ORLANDO, Fla. - You have to control what you can control, and for credit unions that’s one, critical thing.
In remarks aimed at challenging some of CUs most Sacred Cows during Credit Union Journal’s Grow Show, Peter Duffy of Sandler O’Neil told his audience that credit unions for the most part haven’t figured out how to get themselves into the minds of the undecided consumers.
The only solution: “We have to make more money and we need to take that money and pile it into marketing. We need ideas on how to boost earnings and competitiveness. Earnings key purpose is to provide the funds necessary to increase awareness of your culture, increase awareness of your value, distinguish and differentiate your CU from the crowd, maintain competitive value and service, maintain competitive compensation, so that you can increase household penetration and acquire new households.”
Making more money means measuring the credit union using the right metrics, according to Duffy. That means not spending much time on peer group analysis, he said, because what really matters is how the credit union is doing against competitors in its own market.
“If year over year over year we have a five share, someone is ripping you off on marketing and advertising,” said Duffy. “Adding customers and increasing household penetration is where you should spend every nanosecond and dollar, because if you’re not you’re hurting your member. We’ve been focused on loan-to-share, not marketshare.”
Duffy, who spent more than a decade with consumer products giant Procter & Gamble, said no product manager at P&G would last long with the marketshare numbers most credit unions are posting. For credit unions to grow, he suggested, it’s time to reexamine the Four P’s of marketing:
Product, Price, Promotion and Place. “You’re not going to win on product, price or place. That leaves promotion,” said Duffy, before asking, “If we give the best service, and this is a service business, why do we have a 5% market share?”
“I will tell you credit unions do have the best culture. But what’s missing is that fourth P, promotion,” he said. “Promotion requires money and we’re not making enough. Credit unions, before fees, lose 43 basis points. The other guy has a 108 basis point advantage. They are not giving all that back to shareholders. They are spending it on getting the households. We have to get the word out on how your credit union is different and get people to come in and try you. You deliver the goods and then they stay with you.”
