Is the Credit Union Difference Reaching Consumers?

This entry was posted by Wednesday, 21 July, 2010
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I’m grateful for the amount of positive coverage credit unions have received as consumers search for alternative banking solutions.  It’s raised public awareness about credit unions as safe financial institutions with excellent benefits for members.

In my opinion, however, the coverage falls short in delivering the full story on why credit unions are a better option for consumers. I worry that the credit union difference—our voluntary community involvement, commitment to financial education,  service to the under-served, and so on—is becoming lost in the shuffle.

The articles I’ve read tout credit unions’ better interest rates and lower fees. Yes, these are important selling points, but they’re not the only ones that motivate people to move their money or remain loyal. We can’t lose sight of our philosophical differences—either communicating them or operating by them—even though credit unions are enjoying large scale, positive exposure.

Going beyond rates and fees is what truly separates credit unions from other financial institutions.  Sure, lower fees and better interest rates are important. They motivate a certain population. It seems to me, however, that the most loyal members are those who also identify with—and are impacted by—our credit union philosophy.

So here’s my call to action….

We need to pull at the heart strings, not just the purse strings. And we can’t rely on others to do this.

Communicate how your credit union is helping the community through press releases and letters to the editor of your local paper. Reach out to your members by participating in the community and let them know about your efforts. Share member stories and promote your financial education resources like Seminars in a Box. Make a concerted effort to enhance the member ownership experience.

These characteristics are just as important to share with the world. While positive coverage focuses on credit unions as safe alternative banking solutions with great rates and lower fees, it’s our duty to trumpet the credit union difference.

14 Responses to “Is the Credit Union Difference Reaching Consumers?”

  1. To put it in simple terms – heart versus smart

  2. Kerri

    While I agree with points made, I would like to offer a couple of thoughts. As a consumer, when I am looking to purchase something or to change providers, I rarely look at the structure of that organization in the decision-making process. Simply put, my brain goes through a checklist – something like this, meet my pre-determined criteria (color, size, function), within price range, convenient access, reputation, etc. Then, I make my choice. For instance, I am a cranberry juice drinker. I go to the store and look at the shelves of options. My decision would be Ocean Spray because it is good quality at a good price. It was years before I read on the label that Ocean Spray is a cooperative. That is a bonus in my mind when I discover this and has made me a loyal buyer. It was not the motivation for purchasing their product but their cooperative structure (I truly believe) is what makes their product superior in my view, at least. A certain segment of consumers (especially credit union employees & loyal members) value membership; however, this is not the majority of market.

  3. Claire Ippoliti

    Great Discussion. I believe what is more important that the actual credit union “difference” is relationships. What I mean by this is if a consumer were to have a good experience with someone in the community that happens to work at a credit union, they would be more open to hear what they have to say and possibly open an account. Unfortunately, this works for banks as well. Back some 20 years ago when I was a teller at a large commercial bank, I knew all of the customers that came in, as did all of the other tellers. Those customers did not necessarily care about whether they were banking at a for profit bank or a not for profit credit union, they cared about “Sally”, the teller. This is why I believe credit union folks need to become more engaged in community work (volunteering) – locally or nationally. In these tough economic times, most people remember what is important – family, friends, community and they remember the people helping make their community a better place. Do I believe this is the only way to increase awareness or membership, absolutely not. Yet I believe it needs to be one of the components in building awareness.

  4. Mark Condon

    Good questions.

    Every other year CUNA conducts two national surveys: one of current members and one of non-members. We contract with an outside research firm to tele-survey U.S. households.

    Generally, what moves consumers to join is convenience, which is defined by location, hours, and remote delivery channels; and recommendations from family and friends.

    The latter does imply to some degree an understanding of the less tangible values of CU membership such as the cooperative structure and volunteer board. However, it is safe to say that most consumers do not know about nor will they necessarily respond to the intangibles. Credit unions do not have a national brand.

    Individual credit unions do in many cases have a local brand — but not all since it depends on the resources applied to building a brand within a community. The movement has on many occassions funded national branding, marketing, and advertising programs that eventually sputter out due to lack of consistent funding from credit unions.

    In my many years at CUNA, I have witnessed the National Advertising Program (credit union Rose Bowl Parade float), the National Marketing Program, and the National Branding Campaign. The first used spokespeople although its been so long I am embarassed to name them: Lorne Green (Ben Cartwright) and Chad Everett (the TV show Medical Center). The last one that I am aware of was figure skater Dorothy Hamill in the 1980s.

    In the late ’90s, some of the nation’s largest credit unions did kick in the dollars for a pilot National Branding Campaign that focused on the intangibles and tied them to better service and addressed some of the questions here.

