ADISON, Wis. - Financial decisions are a strange brew of emotions, needs, dreams and a small measure of logic.
It is no wonder that a consumer’s choice of a bank or a credit union may have little to do with a rational choice. For years, there has been anecdotal evidence that a choice of a credit union had little to do with reason but more with emotion.
Recent research from the Filene Research Institute, “Why Choose a Credit Union? An Ethnographic Study of Member Behaviors,” provides insights into why consumers choose a credit union and how members can be segmented for marketing purposes, quite unlike they have been in the past. “In fact, the research team could not discern a compelling reason consumers choose one financial institution over another,” writes George Hofheimer, chief research officer. But, he added, it did offer some insights that credit unions can put to use.
One of those insights includes a consumer segmentation model that can help credit unions align innovative products and services along behavioral characteristics rather than traditional demographic profiles, Hofheimer concludes.
Researchers interviewed members at seven U.S. credit unions in 2006 to determine financial attitudes and behaviors by individual members and employees. They found that members can’t be necessarily clustered into tidy packages of age, income, geography, financial standing and education.
A more effective way of segmentation may be financial need categories relating to their life conditions as shown in the following:
Learning & Growing
These can include individuals who are just getting started, starting over again, or encountering new stages in life. These can also consist of students, immigrants, those recently widowed or divorced. They need financial advice, but may not know where to turn.
Demanding & Complex
Individuals who have substantial resources and complex needs are sophisticated in their money management and likely to keep their finances in more than one financial. They may not consider their CUn sufficiently sophisticated for their needs, an issue marketing must address, especially wealth management services.
Security
Individuals with limited funds who seek safety above all else; they are risk-averse and looking for comfort. These folks are typically retired, on a fixed-income or have acquired substantial debt, and would likely appreciate updates on the credit union’s efforts to protect them and keep them informed.
Control Seeker
Individuals have developed a system in place to keep themselves and their family under control. They want to be able to retrieve financial details immediately. They are busy, and may have gotten into financial troubles in the past, and want to avoid those mistakes. They are receptive to credit cards with set limits, budgeting assistance, automatic credit score reports, and information services on basic money skills.
Challenged
Individuals facing financial and/or life challenges who have faced trouble in the past, are currently in trouble, or about to become caught up in debt. These members typically live paycheck to paycheck and can be in any income level, but usually in low income jobs. Emergency assistance, tips on budgeting have appeal.
Status Quo
* Status Quo. Individuals who are content with the financial services they’ve established through experience. They are not thinking about changing financials, but should be reminded of everything the CU offers.
