In the midst of an overcrowded financial services marketplace,credit unions have an important competitive advantage: their strongcommunity focus means that they can develop more intimaterelationships with their customers and establish roots amongspecific groups of people.

This may explain why credit unions have fared better than banksfollowing the recession. In 2012, credit union membership rose byover 2 million, according to the National Credit Union Association.Meanwhile, market research firm J.D. Power and Associates said thatthe rate of customer defection from a primary bank to anotherfinancial institution, such as a credit union, has been increasingevery year. In 2012, banks lost customers at a rate of 9.6%, upfrom 8.7% in 2011 and 7.7% in 2010.

While it is impressive that credit unions have weathered thefinancial crisis, it would be unwise for them to rest on theirlaurels. As the economy begins to improve, larger banks willrecover their footing in the retail space and credit unions willneed to think carefully about what they can do to hold on to theircompetitive edge.

Many credit unions excel at forging strong, long-lastingrelationships with their customers by researching the demographicsof their constituency. Since their members generally havehistorically been drawn from a smaller pool of individuals, it isrelatively easy for credit unions to do this. If a credit union'smembers are teachers or military officers, for instance, creditunions can learn how to tailor messaging and offerings to thesecustomers, thereby developing stronger and longer-lastingrelationships.

However, things are changing. Many credit unions are expandingtheir membership criteria to include a wider range ofcustomers.

With more-diverse member bases, the strategies that creditunions have been using to better understand and engage with theircustomers are no longer as effective. Moreover, bigger banks areadopting the latest customer analytics technologies which allowsthem to compete even more effectively with credit unions.

Advanced interaction management software and sophisticatedpredictive analytics allow banks to better understand and respondto customer needs by offering more seamless experiences andtailored offers across different channels. For instance, if acustomer walks into a bank branch to deal with an issue that can'tbe resolved over the phone, the teller is able to see the previousphone interaction since they are armed with detailed customertransaction data across channels and touchpoints.

This spares the customer the trouble of having to describe theproblem all over again. As another example, knowledge that acustomer researched mortgage rates online can be used to directthat customer to mortgage representative during their next branchvisit. These technologies enable big banks to providecustomers with the more relevant and more personalized experiencesthat were once the cachet of small, local institutions.

In the light of big banks leveraging data and technology tocompete more effictively, how can credit unions stay ahead of thecurve in terms of customer service? The first step is to adopt thetypes of technologies that the banking heavyweights are using todevelop deeper customer insights and identify customer needs asearly as possible.

Software solutions that were once considered too expensive forsmaller businesses are now priced affordably for organizations ofvarious sizes. The right kind of software will allow credit unionsto gain a better understanding of each member's current situationand context; use this information to develop meaningful best nextaction recommendations; and to present this guidance in a formatthat employees can easily access and action.

This means that credit unions do not need to make educatedguesses about what their members need based on general informationabout them, such as their place of work or how much money theyinvest. These are ultimately just glimpses into members' lives.

Credit unions can now arm their employees with the tools and theknowledge to treat members as individuals. With a comprehensiveview of the opportunities deployed across the entire organization,credit unions can grow and protect their member relationships,

As credit unions expand their membership criteria, locationintelligence and demographic and psychographic analysis will alsobecome critical in their relationship management efforts. When amember interacts with the credit union, the representative will beable to access real-time information about this particularcustomer.

This data can be supported with intelligent, actionable promptsto help employees make the most of every encounter. Ideally, thesame system can support call centers, store branches, mailmarketing efforts and any modern customer communication channelensuring that the credit union messaging is consistent.

To optimize the relationship, credit unions should collect andrespect member preferences when it comes to communications. Datacan help to determine which customers prefer to visit the creditunion in person and which would rather take care of their businessover the phone or through an app. The keys to success areunderstanding the relevant topics, channels and frequency ofcommunication.

Another way for credit unions to stay technologically ahead iswith location intelligence software. While credit unions alreadythrive because they are well-embedded in communities, they canimprove their reach of potential new members by understanding therelationships between geographic convenience and relationshipopportunity.

This type of analysis usually starts with an accurate geocodingsolution. Precise location data allows credit unions to locate allthe target customers that the credit union can comfortably supportwithin their infrastructure. It helps them to assess thesepotential customers' eligibility for their products and services inorder to ensure that suggested offers align with their needs.

For instance, a military credit union can isolate individualsthat live on a military base, have enough savings to considerbuying a house and do not yet have a mortgage. Locationintelligence software can also help credit unions identify whattheir local competitors are doing and by extension, which potentialtargets are worth pursuing. Better targeting allows credit unionsto use their marketing spend efficiently and expand theirmembership quickly.

In addition to being priced for smaller businesses, thesesoftware solutions also present the information visually and in away that it is accessible to business planners and leaders, notjust data experts.

Credit unions' customer service strategies have workedsuccessfully in the past, but to stay current, these smallerorganizations need to upgrade their customer analytic systems andlocation intelligence technology. By taking advantage of thistechnology, credit unions can deliver highly personalized, tailoredservice to customers that will help them increase market share,revenue and individual customer lifetime value.

It will also help them play to their strengths as the economyrecovers and the financial services market becomes morecompetitive.

Hal Hopson is afinancial services specialist at Pitney Bowes Software , part ofPitney Bowes Inc. of Stamford, Conn.