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Are Members Overwhelmed by CU Product Choices?
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By Lisa Hochgraf

 

It wasn't that long ago that I heard a conference speaker tell the story of a husband, sent to the store to buy "Tide."

 

The speaker projected--as big as a wall display in a store--a slide of the many, many varieties of Tide laundry soap the man encountered.

 

The husband was bewildered because all his list said was "Tide." Which one was the right one? Which one should he buy to make his wife happy?

 

While I'm sure there are consumers that just can't live without their one specific version of Tide (I, myself, am a perfume- and dye-free type), this anecdote illustrates the idea that consumers don't always benefit from having more options.

A new study from the Filene Research Institute, Madison, Wis., says credit unions also need to know how to handle choice overload in their products and services. "The Psychology of Choice Overload: Implications for Retail Financial Services" is authored by Alexander Chernev, associate professor at Northwestern University's Kellogg School of Management.

 

Chernev outlines three ways credit unions can make choices easier for members:    

  1. Know that less is more. Interviews with credit union CEOs indicate that many recognize the need to pare their offerings to an efficient core group, said the report. Credit unions should ask themselves why streamlining decisions like those made in banking by ING Direct and Ally work.   
  2. Actively curate the credit union's offerings. Instead of reducing the number of available options offered by the credit union, consider focusing on a smaller number of options promoted by the credit union. Instead of overwhelming a new member, the credit union may decide to promote only the subset of options that most likely appeals to new members. Sometimes telling the consumer which option is the most popular is enough to help the member decide.   

  3. Organize around defaults. Take a cue from the benefits area. The practice of allowing employees to opt out of 401(k)s, rather than asking them to opt in, results in dramatically higher participation rates. Setting default options at a credit union can ease the decision burden on members. Deciding whether each option is better or worse than a default option is easier than evaluating each option against all other options.

So when you're in your next product development or marketing meeting for your credit union, think of the poor husband trying to pick out the right variety of Tide. And try out one of the tips from Filene for how to keep choices manageable for your members.

Lisa Hochgraf is a CUES editor.

It's not too late to register for the CUES School of Product and Channel ManagementTM, slated for Sept. 28-29 near Chicago. If you come, I'll see you there!

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