With apologies to Mark Twain, "Reports of the death of SEG marketing are greatly exaggerated."
There has recently been discussion in the credit union movement about our migration toward community marketing and away from SEG marketing. I was recently in attendance at a very informative seminar at which one of the speaker's slides was titled, "Bye, Bye, Business Development; Hello, Community Marketing."
It's not hard to find people talking about community marketing in credit unions. A recent Callahan's article stated that credit unions are relying on more "mass communications rather than...direct mail to employee groups." The move toward community charters has facilitated this migration. Most of the points made in these discussions are valid, especially when they are talking about community marketing. Yes, it is important that credit unions learn more about and utilize community marketing. It's a crucial part of most credit unions' growth strategies and it's an important step in the overall growth of the movement.
However, before you put SEG marketing and business development on the shelf, let's review a few lessons from history. Remember when ATMs were going to "replace the branches?" What about when online banking was not only going to replace the branches, but also replace the aforementioned ATMs? We should know better than to jump to such broad conclusions. Credit union history shows us that members don't want one service in place of another service; they want one service in addition to another service in addition to yet other services. This is also the case with SEG marketing and community marketing.
The benefits of SEG marketing are fairly clear. By establishing relationships with specific businesses and specific locations of those businesses you engender loyalty and you are practicing very advanced "target marketing," or what's sometimes called "niche marketing." Niche marketing is highly effective if done well. If we can continue to work to improve our marketing materials to the point where they can be "mass customized," SEG marketing can be incredibly fruitful. At MECU of Baltimore, for instance, we are currently working toward "SEG-specific" marketing that involves customizing our marketing materials to the extent that they speak directly to a specific SEG. This effort can start by simply using the SEG's logo on a flyer announcing that you will be visiting the SEG. This approach can grow into a robust marketing effort that will help your SEGs realize that they mean a lot to your CU.
SEG marketing should be a part of every CU's growth portfolio. It's possible to make hundreds of visits to your partners each year with a personalized approach to each one. MECU's Business Development Department made 414 off-site visits to our partners in 2006 with a staff of just three. The secret to this level of production is partnerships. We rely on some business-development-trained MSRs to attend some of our off-sites, and we also partner with PFP Services Inc., an insurance company in Connecticut with a dedicated SEG marketing department. The relationship with PFP started at MECU by allowing them to have a representative in our branch lobbies. Their representatives approach members and let them know about the "additional benefit" provided by MECU. They have also provided representatives whose sole function is to attend our offsites.
I know what you're thinking. You wouldn't let anyone go to your offsites like that. Those are your members, after all. If you are thinking that, you are thinking the way I did four years ago. The SEGs I brought on were my babies. No one was allowed near them. Until one day when I really got into a pinch because of a schedule conflict and I "allowed" a company to handle a site visit. The key, as with any partnership, is to be able to trust a third party.
Last year, with three business development employees, MECU was able to bring on about 2,000 new members from SEG marketing alone. In 2007, MECU expects to increase that number to 3,000. Our SEG marketing effort is at the point where we are trying to become part of our partners' processes-new hire process, employee meeting process, payroll (stuffers) process, and human resources process. We will also be working to utilize e-mails to our ambassadors more effectively. We have held "Ambassador Breakfasts" for seven years in an effort to show our ambassadors how important they are to our success.
MECU's membership growth came in at 8.49% in 2006, in spite of the fact that we are purging inactive accounts on a monthly basis. The accounts being opened at off-sites are also "quality" accounts with checking penetration of 44%, as compared to 36% for the credit union overall. This year we are targeting 58% checking penetration at off-sites due to our confidence in our enhanced SEG marketing efforts.
MECU's results are very good, but they are not isolated. As Credit Union Journal recently reported, "SEG-based CUs have had better growth than community credit unions." Community credit unions should continue to make strides in community marketing efforts, but all could benefit from a dynamic, consistent SEG marketing effort.
SEG marketing is not only here to stay, it's part of the future of marketing in general. This type of laser-specific, niche targeting is possible in today's information age. It's "mass customization" at its finest and it will help grow your CU.
John Godwin, CUDE is VP-business development/strategic alliances with MECU of Baltimore. He can be reached at jgodwin
