Altura Credit Union is located in Riverside, California, with an open field of membership. Altura was founded in 1957 and has 106,000 members across 12 branches, with assets of about $700 million. As of December 31, 2010, the credit union employed some 274 staffers, 51 of whom were part time.
Altura had two goals: to cut costs and to generate income. One primary area of focus for reducing expenses and increasing revenue was in the check program. "We were doing an organizational review of expenses and saw that we were spending a lot on free check orders and shipping," says Cindy Thomas, assistant vice president of operations for Altura. "So checking was an area in which we possibly could reduce costs."
Although only about 13 percent of Altura's check orders were credit union expense and the remaining 87 percent were member expense or retail, Altura wanted to reduce printing and shipping costs associated with free check orders. Indeed, the credit union experienced a fairly significant decline in revenue from 2008 to 2009, although check order volume had dropped only slightly.
In June 2010, Altura was undergoing a review with its strategic adviser, Harland Clarke. "We asked what new ideas they had to help us grow our revenue and our account representative explained Delivery Advantage to us," says Thomas. With Delivery Advantage, financial institutions offering free checks to account holders can better manage the cost associated with their check programs. Delivery Advantage utilizes CheckProtect®, a secure and trackable delivery service, as the primary delivery method. Financial institutions can continue providing checks at no charge but the shipping charge and tax are billed to account holders, which reduces check program expenses. Additionally, Delivery Advantage can drive revenue for financial institutions when account holders who pay for their check orders choose to upgrade the delivery to CheckProtect. According to Thomas, "The primary purpose in implementing this program was to improve our check program profitability and to shift the delivery cost for free check orders to our members."
"The primary purpose in implementing this program was to improve our check program profitability and to shift the delivery cost for free check orders to our members.
Members are now receiving their checks via a better and safer delivery method, and our credit union has financially benefited significantly."
Assistant Vice President of Operations
Altura Credit Union
At the time Altura was using standard bulk mail to ship checks, so the advantage of expedited, secure and trackable delivery would be an added benefit to members.
Another benefit of the program to the credit union was that it generated new revenue for Altura — to the tune of a dollar per order — because the credit union opted to ship all member-paid orders via secure and trackable delivery as well. Harland Clarke helped the credit union complete the financial assessment of estimated cost savings and the potential for new revenue, which demonstrated sizable opportunities in both areas. The attractiveness of the program led to swift adoption; it took only a month from the time the credit union first learned about Delivery Advantage until it gained executive management approval to implement the program, a time frame that included drafting and presenting a proposal to Altura's cost committee. Harland Clarke worked closely with the team at the credit union to sucessfully implement the program, and Altura launched Delivery Advantage on October 1, 2010.
As it was preparing to implement the program, Altura made several other account pricing changes, thus making the introduction of Delivery Advantage part of a broader pricing strategy change.
Prior to launch, Harland Clarke provided comprehensive training tools that helped Altura communicate with and educate its staff about the added benefits of the Delivery Advantage program. This information helped underscore that members were actually getting more for their money than they were before. Altura also regularly reviews its fees to ensure its pricing is in line with industry standards.
Altura communicated information about the new program to members via a letter that explained the overall new fee structure, and it posted the news on its website. Employees were notified via email and at manager meetings. All branches received copies of the training tools.
Altura has been using Delivery Advantage for all check orders — both credit union expense and member expense — since October 1, 2010, and the results have exceeded the institution's expectations. Check program profitability for the quarter grew 428 percent from 2009 to 2010. Profit per order jumped from $0.71 in the fourth quarter of 2009 to $4.08 in the fourth quarter of 2010. Likewise, during that same time period, while the number of orders rose slightly, expenses dropped 50 percent. Altura estimates that thus far it has saved approximately 55 percent in overall check program expenses, while providing members with better overall service.
Because fees were being increased across the board, Altura was concerned about a possible negative reaction from members. Staff acceptance of the program was critical to its success with members, because Altura wanted to maintain focus on providing excellent member service. Altura did a thorough job educating its staff about Delivery Advantage. By carefully explaining how the program is a win-win for both the members and the credit union, Altura generated excellent staff buy-in. As a result, members overwhelmingly accepted the program. In the fourth quarter of 2010, member comments (as logged by Harland Clarke) that were directly related to paying for shipping on check orders amounted to fewer than one-half of one percent (0.44 percent) of members charged. The bottom line, according to Thomas: "Members are now receiving their checks via a better and safer delivery method, and the credit union has financially benefited significantly."