How CRM Can Destroy A Credit Union's Brand

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Customer (or Member) Relationship Management can be a powerful new tool, an enabler for marketing. But it will also destroy a credit union's brand if marketing strategy is not in the driver's seat.

In a recent interview with a former EVP of marketing at a leading bank who had crossed over to the world of credit union marketing, I was told, "Branding doesn't work in this category. It's a commodity. Just look at the failure of Citibank, even after all the money they spent to establish Citibank Visa as a brand."

There are more heresies in those few, brief sentences than can be pinned to the altar of the true church of brand management-and no wisdom or sense. But wait-this heretic was a young person. She must have been diverted from the true path by influential thought leaders in the category, seduced by more attractive theories or practices. What are these people thinking or doing? Actually, they're not thinking very hard, and what they are doing is a lot of CRM.

CRM started out as a fancy name for sales force automation. Tom Siebel worked out that if you replaced the instinctive behavior of salespeople with organized behavior, their success rate and revenue realization rate went up. Their managers could also predict with greater accuracy what the revenue rates were going to be. He organized their behavior with software, which recorded who bought what, with what stimulus, at what frequency, and so on. Sales force automation gradually morphed into Customer Relationship Management-with the focus being on business-to-business customers. The software could be used to record a wide range of information about each customer and the transactions they had had with the seller. So far, so good.

However, the conceit then developed that, if we know the behavior of the member/customer, and if we can keep track of how often the seller communicates with the buyer, then we can develop a relationship with the buyer. And, with further morphing, this could apply to consumer marketing relationships.

There are lots of problems with this idea. Let us focus on just one. Credit unions specifically, and financial services in general, tend to suffer tremendously from "silo syndrome." There are huge numbers of people in one silo, who don't know what their colleagues in other silos are doing, thinking or planning. They don't-and often can't-collaborate.

Let's consider just a few silos at a typical, larger credit union. There's the marketing department that identifies and targets members and conducts marketing campaigns, including CRM campaigns. There is the distribution department, which operates the branches. There are the call centers, inbound and outbound. What happens in many cases is that the member-perhaps stimulated by a CRM campaign-signs up for a credit union service, and then proceeds to have a totally different experience of the brand at the branch, at the call center, at the website, and at home (receiving bills and statements, etc).

CRM communications use transactional or geo-demographic segmentation, but the drivers of consumer behaviors are attitudinal. So what happens is that credit unions wind up not talking to their members about what concerns them. When the member calls the call center, the data can't be recorded in any useable way, so the credit union has wasted a touch-point. It's the same at the branch, where the teller doesn't have sophisticated marketing information about the members. And operations just keeps sending out those statements and mailers, blithely unaware of how they impact the brand perception of the member.

But what would happen if traditional brand marketing were to be aligned with CRM? First, marketing would set a tone of understanding the member-their attitudes, hopes, dreams, desires and needs. What a rich field of information! Where the IT staff wails that "You can't append attitudinal data to the database," the CMO revels in the emotional depth and nuances of the consumer's involvement with financial services.

It's in these fertile fields that brands are grown.

A segmentation should be developed, based on attitudinal and emotional lines. A sophisticated segmentation can be a tremendous competitive advantage, because it leads to insights based on emotional needs, and those insights can, with work, be superior to those of less-skilled marketing competitors. Then, when the credit union talks to members, it will be with great depth of understanding that members will recognize and to which they will respond.

A brand-oriented credit union would ensure that silos don't get in the way of the member view, and of the credit union providing the member with a consistent, pleasing experience that defines the brand. The CU might still send out mailers and e-mails as part of a concerted communications campaign. But they would probably realize that when the response rate is below 1% that the 99% saying "no" are sending a message.

CRM might be used as an engine to drive member acquisition, cross-sell and up-sell (anybody see any consumer needs-oriented concepts there?) but never at the expense of driving members crazy with too much communication, irrelevant communication, and a failure to listen.

It's not just credit unions. Wireless telephone companies constantly offend their current customers by making offers to new customers that are superior to the deal the incumbent customer has. Understanding your members and their emotional needs must be the first step, and must guide the downstream activities including CRM. Otherwise the offspring will consume the parent and the brand will end up destroyed.

Christopher Brya is CEO of the Solavista Consulting Group. He can be reached at (602) 636-2510 or on the web at

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