    The results of the pilot, which occured within several large metropolitan areas, clearly showed a marked improvement in non-member perceptions and awareness of credit unions and a willingness to join.

    However, the costs of mounting a truly effective national campaign and to sustain it were simply beyond the movement’s financial ability. Of course, this project occurred just as major media channels were splintering into niche markets due to cable television, the Internet, and most recently social media. There likely are brilliant marketing minds out there that could effectively design something using the new media that is more successful than what was done.

    For an example how a national or at least a regional brand can be built and succeed, you can look at the success of the Desjardin credit union system in French-speaking Canada. There, it is the Desjardin brand that is marketed not the individual credit union brand and the result is 70-plus market penetration in the province of Quebec. It’s not just the marketing and advertising campaigns, it is the use of Desjardin-branded payment cards, call centers, investment brokerages, etc.

    Desjardin has an entirely different business model than that which eveolved in the states, but there are elements of it that are still adaptable in terms of strong collaborative efforts some credit unions are experimenting with (back office, online banking, other forms of Credit Union Service Organizations known as CUSOs

  5. Kerry – If a BP gas station is across the street from an Exxon station, which one do you choose right now? How about 5 years ago? Price, quality, color, and size, mean a lot. So does what’s behind it.

  6. Kerri

    Matt, as I said company reputation is very important to me … so I would drive out of my way to avoid BP! (PS-I was born on the Gulf Coast and my dad was in the Coast Guard. This particular subject is very personal to me) Thanks for asking!:-)

  7. My VP of Marketing and I go around and around on this, she insists that it is important for members to understand the difference between a bank and a CU. Why? It is most important that our members feel and experience a differnce that builds loyalty much quicker than educating members about the evil empire! Why spend marketing dollars to educate members about something that in the end would only raise their jeopardy score, make sure employees are giving members a reason to remain loyal!

  8. Interesting insights and observations.

    A couple of additional thoughts for the discussion…

    1. There are multiple groups of consumers to whom CUs appeal and one of them is the group who sees the principles of the business as important. It might not be the most profitable segment in the eyes of some, but it is one of the most powerful and important…these are the folks who step up as volunteer leaders, who become ambassadors for the CUs to which they belong, and generally help the entire credit union industry as they talk about their experiences and share their stories.

    2. There is also a strong and large segment that cares primarily about convenience and the things Kerri suggests. They also tend to listen to the recommendations of others and check the ratings that people give businesses when they make their buying decisions. They need to hear the stories of how CUs have changed people’s lives…the real world stories about single mothers who kept their homes because CUs helped them, about people with poor credit who turned to a CU that helped them reshape their futures, and about the special moments that CUs create by delivering excellent member service experiences.

    3. Underlying it all is the need for a better understanding of what a CU really is, what it stands for, and why it matters. A national branding campaign may or may not be able to achieve this, but that doesn’t mean that individual CUs can’t tell the story using Josh’s suggested approaches.

    The bottom line is that is not about whether CUs are better than banks, it is not about whether the rates are better, and it is not about whether people believe in the underlying foundations. It is about the way that CUs commitment to serve is understood, demonstrated, and communicated every day to every person whom the individual or global CU brand touches; and it is about creating people who are committed to helping the CU grow by not just saying nice things, but by actively encouraging others who can benefit to take action and join a CU.

  9. Back in a former life, when I was working in retail marketing we found that people come in for the deal, and stay because of the service. I think the same can be said for CUs – people come in for rates/deals and stay for the difference – if they feel it.

    The credit union difference is going to resonant with some – for some people it IS the deal. They want to be part of something different than a bank.

    But far more people are going to come in because of the “coupon,” i.e., better rates.

    IMHO the place to hit the difference hard is with people with one foot in the door – indirect lending members. They already have a relationship, but it’s very underdeveloped.

    Frankly I think the national branding effort can’t work – we’ll never have the $$. You need the power of editorial (news, bloggers, reporters) to convey the difference to chip away at it, then encourage CUs to use follow up ads to connect the dots. Earned media has done more to position the CU brand in the last two years than any branding campaign could hope to do.

    Now what can we do to continue, magnify, and exploit that conversation?

  10. Kerri – that’s sort of my point. IF all other things are equal, stories matter…structure matters. Our goal should be to make all other things unequal, and our structure mean something. We have to work on improving both.

  11. Great discussion. In terms of getting the word out there about credit unions… how often do credit unions benefit from word of mouth? My guess is all the time. So the question becomes, how can they better harness the power of word of mouth? I recently purchased a car and the dealership offered me $500 if I referred a friend. They also promised to give my friend $500 off. Guess what… I referred a friend and we were all happy! Is there some way for a credit union to do this?

  12. Thanks for the comments everyone! Great discussion!

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