Peggy Cunningham: Business & Marketing Coursework

Case #1: Riverside Credit Union
Riverside Credit Union
Jeff Schulz and
Peggy Cunningham
Frank Timmerman, Vice-President of Marketing at Riverside Credit Union, sat at his desk with a smile on his face. After months of effort, he believed he now really had a handle on Riverside Credit Union’s membership. He had been in charge of the initiative to segment the membership base to see if he could better understand how different members contributed to the profitability of the credit union. He also wanted to know which members he should concentrate on in terms of building their business to ensure future profitability. He believed having a better understanding of the various segment profiles would also help his Credit Union better target appropriate financial products to members.
BACKGROUND
Riverside Credit Union is a well-established credit union with just over 100,000 retail members and a small but rapidly growing business membership of about 10,000 members. Credit unions are similar to banks in many respects, but they also have a number of key differences. Like banks, they offer many financial services – everything from savings and chequing accounts to investment advice. However, unlike banks, credit unions don’t have customers – they have members. The members are the actual owners of the credit union. Furthermore, credit unions have a strong sense of their social responsibility in addition to their financial responsibility.
Riverside Credit Union, for example, describes itself as a democratic, ethical, and innovative provider of financial services to its members. It is committed to doing business not only in a way that strengthens its own long-term success but also in a manner that contributes to the social, economic, and environmental well-being of the community in which it operates.
Riverside Credit Union has been quite successful and has assets under administration of almost $2.5 billion. Much of its success is due to its excellent member service culture, the regular introduction of new competitive products, and an aggressive pricing policy that ensures members are always getting some of the best rates available.
Riverside Credit Union also has a good distribution network with which to serve its members. It has 15 branches, 30 ATMs, PC banking, a call centre that is mostly dedicated to serving members, and an interactive voice-response phone banking system. It also has a number of mortgage development managers. During the past two years, the branch sales force had been realigned to focus more on relationship selling. The salesforce has placed the greatest emphasis on members with high balances.
Riverside Credit Union is located in a large urban area that has until recently been growing a little faster than the rest of the country. During the last year or so the economy has been slowing, resulting in much more competition among financial institutions. There is also more competition from category killers that are focusing on specific product areas like credit cards and mortgages. The Internet has facilitated this type of banking and that done by other ‘direct’ financial institutions, which are aggressively competing for savings and investment accounts, with rates ...