While not all credit union leaders share this thinking or have the ability to spend a lot of money on marketing, industry experts told The Credit Union Journal more and more are realizing just how important marketing is to the success of their organizations.
"Credit unions are mostly run by financial numbers people and that has driven an attitude for a long time that anyone can do marketing," observed Nicolette Lemmon, President of Lemmon Tree Consulting, Tempe, Ariz. "In the 2000s, the competition has increased and this change to compete in a broader community requires much more to attract new members."
Michael Poulos, CEO of Michigan First CU, agreed. "You can be as good as you can be but if people don't know it, it's all kind of wasted," he said. His $400-million credit union budgets about 2% of assets to marketing.
"It's on the higher end, but includes community contributions and scholarships," he said. "Still, it's probably not enough and will gradually increase over the years."
Lemmon said while major markets might require more than smaller markets, the average spent on marketing should be between .1 and .2% of the overall budget. "A credit union with $200 million in assets should have a marketing budget of $200,000," she said by way of example.
Dawson noted the unfortunate reality is that marketing is expensive. "Others are appearing in media channels that you can't afford," he said. "What do you do to survive? There is a minority spending what they need and a majority who are not."
And, unless they are protected by regional considerations, he said, it's not going to get any easier. "If you are a small community charter in a major market, that's the worst of all possible worst," he said. "You are competing against the big guys."
Dawson predicts that with the customization of services, the offshoot of home banking and the evolution of e-marketing will contribute to more and more mergers among credit unions (The CU Journal, April 4).
Industry analysts said changes that have included everything from deregulation in the 1980s, which allowed CUs to expand service offerings, to technological advances, such as the emergence of the Internet in the mid-1990s and the online banking that followed, have created new opportunities for credit union marketers. E-mail alone has opened the door for many to reach members in a cost-effective way, they said.
"Marketing has gone from complete obscurity...to something that is very important to the success and viability of the organization," Dawson said. "I think more credit unions have gained the sophistication and some of the techniques they use in the real world."
Among the biggest, he said, is branding.
"There is a strong interest in creating and differentiating their brand," he said. "You can't just wave the credit union flag anymore. You have to show what makes you different not only from the banks but from other credit unions."
In order to do that, today's marketers must have skills that go above and beyond the ability to create a catchy direct mail campaign or write a spiffy newsletter.
Not only that, added Lemmon, these marketers also need to speak the language of the financial experts. "We are seeing in many industries marketing people who are more numbers-oriented," she said. "They are able to speak to the issues."
As part of Lemmon Tree's Marketing University for credit unions, Michigan First's Poulos conducts a class in financial ratios to help marketing people emphasize numbers.
"We made a huge push in the 1990s to show return on investment for marketing dollars spent," Lemmon said. "Numbers people want to know projections. They want to know percentages. They want to us to show them how we're going to return those marketing dollars."
Historically, marketing has been about "colors of newsletters, what font you were going to use and photographing publicity events," Poulos added. "It's not been finance driven."
In today's market, it's more about "selling stuff," he said. "It's selling the image of the credit union, selling us as an institution so people will use our products and services."
And, as that numbers guy, he said he wants to know how that's measured. "When we do direct mail, I want to know whether we made any money off of it," he said. "Was it worthwhile to send 3,000 postcards out?"
Poulos said there is no question that his marketing expert belongs at the strategic planning table. "You have to spend money in order to make money," he said. "And, if we're getting back $10 for every dollar we spent on a promotion, why would we stop?"
