Credit unions often prosper in the wake of big banking scandals, like the recent cross-selling debacle at Wells Fargo & Co. That's because credit unions are seen as a safer relationship.
Some credit unions saw a substantial uptick in memberships back in 2011 following a consumer-led movement called Bank Transfer Day; but the lift for many was anemic. The movement, a response to Bank of America's plans to charge customers a $5 monthly fee for using their debit cards, called for disenchanted consumers to leave their banks.
In October 2011, Charlotte Metro Federal Credit Union saw monthly new members double to more than 1,200. But much of that spike was attributable to significant investment in mass media, including local Super Bowl ads, for years before the movement. To leverage the next Wells-Fargo type event, credit unions must start investing now and not wait for scandals to make headlines before taking action.
Here are three things credit unions should do now to attract new members following the next banking brouhaha.
Invest in marketing and branding.
You must build your brand recognition in the marketplace now. People won't walk through your doors or find you online if they don't know you exist or don't know if they are eligible for membership.
Look for opportunities to put yourself out there, wherever your potential members are. For larger credit unions, that might mean advertising in mass media or getting your name on a sporting arena or an entertainment complex. Two examples come to mind for both smaller and larger credit unions: The Charlotte Metro Credit Union Amphitheater and Golden 1 Center in Sacramento, Calif. — named for Golden 1 Credit Union and home of the NBA's Sacramento Kings. Make sure that where you invest fits your target market and overall strategy.
If you're a smaller credit union, think smaller, local newspapers and newsletters. Or, if you're an employer-based institution, make sure you take advantage of every channel the employer allows you for getting your name to those prospective new members. For example, are your materials included in the materials new hires get on their first day?
It's all about making sure the people in your market know who you are.
Make sure your business model is agile and scalable.
What happens if your new members double in one month? Do you have the staff and technology in place to support rapid growth in membership?
You need plans to address sudden growth. The last thing you want is to build up your name in your community so that you attract a ton of new members who you are not prepared to serve.
Remember, planning ahead doesn't cost money. For example, you can make plans for how you would quickly increase staff at your call center. Are there part-time employees who would like more hours? Is there a staffing company you can turn to? Are there back-office employees who could serve as member service advisors for a short time should a rush come?
Develop your sales and onboarding culture.
The biggest opportunity you have to capture the greatest share of members' wallets is the first time you see them. Most of the business you will ever get from a member comes in the first six months of membership. For example, Charlotte Metro Credit Union receives about 73 percent of all the business it will ever get from new members within six months.
But too many credit unions act as order takers only. That's wrong — for you and for your new members. You're not serving your new members if you fail to take time to get to know them and understand their finances. Getting to know your members allows you to suggest other ways your institution can help them achieve their financial dreams. Maybe one new member plans to open only a personal checking account because she doesn't know you can also provide her with the small business loan she needs.
Of course, financial institutions' sales cultures are being widely criticized following news that Wells Fargo opened accounts for 2 million customers without their knowledge. That's not a sales culture; that's fraud. Don't let another institution's bad practice turn you off from one of the financial services industry's best practices.
Once you get your new members in the door or on your website, don't forget them.
Start onboarding new members. Onboarding is the stream of regular communications between a credit union and its new members. Unfortunately, a lot of institutions don't do this. A common rule is known as 2-2-2. Two days after a member opens an account, you call. Two weeks later, you email. Two months later, you send something — a letter or a brochure — in the mail.
Bottom line: If you're a credit union, it pays to be prepared for the next banking event that sends consumers out of their bank's doors and hopefully into yours. While it's too late to capitalize on the recent Wells Fargo scandal if you weren't already preparing, you can get ahead of the next one.
J. Paul Leavell, Ph.D., is the senior strategy analyst at Charlotte Metro Federal Credit Union.
