DEARBORN, Mich. — How does a credit union streamline operations, reduce the cost of generating a dollar of revenue to 48 cents from 78 cents, and then leverage those efficiencies to deliver a $17-million member dividend each of the last three years?
Those who attend the Grow Show, April 27-29 in San Diego will get the inside scoop straight from DFCU Financial FCU, which has mastered a business process that's allowed it to make year-end payouts a big part of its brand image. The approach is distancing the credit union from other financials, said DFCU CEO Mark Shobe, whose credit union grew assets by $272 million and 3,200 members last year in a depressed market.
Shobe, who'll host the Grow Show session on "Patronage Dividends, A True Market Differentiator," shared that the process also retains members and builds loyalty, helping the CU gain greater share of wallet.
"We have tripled our share of wallet with members in the last five years," he said. "Taking this approach gives credit unions an arrow in their quiver that is second to none in the marketplace. Banks cannot produce this."
Shobe will share how this unique business philosophy "really makes members feel like owners," and explained it's a two-step process that takes time, but is well worth the investment. "It's not something that you can turn on overnight if you want to do it at the magnitude that we are. You must be able to deliver the annual dividend on a consistent basis to make this work."
What's placed DFCU in the position to deliver the large yearly payouts is a business strategy that "has everything to do with execution," Shobe explained. "You need to be very focused. You can't be all things to all people - some call it back to the basics. But you have to pick your market space, have a simple business model, be singularly focused on it, and execute with excellence. When you execute with operational excellence, you lower your cost structure."
With efficiencies well in place, Shobe said DFCU was able to begin marketing the year-end payouts that became the "core" of its brand image. The credit union's www.paysto belong.com microsite emphasizes it "pays" to be a DFCU member, and has a "Dividend Calculator" that in seconds shows individuals how much in a year-end payout they could receive by doing business with the credit union. The tool is also used to help existing members quickly see for themselves how much greater their dividend can be if they bring over additional business.
Shobe said the strategy works for any size CU. "It doesn't matter what your scale is. The business issues and the opportunities are the same. This philosophy will not only help you stand out from banks, but from credit unions, as well. And goodness knows, in our business we need something to make ourselves different."
