Lots Of Lenders, Lots Of Borrowers-What To Do

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In searching for an effective way to build their bottom lines, credit unions need look no further than small-business accounts, a lucrative market often underserved by banks, one person is advising CUs.

But before deciding to court small business, a credit union needs to create a uniqueness that sets it apart from other suitors, a marketing expert told CUNA's Lending Council conference.

"Small businesses present a huge opportunity in market growth for credit unions," said Debrah Dippen-Watterson, director, MEMBERS Marketing Source, the marketing arm of CUNA Mutual Group. "But as important as anything, success is in the packaging, and how you determine that unique spot, you can claim as your own. You can't be everything to everybody."

Plenty of Reasons

There are plenty of reasons for a credit union to pursue small-business accounts, according to Dippen-Watterson, who will be addressing The Credit Union Journal's SEG & Business Development Conference in March 2004. Among those reasons:

* There are 11-million businesses in the U.S. with $10 million in revenue and 20-million businesses with revenue of $1 million.

* Banks have failed to lay claim to this marketplace. "Big banks struggle to make money on small business accounts. They're in and out of small business markets. Also, a small business person is more philosophically aligned with a credit union than it is with a big bank."

* Fifty-one percent of small businesses use the same financial services provider for business and personal banking. "You can further enhance your SEG marketing efforts because you're not only banking the employees, but the employer. This member has more financial needs and potentially can add significantly to your non-interest revenue."

In order to understand their potential small-business market, Dippen-Watterson told workshop participants to do their homework. "Once you have identified the target market to pursue, look at competitors' offerings and identify any gaps. Also consider forming focus groups of business leaders within this target group to determine what they dislike about their financial institution," she said. "Find the pain point, then develop a solution that can remedy the pain."

Dippen-Watterson advised that once a credit union identifies its target market, market needs and product package, it should wrap its solution within an "emotional value proposition" showing how the credit union's small-business package meets that need better than anyone.

"That unique position in the marketplace- your stake in the ground-is your brand promise to your members. That brand should work in conjunction with your current credit union brand, presenting a consistent, powerful message to the market," she said. "Respecting their communication channel preferences, integrate your brand across all channels. Keep in mind, marketing to small-business owners is not always through direct marketing channels."

With that brand established, Dippen-Watterson recommends CUs go to market "with a marketing sense of acquiring, retaining and expanding."

Keys To Success

The acquisition stage can involve creating an awareness through advertising, mailings, and offering small-business resources on the credit union's website. Retaining and expanding phases can include such strategies as annual reviews, advisory groups and a continuing communications plan.

"Key to your success in all of this is that everyone in the credit union is engaged in your small business initiative," Dippen-Watterson said. "You need buy-in from staff, top to bottom. You can't just hang up a shingle and start business. Every touchpoint in the credit union must say, 'we do small business.' "

Dippen-Watterson cautioned credit unions to focus on the "end game" when pursuing small-business accounts. "Often times, credit unions are focused too much on the operational end of building a small-business offering. You always need to be thinking about the end, like who you are serving. Look at the end target, then build toward that end."

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