marketing to reg e
DESCRIPTION
Thoughts on how to minimize the impact of Reg E. From segmentation to communications tips.TRANSCRIPT
Reg E is not the Reg E is not the
EEnd of fee incomend of fee income
Reg
Reg
veryone
is in a panic
Reg
It’s the nd
of fee income
Reg
yesAll
are on Marketing to make it better!
Discussion Overview
The Reg E Reality
What Members Want
Getting the Message Across Targeting Communication Training
Measurement
After the Reg E Deadline
Reg E Reality
The Basics
Reg E goes into effect for new accounts on July 1 Existing accounts on August 15 Members must respond by August 11
Checking and ACH transactions not impacted
Only involves Debit/POS and ATM transactions
Members must opt in for Overdraft Service
The Basics
27.4% of CU non-interest income comes from NSF/Courtesy Pay
Source: Callahan & Associates’ Non-interest Income Survey
The remainder is from: Debit/Credit Card Interchange Lending Fees ATM Fees Etc.
The Basics
NSF Transactions by Transaction Type
Source: FDIC
Callahan & Associates estimate that roughly 56% of your
total Overdraft Revenue will be in flux.
The Basics
NSF Transactions by Transaction Type
Source: FDIC
The income at risk is driven by about 12% of your member-base
What do Members Want?
What do Members Want?
Members want complete transparency
Communication should be simple to understand
Options should be painfully obvious
Many members will gladly pay for convenience, but the choice must be
theirs.And the options must be clear.
So how do we get the message across?
Targeting
Your High Overdraft Users Are The Key
Remember, about 12% of your members drive this revenue.
Targeting beyond initial contact to all effected
Primary Target: All Members with 10+ ODs in last 12 months
Secondary Target: Model Primary Target Checking account balances What is the average low balance of the month
Everyone else
Option 1
Primary Target: All Members with 10+ ODs in last 12 months
Secondary Target: 1-10 ODs in last 12 months
Everyone else
Option 2
Targeting beyond initial contact to all effected
Communication
Educate
Motivate
Get a Response
Educate
Stick to the basics
What is an overdraft and what will be different on August 15
Motivate
Help the Member make an informed decision
Provide “real world” examples with and without opt in
Get a Response
Make it easy for the member to opt in
Always provide a means to act
Opt in form on Letter
Secure form on Website
Link to form from eMail
Phone & URL in
Statements
Tools to Front Line
Staff
Outbound Calls if
necessary
The Message
Intro LetterIntro Letter
EDUCATE: Reg E basics. Keep it simple
MOTIVATE: Real World Examples with and without opt in
GET A RESPONSE: Include the form with self-address and postage indicia. Make it easy.
Intro LetterIntro Letter
What is an Overdraft?
What are the standard Overdraft practices?
Real World Examples with and without opt in
Form with opt in AND opt out options
What fees will be charged if CU pays Overdraft?
I want it! How do I authorize this?
For a copy of this letter, email [email protected]
Other Media
Use this same messaging and methodology for all other forms of communication.
Educate
Motivate
Get a Response
Staff Training
Staff Training
EDUCATE Reg E basics Cheat Sheets Real World Examples
MOTIVATE Teach basics of fee income to CU bottom line Consider small incentives for ANY response Set goals and report weekly progress
GET A RESPONSE “Hit Lists” by Branch (High Overdraft Users) Buck Slips with real world examples Train to ask the right questions
Buck Slip Sample
Buck Slip Sample
Educate
That means…
Fee details
Get a response
Educate
That means…
How this is different
Get a response
The 7 Right Questions
It’s about being Consultative and taking an Advisory Approach.
The 7 Right Questions
1. Do you use debit cards frequently to make purchases because it’s convenient or you often do not have enough cash or other forms of payment with you?
The 7 Right Questions
2. Do you often get close to a zero balance on your account by the time you make a new deposit?
The 7 Right Questions
3. Are you often not sure of your account balance before making a purchase or cash withdrawal?
The 7 Right Questions
4. Do you often use your debit card when you are out of town and away from a XYZ Credit Union branch?
The 7 Right Questions
5. If you need to use your debit card for an emergency or unexpected purchase, would it be important for that transaction to be approved regardless of your account balance?
The 7 Right Questions
6. Though you do not anticipate taking your account to a negative balance, would you consider paying a fee for the convenience of completing a transaction if it took your account to a negative balance?
The 7 Right Questions
7. If you were trying to make a purchase for an amount of more than what is left in your account, would you rather pay a fee to avoid the embarrassment of being declined?
The 7 Right Answers
0-2 “Yes”No real need
to opt in
3-4 “Yes”Don’t plan to use but may
be nice
5-7 “Yes”Definitely
need to opt in
Measurement
MeasurementMeasurement
Set Goals: % of High Overdraft Users % of all others
Measure opt in AND total response if possible
Report weekly to management and staff
Total #
# of Opt ins
% opt ins
# of Opt outs
% opt
Outs
Total Reponse
s
% Response
sGoal
High Users
170 75 44.1%
30 17.6%
105 62.0% 90%
Medium Users
300 90 30.0%
80 26.7%
170 56.7% 80%
All D.C. Members
1,000 400 40.0%
300 30.0%
700 70.0% 70%
Sample ReportSample Report
After August 15
After August 15 After August 15
Proactively communicate with members that opted out when you decline their debit transaction Explain that you acted according to their wishes Provide an opportunity to opt in
Prepare the front line staff and call center Reiterate the Reg E basics Arm them with a list of all Reg E materials that
members received Provide them the tools to Opt members in for future
transactions
Add to On-Boarding Program
Despite your best efforts, you’ll be amazed by how many complaints you’ll receive when transactions are declined.
After August 15 After August 15
Cross sell / pre-qualify members for other options to protect against overdraft like Savings Sweeps.
What about those members that opt out?
This is an opportunityThis is an opportunity
Have “The Talk” with members How to create and keep a budget“Whether you opt in or opt out, there’s NEVER a fee if you
don’t overdraft. Don’t spend what you don’t have.”
Avoid debt “Just say ‘NO’ to credit cards.”
ID Theft“NEVER provide information to someone that contacts you.”
“eStatements are safer than paper statements.”
We can differentiate ourselves from our for-profit counterparts
This is an opportunityThis is an opportunity
For those companies that may decline cards at POS Educate about possible effects of Reg E (In-house
seminars)
When your members are declined at POS: Provide retailer with opt in tools (phone numbers,
online, etc.)
What about our commercial friends and SEGs?
Wrap UpWrap Up
Run EVERYTHING through compliance Keep ALL COMMUNICATION as simple as possible Provide the Member with smart options Educate … Motivate … Get a Response Use all of your touch points Measure and Report August 15 is only the beginning
Eric GaglianoEric Gagliano
MarketMatchMarketMatch
SVP, Client ManagementSVP, Client Management
[email protected]@MarketMatch.com
866-501-2233 x 106866-501-2233 x 106
Thank You