Credit unions, turn your member community back into a club!

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Credit unions, turn your member community back into a club!

Speaking to small credit union executives is so rewarding.  We already refer to credit unions as the Good Guys of Banking.  That title is reinforced each and every time we meet with credit union people and hear the good they are doing with their members.  The credit union mantra of "people helping people" truly lives on with these organizations today.  

Our Chief Marketing Officer, Brian Ramos, had the pleasure of speaking at the EPL Client Conference this week at the Rosen Shingle Creek in Orlando.  He was the closing speaker for the event, and brought home his message of "Turning Your Member Community back into a Club."

In his talk, Brian started off by referencing an article from 2010 in the Financial Brand that articulated the negative ramifications of community charters:

1) Lost focus - The bigger your target audience gets, the harder it becomes to find a unique value proposition.

2) Massive marketing muscle - Closed-charter credit unions are accustomed to a very limited range of marketing tactics. They aren’t familiar with what it takes to generate name awareness and build a mass-market brand.

3) Estrange your sponsor - As you change names and start marketing to the general public, the feeling that your credit union was once an exclusive, club-like employee benefit disappears right along with the special access your credit union once enjoyed.

4) The old name won't work - If you have a word like “Employees,” “Teachers” or some other equally-limiting term in your name, you will never convince the community that “everyone can join.” Many credit unions think adding the word “Community” in their names connotes an open charter, but that never works as hoped.

5) Cooperation becomes competition - Credit unions are comfortable competing with banks, but they aren’t used to competing with other credit unions.

6) Bankers hate community charters - Each new community charter fuels the ABA’s fight for credit union taxation. If every credit union in the U.S. had a community charter, then what argument would there be against taxation?

While messages like Live, Work, Join were joyous messages "back in the day," that message has now led to a generation (or two) that no longer can distinguish a credit union from a bank.  Which leads up to our current challenge of creating a strong value proposition (besides just, "we offer lower fees and rates").  That's not a compelling value proposition these days.  It's over used messaging that every financial institution touts.  So, how do you define your value?

Well,  let's look at companies that rely on "membership" and call themselves a "club" as examples.  How does Costco, Sams and BJs get a member to pay $50-$100/year per card for membership?  Don't you expect to purchase enough items or get enough services in that year to get that money back?  Otherwise, you wouldn't join!  What about fitness clubs.  Don't they have to provide you with a value proposition that makes sense for you to part with $20-$75 every month.  Planet Fitness uses their HydroMassage beds as a "closer" to get people to sign a contract and double the amount they pay each month (from $10 to $20).

What about a company like American Express.  They have mastered the art of getting people to pay a premium for a credit card.  Doesn't nearly every credit union give that away for free?  AMEX gets $175/year per card for their Business Platinum and business owners rush out to get one as early as they can get approved.  It's a status symbol...that you're paying a premium for.  Yet, they have made a compelling case to pay the price for membership and articulate their value proposition pretty cleanly with rewards like $200/year in waived baggage charges.

Think of your Credit Union as a club, with a defined target audience (or two) and work towards addressing the needs of that audience.  It really can be profoundly that simple.

Brian provided a few examples in his talk to help bring this message home in a more tangible way.  Let's look at a member base like teachers.  While you may have teachers as a core audience, you have relational draw to prospects like parents, administrators, kids and really anyone who believes strongly in education.  Rather than looking at teachers as prospects for a loan, what about looking at ways to address systemic needs:

  • Funding School Supplies
  • Funding Class Field Trips
  • Teacher Appreciation Efforts

Imagine if your products had a direct correlation to helping these efforts for parents and schools.  Perhaps a program where members can round up their debit transactions (i.e. Bank of America's "Keep the Change") but could allocate their "savings" to help fund their child's school or classroom.  Even small credit unions with less than 10,000 members have amazing prospects of turning their member base into a cause agent for good in their community.  That effort would then create momentum of good will and new member interest wanting to support teachers.  You could also expect that a county school board would welcome the opportunity to bring a program like that to every school in the district and you'd have communications (marketing) channels opened up to every family in the school system.  Local media would cover a program like that as a great community story and the credit union would get free coverage for creating this product.  Heck.  If done right and with enough traction in a community, we might be able to end those stupid school fundraisers of buying junk none of us need so the school can get a pathetic 15-30% of the proceeds.

All of this requires a paradigm shift in your thinking.  Stop thinking of how you can compete with the "big banks" are start thinking of how you address the needs and wants of a group you are passionate about and relate strongly to.  Only then will your value proposition become more clear.  When your value is more clear, your membership grows (and I'm fairly certain every credit union is in great need of that).

To find out more about this talk or even discuss how this approach could be tailored for you, get in touch with us!