Strategy: Call Up Your Members, Tell Them To Go Away
Three weeks ago I had the following phone conversation, and I immediately wrote down what was said. Why? Because what many credit unions may not realize is that this same conversation was likely had with most of your best members-and not to your benefit.
Phone Solicitor: Mr. Derkman... (Let me just state right off that nothing builds instant affinity quite as effectively as mispronouncing a person's name)...
Me: Um, yes (as I recognized immediately this is some read-from-a-script, insert-name-here, auto-dialing telemarketer and my mind raced to conjure up reasons I needed to go.)
Phone Solicitor: I'm calling on behalf of your credit union, with which you have a credit card.
Phone Solicitor (switching to the mechanized voice he's likely used to read this same pitch hundreds of other times): "As a privileged customer of the bank, you deserve special benefits from the bank... (He started pitching some benefit or another but I didn't hear it, my mind's ear replaying the "privileged customer of the bank, you deserve special benefits from the bank" line.
Me: No thanks.
I have two credit cards from separate credit unions and both have been sold. (I like to think every members' card account was sold and that I wasn't singled out.) I assume both credit unions had good reasons for making the move, and would be willing to wager that as the respective boards weighed the sale the words "core competency" were used again and again during the process. As in, credit cards are no longer a "core competency" for the credit union and we should sell the portfolio to a company for which plastic is a "core competency."
So what is a credit union core competency? The ultimate core competency is the concept of membership. Indeed, it's the only real core differentiation credit unions have versus their competitors. Yet one unforeseen byproduct of these portfolio sales that have been well-documented in the pages of The Credit Union Journal is the message being sent to many members, and that is "You're not a member. You're just another (albeit privileged) customer of the bank." This on top of the fact many statements require payment be made to Bank Card Services.
Case in point is the phone solicitation I had above. I would emphasize it evolved into a "solicitation," starting out by leveraging the affinity I have for my credit union before by sinking into just another shilling sales pitch. And then it sank even further from there.
I have shared with many of our reporters after they've joined The Credit Union Journal that it takes a thousand stories to build credibility, and just one to tear it down. By the same token, credit unions are spending millions of dollars on "branding" and "rebranding" campaigns designed to differentiate them from the BofA's and the Merrills and the Bank Ones of the world, and then turning right around and calling every one of their credit card holders to tell them there is nothing special about credit union/bank at all. It's difficult and challenging enough to convey what is unique about credit union membership in and of itself without getting on the phone and submarining the message with members, um customers. It's akin to the fast food companies that spend huge amounts to buy 30 seconds during the Super Bowl to advertise something new on the menu, but when you walk in-or God forbid, use the drive-thru-you're confronted with a fleet of indifferent (at best) teenagers almost angry you brought it up. Although they'd be delighted to help you, just as soon as they're back from break.
It may very well be that your credit union and board decided the sale of your portfolio was the best decision in the long run. But what can't be disputed is that if you're among those that have sold your portfolio, you need to start paying a lot closer attention to the marketing of your membership. It's not enough to just sign-off on the product or service that will be pitched to the members; you need to be a much tougher monitor of the scripts that will be used by telemarketers. Check the wording; it matters. The FTC's "Do Not Call" list is hugely popular for a reason. Make sure your own name and the names of other members of management and the board are on the list for possible calls so you can hear the message directly.
If there is another huge irony here it is that American Express has spent a lot more than Bill Gates' own card limit trying to position its card with the message, "Membership has its Advantages." You're not a customer, AmEx emphasizes, you're a member. I carry two AmEx cards, and despite all the advertising and "exclusive cardholder benefits," I always know that when it comes down to it I'm just a another 15-digits to the company.
Imagine the reaction at an American Express senior management meeting if a credit union were to explain that it is giving up an advantage American Express would die for. To borrow from one of its competitors: Cost of the piece of plastic: less than a quarter. Cost of phone solicitation: Less than a buck. The competitive advantage of membership: Priceless.
Frank J. Diekmann is editor of The Credit Union Journal. He can be reached at fdiekmann