The ongoing scandal surrounding Wells Fargo presents a golden opportunity for credit unions to distinguish themselves from the big banks, but there is great debate about the best way for CUs to do that.
According to Samantha Strickland, owner and CEO of The Pod Advertising, an advertising and marketing firm based in Tallahassee, Fla., said from a marketing perspective, there's an appropriate "credit union way" to respond to the Wells Fargo situation — and that's "to focus on the message that credit unions are about people before profit."
She suggested that messages like "We'll never sell you a product you don't need" and "Our staff is trained to listen to your needs" will go a long way to differentiate the credit union culture from the "Wells Fargo way."
And social media is clearly the best way to transmit these messages to the public, she said.
"We recommend videos on Facebook, specifically a promoted video from the CEO directly addressing this hot issue and explaining the credit union's commitment to people before profit," she said. "[And] be sure to include the script on screen so that viewers can see content even without sound."
Bye, Bye Bonuses?
The marketing side of things is just one element of how CUs respond to the Wells Fargo fiasco, along with how the movement addresses cross-selling strategies and bonus structures.
For her part, Strickland doesn't think that credit unions should do away with their own incentive-bonus payment systems and sales cultures simply because of the negative fallout from the Wells Fargo news. "Well Fargo made a mistake in their 'sell or sink' culture," she told CU Journal. "It all comes down to training. Sales should be based on a member's needs assessment not what 'score' an employee needs in order to meet a quota." Credit unions, she said, must empower staff to "listen and respond" to members, not require them to be "product pushers."
Still, the heavy criticism directed at Wells Fargo might inspire credit unions to
But Paul Crawford, president & CEO of Scout Branding Company of Birmingham, Ala., said he thinks that the Wells Fargo scandal will lead to the types of incentive programs that played a role in this mess will be done away with, both at banks and credit unions. "I'm sure legislators are drafting the bills right now," he said.
On the positive side, this scenario creates an opportunity for all financial institutions, and the "smart ones are crafting their strategy right now."
Crawford said he would advise any credit union or bank to avoid "going negative" in their marketing campaigns.
"Everybody knows what happened [at Wells Fargo] and how bad it is, so there's no need to create a blistering campaign about how terrible banks are," he cautioned. "It's better to draw new members by selling them on the merits of credit unions and your specific credit union."
A Vibrant Strategy
That's the strategy being taken at Vibrant Credit Union, a $567 million institution based in Moline, Ill. Vibrant wasted little time to highlight the credit union difference in response to the sensational Wells Fargo headlines.
Vibrant CU hit Facebook with posts such as "Vibrant, opening REAL accounts since 1935" (a sly reference to the false accounts Wells Fargo created). Other posts included phrases like "Break up with your big bank, bank local" and "Hook your stage coach to a real horse."
Thus, in light of recent banking news, Vibrant CU said, the credit union found this to be an "optimal time" to highlight the differences between banks and credit unions.
Liz Rose, Vibrant's marketing manager, told CU Journal that the credit union has also done TV commercials, but there are not currently have any plans to expand beyond that.
"We've noticed through our posts on Facebook that people are not necessarily aware of the differences between big banks and credit unions," said Rose. "This has provided a great way to start that conversation and get the dialogue going. We want to educate the community and share the positives of not only our credit union, but all credit unions."
Still, the response of the campaign from the public has been "enormous," Rose added.
"Within the first 24 hours alone we reached over 10,000 people and saw tons of social media engagement through both post likes and comments," she said. "We've had people comment saying this won them over, they'd like to join the credit union; That it's refreshing to see financial institutions even hint at how wrong what Wells Fargo did, and even asking to learn more about what the difference between a big bank and a credit union is."
Emotional Rescue
Nicolette Lemmon, president of the LemmonTree Marketing Group in Phoenix, Ariz., said the key for credit unions hoping to capitalize on this moment is to generate an "emotional reaction" that goes beyond the initial story.
