TEMPE, Ariz.-No department within credit unions has felt the budget axe as much as the marketing department over the past few years.
The irony and the trageDy, notes one person who acknowledges that marketing is often seen as a "necessary evil," is that it is marketing that can play the most critical role in reversing the trendlines that led to budget cuts in the first place.
"They know they have to do marketing, but they don't really get it and they want to do it for less," lamented Nicolette Lemmon, president and founder of LemmonTree Marketing Group, a credit union consultancy based here. "But the problem is, there is only so much to cut before the organization dies. When marketing disappears, the credit union disappears from the minds of potential members and borrowers."
Lemmon pointed to a concept advanced in the book "Good to Great" by Jim Collins: marketing is akin to a flywheel. She argues the "marketing flywheel" must be going all the time to touch members on different targets.
"The results might not show up for a while, but the flywheel can't just be turned on one day and work," she said.
Two levels of credit union marketing are going on at all times, she continued: one is tracking member response to a specific offer, the other is the ongoing marketing flywheel.
"Marketing needs to continue to build business and to generate leads at all times," she said. "It takes seven touches for someone to remember something, so that means using everything: the posters in the lobby to the landing page on the website."
Missing Elements
Although the recession is officially over, few credit unions feel they have seen what could be called a "recovery." Lemmon believes that has led to a perception that marketing is not as effective, but she urged that certain mitigating factors be considered. The operating expense budgets at nearly all credit unions have been "decimated" by assessments that took money "right off the bottom line," she noted. That pressure has led to, at best, no increases in marketing and training, and more often to a reduction of budgets in those areas.
"Marketing departments have not had the dollars they had prior to 2008," she said. "Another missing element credit union management teams have faced during a difficult economy is the baby boomer generation has stopped its consumerism and Gen X is 11% smaller than the previous generation, so everyone is fighting for the same heavy-lifters in the economy. There are fewer people ages 30 to 50 these days, so marketing dollars are fighting each other."
For years economists and marketers have trumpeted the coming of Gen Y, but Lemmon pointed out the oldest members of that generation are 26 and the youngest eight, meaning the vanguard is just now coming into the age where they might be getting married, buying houses or buying cars.
"There are a lot of pressures on credit unions, but the marketplace is difficult," she said. "Few businesses can have an 11% drop in their customer base and survive with the same numbers. Gen Y will have a big impact, but it will be a while."
Social Media No Magic Bullet
Many CUs had hopes that social media outlets such as Facebook and Twitter would yield unlimited free marketing, but Lemmon said many people seem to be overlooking that critical first word: "The social media presence is social."
"It is really hard to make a financial institution interesting to talk about in social media," she said. "A recent study found one-in-five credit unions have abandoned Twitter. It makes sense, because a credit union is not a celebrity and does not have new and interesting news every day."
Lemmon said Pinterest or other niche social networks might be a better option for managing a CU's brand than Facebook. Whatever platform a credit union uses, she said the important concept is to get information about the CU in front of members.
If a credit union has e-mail addresses it will do e-mail marketing, but Lemmon said due to people changing their contact information frequently she has yet to find a credit union that has a current e-mail address for all of its members, meaning it has to do direct mail.
"If direct mail is done well, it is received positively," she assessed. "If it is not done well, it is seen as junk. The most important aspect is tracking results to see if direct mail is doing the lead generation it promised and giving a return on the investment. I have to have the numbers so I can talk return on investment and make sure the creative efforts are helping the credit union run efficiently."
Services vs. Product Marketing
One element that has changed over the years is most credit unions do not have a chief marketing officer, Lemmon said. This is important, she asserted, because services marketing is "much different" from product marketing.
"People visit their grocery store on a weekly basis to buy products, but they do not go into their financial institution often after the initial visit to set up an account, which makes managing the relationship more difficult," she said.
According to Lemmon, CUs must have a "position" in the mind of their members so they "pop up" when those members need something, such as a loan. She said such positioning requires a focused strategy and a consistent marketing message.
"People need to know why they should turn to the credit union," she said. "A checking account is a checking account, so what is important is how it is marketed. Credit unions that have a community charter must be very strategic to demonstrate why someone should come to them rather than the big bank on the corner."
Most CUs have a "low-cost strategy," which Lemmon noted means they need volume to make their numbers-which can be difficult. She said credit unions should focus on developing deeper relationships with the members they already have and get them to recommend the credit union to their family and friends.
Another overlooked aspect of successful marketing is training frontline staff to look for cross-selling opportunities, especially with younger members. Because most people do not come into branches, Lemmon said the frontline people need to reach out to new account holders and tell them what the credit union can do for them.
"Don't just let someone open an account and let them go," she advised. "Make sure the relationship with the newbies is stellar."
Look To Business Services
Business services is an area Lemmon believes holds great promise.
"Business and commercial lending are the future for credit unions," she declared. "Many young people who are graduating college and having trouble finding a job are going to open their own businesses. Credit unions need to become known as the best place to go to find a good deal, which will capture the young people."
Successful marketing is "not just writing a newsletter and making posters. It is about a good strategy that is supported by tracking results and return on investment," she said.
