Market research does not have all the answers, but according to one person, credit unions cannot and should not do anything without it.
Nancy Tack, vice president of communications for Manhattan Beach, Calif.-based Kinecta FCU, told the CUES Nexus Conference that market research can get subjective responses in many areas, but still provides solid direction in others.
"Market research is not a perfect science," she said. "Members change feelings and behaviors, and they are influenced by a variety of subjective factors. However, it answers key questions: How well does a credit union know its members? How satisfied are the most profitable members? What is happening in today's market?"
Other important information that can be gleaned from market research includes: who are a CU's members and who are its potential members? What kind of people are they? Where do they live? What can or will they buy? Is the credit union offering products they need? Is pricing consistent with what members or potential members regard as value?
"Why is this important? Because it helps reduce business risks," said Tack. "A credit union does not want to spend a lot of money without doing research first."
Primary research methods include member and non-member surveys and focus groups. Secondary research channels such as market segmentation, member profiles, white papers, syndicated research and market intelligence also can be helpful. All of these methods have both strong and weak points.
Member surveys are the most effective means of tracking transactions across all channels, and they reveal the gaps most likely to lead to new products, Tack said. Focus groups offer perceptions of the CU itself. Kinecta uses focus groups to learn why people become members and what barriers keep others from joining.
Groups Targeted By Kinecta
The three key target markets for the $3-billion, 200,000-member Kinecta are established loyalists, experience seekers and rate hoppers. Tack said established loyalists have multiple accounts and have been with the CU for years, experience seekers hear of Kinecta's member service quality and open a small number of accounts, while rate-hoppers simply seek the best rate of the moment.
"Established loyalists feel a sense of loyalty to Kinecta. They perceive it to be like a private 'club,'" said Tack, noting the credit union's founding to serve Hughes Aircraft employees in 1940. "They experience nostalgia of what the credit union used to be. They appreciate being known at Kinecta, and getting more personal service, better rates and other membership perks."
Since membership expanded, these established loyalists -some of whom date back to the Hughes Aircraft days- feel they get less special treatment, she said. "Still, they have several accounts with Kinecta and always check with us first when considering a loan or deposit account."
Experience-seekers may or may not have been with Kinecta for a long time, but they like getting better rates, Tack said. They don't like banks, mostly because they feel they are getting "fee-d" to death and don't appreciate the impersonal interactions. She said it is important to recognize them because it is likely they started with an account that doesn't require much contact, such as an auto loan.
Rate hoppers-as the name implies-have no loyalty. They have a "what can you do for me" attitude. "Credit unions must think of ways to market to the rate hoppers, or decide not to go after them," she said.
CU Impressions
Kinecta's research found many consumers assume they must belong to a credit union through work. "The ability to join was a big, pleasant surprise," said Tack.
Most people have positive impressions of credit unions: they think of credit unions as having better rates, high quality, personal service, low fees, are highly ethical and eager to do business with people.
On the negative side, people think of credit unions as not being convenient or having enough branches or ATMs, and having less convenient hours. "Our challenge is low awareness," Tack said. "Consumers don't know who we are, how we are better or how to get to us."
Kinecta's slogan is: "Like a bank. Without the bank part." Tack said the CU wants to be seen as friendly, but not lap dog friendly. "We want to be like a greyhound. We wanted a slogan with a little attitude. It was positively received-it struck a positive chord with members and non-members."
In December 2004, Kinecta did a brand health study. It found the general population's awareness of the CU is low. Bank of America had the strongest awareness, while Washington Mutual and Wells Fargo had equal awareness.
"The study showed us building equity through advertising should be an important long-term objective," said Tack. "Almost no one in our marketplace is loyal to one financial institution."
The study also found Kinecta has an open slate with the public regarding its image. "This is an ideal time for a branding campaign," she declared.
Proceed With Caution
According to Tack, market research may make the difference between right and wrong decisions that affect sales. She advised being careful predicting a new product's success without accounting for costs, and of any decision in which the credit union considers relatively few options.
In addition to surveys, focus groups and other formal research methods, Tack said CUs should take advantage of a little-appreciated but ongoing form of research: the front line staff.
"Don't overlook data from front line staff," she counseled. "They often know the day-to-day needs of members based on informal conversations."
