Does Credit Unions' Gen Y Campaign Have Lessons for Banks?

Credit unions are increasingly hiring their spokespeople through online contests. No wonder; the winners of these contests have displayed phenomenal talent at pulling in the deposits of thousands of young adults.

The secret to the spokespeople's success — using the Web to build a community that is still fundamentally local — may also benefit banks, experts say, though doing so would mark a fundamental shift in how many banks approach their audience.

"Could banks use some of the same techniques? Absolutely," said Brad Strothkamp, vice president and principal analyst for the marketing and strategy group at Forrester Research in Cambridge, Mass.

But it would not be an easy transition, he warned.

"This would take soul-searching on the banks' part about why an individual of this age would choose them," Strothkamp said. "From a Web perspective, this has not been their strong suit."

The online contests, and all that goes with them, are part of the Young & Free campaign, launched in 2007 by Currency Marketing, a credit union marketing company in Chilliwack, Canada. The campaign started from a fundamental proposition: Credit unions, faced with an aging population of members, had to do something to stay relevant and to gain a new, young base of customers.

Young & Free provides the tools to engage the youth market, using a combination of social media and contests to find a young, media-savvy credit union spokesperson. To connect with younger consumers, the credit unions that have run the campaign were also urged to create price-sensitive products, such as free checking accounts with low or no fees.

The campaign's successes carry some instructive messages about social media, particularly about the importance of having a sincere message and spokesperson. Banks and credit unions also need to tie their efforts to a larger community goal.

Young & Free "is not simply a social media campaign — it is a multichannel campaign for attracting Generation Y," said Ron Shevlin, a senior analyst at Aite Group LLC in Boston.

Credit unions that have joined the program have had dramatic growth in sign-ups of Generation Y members, who, generally speaking, fall into the 17-to-25 age bracket.

"We have increased our membership in that age group by 50% since launching the program in 2010," said Jessica Emert, the marketing director for ORNL Federal Credit Union in Oak Ridge, Tenn. The $1.3 billion-asset credit union started its campaign in February 2010 and now counts 3,000 Gen Y members among its 154,000 members.

Nine credit unions have participated in Young & Free, and many say they have more than doubled their Gen-Y membership year over year.

Only one credit union per state participates. The most recent entrant is Michigan First Credit Union of Lathrup Village, which announced its involvement Feb. 25.

The most prominent element of the Young & Free project is the search for a "spokester," an engaging, social-media-savvy young adult who will represent the credit union for a year in its marketing efforts to Generation Y. The spokester is chosen in a contest where credit union members vote for a favorite, "American Idol" fashion, through social media channels.

The spokester gets an annual salary from the credit union — typically around $30,000, plus a car used to attend community events and all the technology necessary to engage young members with social media (a video camera, a laptop and a smartphone, for example). The spokester also must run a website for the campaign, develop contacts through social media, write daily blog entries, interact with members over Twitter and post videos.