"While the scandal was about cross-selling goals gone awry, the media story does not have the same emotional reaction that the recession offered years ago when the big banks seemingly were squeezing the little guy with subprime lending and fees," she told CU Journal. "At that time, the activist approach to switching banking to credit unions was a much more appealing message."
Credit unions, she noted, can gain momentum if they tell their "compelling story."
"Because the Wells Fargo personnel took advantage of their customers to meet goals, credit unions can highlight stories about how they help members achieve financial success," she suggested. "In essence, it is about having a 'better story' that creates a compelling emotional reaction. Some credit unions have embraced this, but there are many that cannot really define the difference their financial services make in the lives of their members."
But Lemmon warned that because of so many different marketing channels exist — including email, social media, direct mail, online ads, newsletters and more — and consumers respond differently to each one, every credit union should embrace a marketing strategy of using targeted marketing with demographics to tell their story.
"The fluidity of having a strategy based on using all channels provides a flow that can come back in the form of referrals," she advised. "Promoting exactly how your credit union is making your members' lives or businesses better than it is now will bring remarkable results."
Take the High Road
Holly Fearing, Social Media Advisor at Filene Research Institute, suggests that credit unions take the "high road" in response to Wells Fargo and not create an "anti-bank" campaign. Rather, she said, they should work with regulators and lawmakers at all levels to make sure they understand the ways credit unions are different from banks, and that CUs can be partners in the regulatory process, since CUs and lawmakers are both looking for the best solutions for consumers.
Alongside that, she said, it's crucial for credit unions to get their story out into the media — particularly local outlets — while the Wells story is still in the headlines, so that CUs can highlight their differences from the big for-profit banks.
"This maximizes the collective message and awareness about credit unions as the alternative that may be lesser-known but certainly more welcomed at this moment in our economic situation," she said
Fearing added that credit unions should always be telling their stories to their members and others in the community through various channels — branches, websites, newsletters, email and social media, to name a few — and partnering with community groups and local businesses to highlight the impact they have on their communities.
Act Now!
Credit unions won't begin issuing membership dividends until later this year, but Roy Page, founder and CEO of credit union marketing firm Third Degree Advertising in Durham, N.C., said that it's important to emphasize that credit union profits go back to their membership, "rather than into the pockets of executives and boards" as at the big banks.
To maximize this opportunity, Page recommended that credit unions use each messaging channel to address the differences between the credit union and large, corporate bank structures.
"In areas with a large Wells Fargo presence, a good strategy is to increase your visual messaging options within media," Page added. "Seek out opportunities to get your message in front of new eyes, especially those concerned or affected by this Wells Fargo news."
But he also suggested that this should be a multi-faceted approach. "You aren't going to reach everyone through one channel alone," Page said. "Using a layered approach helps saturate the message you are looking to expand. The average consumer needs to see your message eight times before acting. Using options such as outdoor, digital, video and social media carries more impact than expecting everyone to see your ad through one channel alone."
Page further noted that 2016 is not a normal year — the country is going through the turmoil of a bizarre presidential election campaign that has dominated airwaves and social media. "We [credit unions] are competing for attention spans more than usual," he said. "Cap this strategy at November 1. Due to short attention spans and the quick rise of scandals, it is crucial that a credit union is utilizing a brand awareness and strong community tie on a normal basis."
One Bank's Perspective
At least one megabank is committed to not taking advantage of Wells' troubles.
U.S. Bancorp Chief Executive Richard Davis recently said that not only will his bank not try to woo embittered Wells Fargo customers away, but any U.S. Bancorp employee found to be doing so will be fired.
Business "will come to us if we've earned it," Davis said during a presentation at an investor event it held last month in New York.
As the news began to unfold, Davis said he reminded employees at his Minneapolis company to take the high ground.
"We went out [days later] and told [bankers] to take no advantage of the Wells circumstance," Davis said.
