'Combat-Tested' Tips On Marketing To Community

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For credit unions making the transition from the captive audience of a single sponsor or a few familiar SEGs to a community charter, business development to a larger FOM can be a scary prospect.

Two speakers at the California Credit Union League's recent Big Valley Educational Conference here drew a large audience to an educational session that promised "combat-tested" tactics for business development.

Chris Lamb, the executive vice president and chief operating officer at Energy First Credit Union, said her Monterey Park, Calif.-based CU is only about five miles from George Poitou's SCE Federal Credit Union, which is headquartered in Irwindale.

"Because we're so close, and we're both energy-based credit unions, people might think we would be worried about competition, but we're not," she said.

Lamb asked how many of the attendees were from community-chartered CUs. Nearly all raised their hands. When she asked how many were from credit unions that were considering switching to a community charter, the remainder responded affirmatively.

"One year ago, I was in the group that is thinking about it," Lamb said. "The board had a lot of consternation about making the switch."

Energy First CU was chartered in 1954 by employees of The Gas Company-which remained its sole sponsor until 2000 when the credit union began adding SEGs. It was granted a community charter in October 2003 and will formally launch in its new role in the fourth quarter of this year.

The credit union applied for a community charter due to four reasons, Lamb explained. First, it was receiving diminished support from its sponsor due to a merger with another utility company, downsizing and a move of the corporate headquarters. Second, its membership was getting older (average age 47). Third, it had difficulty recruiting and maintaining new SEGs since it did not enter the SEG marketplace until four years ago. Fourth, because of the merger, it suddenly faced competition from another credit union serving the same group.

With the credit union's future in doubt, Lamb said management "assessed who we were, what we had to offer and compared us to the competition."

One Conclusion To Be Drawn

The conclusion was that the credit union had to "catch up" its product line, systems and services in order to prepare for the open market, she continued. What followed was a reorganization of the lending department, the addition of business development and electronic services departments, the introduction of new products such as GAP insurance, credit cards, Internet banking and online bill pay, and indirect lending. "We had to hire people to implement all of these things," said Lamb.

Before the community charter was granted, Energy First began reaching out to nearby communities. Lamb advised CUs to take advantage of their staff and volunteers and consider allowing them to do volunteer work on company time. She cited the example of Chatsworth, Calif.-based Telesis CU, whose employees have four hours per week of community volunteer time.

"We consulted with other credit unions, asked questions and formulated an action plan," said Lamb. "The best tip we got was find an unmet need and see if you can fill it. Two other good tips were define your niche or focus, because you can't be all things to all people; and make financial education a priority and be willing to serve a diverse market with diverse products."

Energy First did extensive strategic planning with a consultant and developed a five-year plan, she continued. The plan includes 14 projects in 2004.

Other items for CUs contemplating a switch to a community charter to consider include: a possible name change, a precise definition of its "community," and the changes a diverse market-both in ethnicity and salary level-the new charter will bring. Credit unions must examine their products and services with a critical eye and determine if they can meet the needs of potential new members.

Observed Lamb, "A critical question is: how can you keep from disenfranchising your core sponsor and your existing members while adding in new community members?"

Because Energy First's geographic area includes many Asian and Hispanic neighborhoods, the CU met with a diversity consultant to learn how to reach out to those markets.

Lamb said Energy First has its systems, processes and products in order and is hiring new employees to prepare for its fourth quarter rollout as a new community-chartered CU. The long-term plan calls for 100% membership growth rate and 50% loan growth over the next five years.

Selling Selling to a CU

Poitou, the chief operating officer at SCE FCU, said credit unions cannot be afraid to sell, because business development is essential to a CU's success.

"'Sell' is not a four-letter word, at least not the credit union way," he said. "Credit unions do face sales dilemmas because they don't want to seem 'like a bank.' Banks are known for product pushing, so credit unions avoid sales. They feel members already know certain products and services exist-but they don't always."

The credit union way, he said, is the process of selling by building trust and long-term relationships with its members. A CU's business development staff should develop member profiles so it knows to call a family about a car loan when a teenager turns 16.

Poitou hires his sales people from retail outlets such as Nordstrom or JCPenney. Whenever he receives particularly good customer service at a store, he hands the person his business card and tells him or her to call him about applying for a job.

"Most people in financial institutions come up through the operations side, so they are unfamiliar with sales. Sales is something a person either can do or cannot. If someone applies for a sales job but has no experience selling, I direct him or her to our other departments," he said.

For CUs contemplating a switch to a community charter, Poitou recommends following a series of steps designed to create the proper atmosphere. Sales people should be "empowered" by giving them extensive training so they will be knowledgeable when out in the field. The individuals should have clear expectations in the form of quantitative goals and incentives. Like all other departments, he said, sales should have a manager.

"It is very important to have a defining moment in time-the official transition from an administrative environment to a sales culture," he said. "Have a party with every employee so there is no confusion. Everyone will know what the expectations are from that day forward."

Also vital is for the board, CEO and top executives to embrace the sales philosophy, Poitou added. He advises management to go through the CU's sales training classes themselves so they fully understand the program.

Keeping the Wheels Turning

Once the new focus on sales is in place, CUs cannot assume everything will take care of itself. Poitou said ongoing coaching and regular "rah-rah" sales meetings are important to keep people focused on the task at hand. SCE FCU distributes bonus checks at these meetings. Some of the credit union's managers were concerned about labeling the "best" and "worst" sales people at meetings, but Poitou said such competition is the nature of sales.

Once the sales staff does its job, then the operations side must take over. Poitou said a system must be set up to ensure everything a sales person promises comes true.

"Sales and operations is a tough marriage to maintain," he said. "The sales people go out and drum up business, and operations people must follow up. It is an uphill battle every day, because I see sales people doing operational tasks such as opening accounts. I have to remind them they are not operations people. It is the job of operations to follow up on what sales did; to open accounts and process loans."

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