Is your credit union just another pancake house along the road?
That question was put to attendees at the CUNA Marketing Council's meeting here who said his own home market often seems like an endless string of pancake and waffle houses.
Brett Noll, chief marketing officer for Langley Federal Credit Union in Newport News, Va., showed slides of more than a dozen pancake and waffle houses to make his point. Other than chain eatery International House of Pancakes, whose ubiquitous IHOP logo can be seen nationwide, there was not much to distinguish one restaurant from another, Noll noted.
"There are many financial institutions in every credit union's hometown. Is your credit union a pancake and waffle house?" he asked the audience. "Why don't people buy generic aspirin? Because Bayer does a real good job of branding their product. They make people think their aspirin is better."
Branding, said Noll, is creating a firm image of the credit union in the minds of members and potential members. It also can help wallet share, which he said differs from market share. To measure wallet share, a credit union should compare the services it offers to those offered by other financial institutions in its area. Peer comparison data are available from Raddon, Callahan's and CUNA, among others.
"Start with research to discover what the image of your credit union is in the community," he counseled. "Differentiate yourself so you are not a pancake and waffle house. Get the staff to buy in, build in operations and apply to your products and services. The most important question, is: does a CU's brand make its members feel a certain way?"
The biggest mistake made by many credit unions that convert to a community charter, Noll continued, is to put out the following message: "Everyone who lives, works or worships in the area can join." This statement is not strong enough, not compelling and makes the credit union sound like a bank, he assessed.
"A credit union needs to emphasize why it is better, and why people should join," he said.
Seeking Stickiness
There are many ways to "hook" members into making their CU their primary financial institution. Noll said one of the best is online bill pay. Members with online bill pay own more products, hold higher balances and are significantly more profitable.
Other ancillary services that lead to "stickiness" include home banking, checking accounts and debit cards.
Profitable members can be retained through relationship management and reward programs, he said. People especially like gift certificates and free merchandise in return for their loyalty. In many cases, he added, loyalty rewards go unclaimed, but the goodwill is there.
Noll listed several other "wallet share monsters," which he said help credit unions increase the number of products members carry.
These include:
* Pre-approvals. "These are a great way to let people know they are approved for auto loans, credit cards, home equity lines of credit and more. One big issue is, many people receive several pre-approval letters every day, and they all look the same. Credit unions must be creative to distinguish their offers from those of other financial institutions."
* Modeling. Noll said credit unions should research their member rolls to determine what types of people use certain products and services. Once a target demographic is identified, the credit union should market to those members.
* Geographic marketing. Similar to modeling. Certain products tend to be more popular in certain areas.
* Switch kits. "These are great tools to open checking accounts," he said.
* Seminars. These represent an opportunity for a credit union to teach members about financial education, and sell products at the same time, Noll said.
* "Two-year itch" mailings. Two years into a car loan is a good time to send a postcard, as it is about the time people start to think of getting a new car, he said. Noll recommends a postcard, rather than a letter, so members do not have to open an envelope.
* New member mailings. Langley Federal Credit Union does "new member matrix mailings," Noll said. These are a series of monthly announcements over a six-month period, each advertising a different product or service the credit union offers. "We market heavily to new members, because the first six months is the honeymoon period. The system is programmed to know that if a member has a particular service, it skips ahead to the next mailing."
The BMBCF Model
Most credit union decisions are made based on the "BMBCF" model, which Noll said stands for "board member's brother's cousin's friend," and represent a person who makes a suggestion one day about how something should be done despite having no in-depth knowledge of the workings of the credit union.
"Instead of the BMBCF method, credit unions should use focus groups, test marketing and surveys to determine what needs to be done," he said.
"Advisory groups are very helpful. For example, at Langley Air Force Base there are many young soldiers. They get involved with payday lenders and get in a money crunch. Subsequently, they develop domestic problems and their job performance-which is defending our country-goes down," he continued. "The advisory board asked our credit union to develop an alternative payday lending product, which we did."
Once a credit union has a handle on which products and services members need and want, it can deliver them at the right time, said Noll.
By using lifecycle marketing, a credit union can promote the different types of loans people need at different stages of their life. Situational marketing dictates if a member sends in a change of address form, he or she gets a postcard asking them to keep their business with the credit union.
"If someone is changing addresses, they probably just bought a home. This means refinance opportunities. Use aggressive retention programs-don't just let people leave."
Test Tube Marketers
Noll recommends creating "test tube marketers," people or companies who spread good word of mouth advertising on behalf of the credit union for little or no cost.
One method is testimonials-using members who are particularly happy about the service they received from the credit union.
"These are cheap, influential, the copy is easy and creative, they capture attention, lend instant credibility, strengthen the credit union's brand image, and translate across various mediums."
Partnerships with the community are another way to create test tube marketers. Noll said credit unions can capture attention through the element of surprise, yet the exposure can be low-cost.
Langley Federal Credit Union placed an ATM near a McDonald's location. The credit union printed flyers noting the connection, and McDonald's passed out the flyers.
"Another time, we went to auto dealers in our area and asked if we could put posters in their windows. They were low-cost, but we got a good return because when people came to the dealer, there were posters for our credit union in the window," he recalled.
Tap Vendors For Cooperative Advertising
Credit unions should tap their credit card and check vendors for cooperative advertising assistance, said Noll. "Intelligent inserting" can be performed by the company that prints statements, and a checking account insert can be sent to members without a credit union checking account.
There are many ways to reach members inexpensively, if credit unions tap their resources.
These include statement envelopes, transaction envelopes, ATM receipts and ATM screen advertising.
Free television and radio time is available to CUs that produce public service announcements, Noll said. "These are inexpensive to make, and the credit union logo can be on the air the entire time. They can be about identity theft, saving money, ATM safety or car-buying tips."
