CARERET, N.J.-It's an old adage because it's a truism, one person believes: You've got to spend money to make money.
"Even if credit unions decide they don't want to do any more direct mail because they don't see the return, the fact of the matter is they are still going to have to market their service, and depending on what methods they choose to engage, those things are going to cost money," said Sean McDonald, director of business development at Mid-State FCU here and chair of CUNA's Marketing & Business Development Council. "The cost of marketing, consulting and designing all has been increasing and will continue to increase. Those dollars are going to have to be spent; some CUs are going to do it and others will resist, and unfortunately those might not be the same credit unions that achieve the same level of growth that their peers will."
McDonald conceded that marketing becomes more difficult when budgets are cut by as much as 40% and yet the marketing staff is still expected to drive similar response rates and growth as prior to the reductions. "We saw a lot of that even up to parts of last year, but I think we're starting to see some of those budgets being reinstated to previous levels," he said.
With the mass migration of consumers to credit unions as a result of Bank Transfer Day, McDonald noted that marketers have an even greater challenge now: keeping those members and getting wallet share.
"If we don't continue to market ourselves effectively, we might lose those members back to the banks. We have a tremendous opportunity, but the banks will eventually right themselves," he said. "And let's face it-they're still going to have more money than we do, more resources, a lot more lobbyists on Capitol Hill. So really, now is the time for CUs to seize this opportunity and carpe diem."
The E Channel
One component of seizing that opportunity means marketing to consumers through the channels they're most receptive to, and that increasingly means e-channels. Rather than relying on direct mail, McDonald's own CU has begun to put its emphasis on e-mail marketing.
"It's inexpensive for the most part, you can pretty much craft any message you want...and you can track it better," said McDonald. "If you send 10,000 postcards out in a bulk mailing, you have no idea how many end up in garbage cans, how many end up not being read, etc. With e-mail, you can track it."
Still, he said, credit unions need to do a better job of taking advantage of info they already have. "They have all these people who are flocking to technology, who are giving their e-mail addresses out because they have to in order to sign up for online banking; why not use that for marketing?"
McDonald predicted that direct mail volumes will continue to decline, both because of the prohibitive cost (when compared with electronic messaging) and because the market that is most likely to respond continues to dwindle.
"I do think there is momentum towards the electronic, but personally I hope the print stuff doesn't go away completely,"
Loan Promotions That Work
McDonald noted that it's hard to find a credit union in the country right now that isn't promoting loans. "We've been asking members for years to save and save and save, and now that they've saved we're changing our tune to borrow, borrow, borrow," he said. "So a lot of marketing folks are now focused on how to generate more loans and let people know that we're more than just a $3,000 personal loan."
It's important for credit unions to do focused events and target their marketing, said McDonald. "Credit unions have to do a better job in a mass way of just getting the word out that 'Sorry you got declined at one of the bigger banks, but did you know you have another option?' I think a focused loan event and creating a sense of urgency-teaser rates, balance-transfer promotions, something that's focused-gives people that compelling reason to come in and discuss it as opposed to just saying 'We have loans.'"
