenues that tend to correspond with a consumer’s primary financial institution and offer a variety of avenues for deeper relationships.

To identify members at highest risk of attrition, CEFCU provides an anonymized transaction data set to its AI and analytics support partner, Stakana, which processes the data using its own model to determine both a control group and a list of members at highest risk of leaving the credit union within the next six months.

Stopping The Problem Before It Starts

With its at-risk list in-hand, CEFCU begins an intervention process by sending a brief Qualtrics survey to that group soliciting input on how the credit union is doing. The key to success, notes Flexer, is that the survey itself is innocuous.

“We want to avoid creating the problem we’re trying to solve,” she says. “We don’t want to show up in somebody’s inbox saying, ‘What did we do wrong?’ because then you can create the problem. If this is working well, we’re reaching folks before they’re even conscious they are at risk of taking off for greener pastures.”

Part of the survey includes asking members how they feel about CEFCU and its service and whether that member wants to hear from the credit union directly.

“We want people to feel that we care what they think and that we’re happy to work with them,” Flexer says.

Although CEFCU had initial concerns that the surveys could lead to aggressive feedback from disgruntled members, Flexer says the credit union has had fewer than 25 incidents (less than 1%) in four years of this kind of outreach.

The results are notable. In the past four years, members on the at-risk lists have had 70% lower attrition rates than the control group. That’s an ROI of more than 400%.

Even better, a retro analysis of those who received the intervention emails showed deeper engagement with those who responded to the surveys.

“We wanted to know what happens six months downstream — are we seeing any difference in relationship acquisition or debit card usage?” Flexer says. “When we did a six-month follow-up based on their transaction activity, we saw a significant increase in direct deposit penetration, which for us is a PFI indicator. So that was really encouraging.”

Credit and debit ACH transaction counts and amounts were also up both three and six months after intervention. Although the sample size is relatively small, Flexer says the results are strong enough that the credit union is confident its efforts are making a difference to its business.

The Bigger Picture

Although Flexer and her team focus on data and business intelligence, the attrition surveys aligns with CEFCU’s broader efforts around member experience. The credit union conducts a variety of surveys to not only gauge satisfaction but also ensure members — new ones, in particular, including those who joined through indirect lending — understand the variety of products and services available to them. Among other things, these surveys have helped identify different relationship trajectories for members who joined online versus in person or via indirect loans as well as various member journeys based on age, demographic, location, and more.

That outreach has had a measurable impact. Within the past year — which included three different iterations of its member relationship survey — CEFCU’s metrics for satisfaction and member experience have both risen. Its Net Promoter Score is also up, rising 5.4 points to 59.1 as of November, according to Diane Roe, CEFCU’s vice president of member experience and organizational and employee development.

“We’re gaining more and more data in that pool to identify those trends, which gives us a good line of sight into where we should focus our efforts,” says Roe.

CEFCU leadership plans to continue those efforts, including a multi-point plan to deepen relationships with members who join via indirect lending.

For now, stemming the tide of account attrition is a major step in the right direction.

“Attrition is a complex problem — I wouldn’t see there being any single magic bullet,” Flexer says. “We’ve found a nice little solution for this particular leak. Of course, members are still going to close their checking accounts, but what we’ve found through this process is that the AI model successfully identifies members at high risk of closing their accounts.”