LAS VEGAS—Credit unions have an untapped opportunity to grow membership – not just from non-members, but from disengaged members as well.
That was the message from Brian Werger and Tina Buttchen, both of CUNA Mutual Group’s TruStage Insurance Program, and the pair offered insights and strategies based on their recent research.
According to Werger, a director for TruStage, millennials are a large and diverse group with $200 billion in purchasing power.
“They do not use credit unions because they do not know much about them,” he said. “They are graduating college with much more debt than previous generations. Make it easy for them to engage with your credit union. Create an experience from their perspective.”
TruStage research has found one out of every four people with products through a credit union does not identify as being a credit union member. Only 22 percent of CU members are “fully engaged” members. “Within the membership there is an opportunity segment of those whose credit union is not their primary financial institution,” Werger said.
TruStage segmented credit union membership into four separate groups:
- Fully engaged members
- Engaged members
- Disengaged members
- Non-members
The latter three, said Werger, represent opportunities for growth.
“Each segment uses the credit union differently,” he said. “They have different perceptions and they act differently, so the same marketing message will not work on all of them. Segmentation is key.”
Buttchen, a sales specialist for TruStage, said research also uncovered several consumer perceptions of CUs – and while some of the feedback may be familiar, it can be painful to hear.
“There are people who think credit unions are not as accessible as banks and not as secure,” she said. “Others think credit unions are difficult to join. They think they have to have a certain job or be part of a special group to join.”
Despite the fact credit unions have a shared ATM network and many refund ATM fees, there still is a perception that CUs have limited, less convenient, or specialized products and services, Buttchen continued.
One new credit union member quoted in the TruStage research observed: “Credit unions are less likely to push members into services they don’t need, but the drawback is there is less incentive to improve services to attract more customers. Banks are always trying to grow, which spurs them to develop features and services to compete with other banks.”
A non-member who took part in the study said, “I would be open to using a credit union, but not enthusiastic. Honestly, larger banks feel safer, more secure and more reliable to me.”
“It is important to think about this perception in your messages to members,” advised Buttchen.
Convincing millennials to make the switch
Nearly half of millennials who use a credit union joined due to a recommendation by a family member or a friend. Buttchen said some credit unions have done a good job of capitalizing on this trend by offering referral plans that give a small monetary incentive if a friend signs up.
The TruStage research found barriers to switching to a CU from a bank include complacency, the perceived hassle and misconceptions. Potential acquisition drivers include a better interest rate on a loan, free financial planning, or counseling at workshops and seminars.
“When battling against skepticism, financial security and strength carries weight, especially with unfamiliar audiences,” Buttchen said. “Transparency in trusted partnerships may also help mitigate some of those concerns.”
Werger pointed to several credit unions that are using gamification. For example, Summit CU in Madison, Wis., does an annual contest called Project Money. It is a savings contest with a $10,000 grand prize. The CU helps families build budgets, pay off debt and figure out ways to make every dollar count.
“Budget and savings are often associated with intended spending. Try offering specialized savings accounts, such as Christmas Club or vacation savings accounts,” he advised.
Almost four in 10 millennials in the “opportunity segments” are bilingual. Werger suggested CUs should offer a welcome page in Spanish. “You do not need to have a whole new website,” he said.
