Mark Arnold :: Blog

I am fortunate to serve on the Texas Credit Union League’s Communications Advisory Committee. At our meeting last month, representatives from the League shared some powerful statistics and information about our credit union environment. Below are some the highlights in the areas of age distribution, shifting ethnicity, and what Boomers want from their PFI.

However, just like CUNA’s excellent E-Scan (a must read), information is useless unless you do something about it. So after each informational area I offer some suggestions for what credit unions can actually take.

Age Distribution

The following was shared from CUNA’s 2009-2010 National Member Survey:

• Credit union members are getting older. Members’ average age is now 47, up from 1985.


• To meet long-term lending goals, credit unions will have to attract more consumers from the 18-to-24 age group. And the news on this front is not good. The percentage of members age 18 to 24 is small and getting smaller.


• Credit unions need a two-pronged strategy for achieving future loan growth. They need to continue to attract more consumers in the peak borrowing years of 25 to 44 and they need to attract even younger consumers 18 to 24.

—Action Steps

Credit unions have talked for years about getting younger, but the reality is we are heading in the wrong direction. Here are some suggestions:

(1)    Target the parents (who are credit union members) to get the youth.

(2)    Offer technology products such as online account opening, mobile banking, text alerts, etc. that youth want.

(3)    Embrace youth at your credit union: hire young, put Generation Xers on the board, promote young people to executive positions, etc.

(4)    Adopt a complete youth marketing strategy that includes social media, key events, college partnerships, etc.

Shifting Ethnicity

The following was shared from the U.S. Census Bureau:

• Hispanics are the fastest growing portion of the U.S. population, representing about half the growth since 2000. After the 2010 census, demographers expect Hispanics to total 50 million or about 15% of the population. This figure will rise  to nearly 25% in 15 years.


• The size and relative youth of Hispanic consumers make them attractive to credit unions looking to not only grow membership but to expand their pool of peak borrowers. The Hispanic population is also migrating to other regions beyond the western and southern regions.

Like the youth, Hispanics are a prime growth target. But reaching them is easier said than done. Here are some suggestions:

(1)    Hire bilingual staff throughout your credit union.

(2)    Make sure all your marketing material is in Spanish (not just one brochure).

(3)    Form partnerships with key Hispanic organizations in your area (Hispanic chambers, small businesses, etc.).

(4)    Immerse your credit union completely in the Hispanic culture, especially if you have branches in largely Hispanic population zones.

What Boomers Want from Their PFI

The following was shared from a CUNA Mutual Group Retirement Research Study:

• More than 40% for credit union members are baby boomers and 17% of these members are likely to leave their credit union.


• Currently boomers say credit unions do not play a significant role in their financial lives and they don’t rely on them for financial guidance and advice.

Boomers, boomer, boomers. If credit unions take them for granted, they will lose them. Here are some thoughts for not just retaining them but thriving with them:

(1)    Offer financial planning services and don’t treat it as an after –thought in your marketing strategy: make it a core product offering (just like loans and checking accounts).

(2)    Offer special products designed just for Boomers—not around their age but rather on their active and full lives.

(3)    Focus on advice rather than selling; if you give them advice the sale will eventually come.

(4)    Flood them with financial information through your website, financial seminars, etc. Don’t just make your website information but rather design it to help them manage their portfolios.

The information the League shared is invaluable—now it’s up to us in credit unions to do something with it.

In a recent session at Southwest CUNA Management School on “Advanced Branding for Credit Unions,” I had a Dallas branding company called Loudthought share a few case studies along with some of their ideas about the importance of branding.

One thing their CEO, Jim Foley, said especially struck me: “People hear what they see.” He went on to say that people will trust their eyes before your words.

So think about that minute. You can say your credit union is all about service and being member focused. But what do your branches look like? Retail marketing—how your branches look and feel—matter. This is especially important for older members because the branch is where they conduct the majority of their transactions.

Or you could look at the other end of the age spectrum and think of children. If one of your strategic goals is to get younger, do you have a kids’ play area inside the branch? Have you considered the radical step of having video games in the lobby for teens?

But it’s not just how your branches look and feel. With branding, everything matters. Even how your bathrooms smell. What are your bathrooms communicating about your brand? With branding, perception truly is reality.

What do members see when they drive up to your branch? What do they see when they walk in? Are you promising them one thing and delivering something else?

Here are some quick questions you can ask:

(1)    How is the parking lot maintained?

(2)    Is there adequate parking available?

(3)    Are sidewalks litter-free and maintained?

(4)    Are doors and windows clean?

(5)    Is the landscaping maintained?

(6)    Is the member service area clean, orderly and free of food and drinks?

(7)    How does the lobby look?

(8)    Is the marketing literature displayed nicely?

(9)    How is your staff dressed and groomed?

(10) How is the staff at maintaining professional behavior (refrain from chewing gum, OVER-socializing, drinking or eating in the presence of members)?

In a recent session at Southwest CUNA Management School on “Advanced Branding for Credit Unions,” we had a passionate discussion about whether small credit unions can compete against larger ones. The answer: niche marketing. Size doesn’t matter—niches do.

Successful credit unions (no matter the size) target niche groups. Your credit union cannot be all things to all people. It might be families, single moms, seniors, Hispanics or one of a dozen other demographic profiles.

The key is to pick three or four groups and become a financial service provider leader for them. Your credit union is better off being the number one choice of a small subgroup than the fifth or sixth choice of a larger group. The smaller, niche group tends to be more loyal to you.

For example, I conducted a long-range planning session followed by a brand plan for Heart of Louisiana Federal Credit Union. During that process we determined the credit union was challenged by trying to serve too wide of an audience. We chose to focus on blue collar workers, professionals and residents near one of their branches.

“Focus is critical to our brand and credit union’s success,” said Cindy Beauregard, CEO of Heart of Louisiana FCU. “We were able to identify specific niches we were good at serving. Instead of focusing in every direction we now target similar subgroups, which leads to better results.”

So what are a few emerging niche groups your credit union might want to consider targeting? Here are a few to consider:

(1)    Minorities/new immigrants

(2)    Low wealth/underserved

(3)    Small businesses

(4)    Young adults

(5)    Mompreneurs

(6)    Prime Time Women

Astute marketers will notice that these unique groups might require unique lending situations. These target groups are getting loans somewhere: the question is, are they getting them from your credit union?

It’s also important not to put all your eggs in one basket. Multiple targets could shield you from possible economic downturn in one particular industry.

Big or small, all credit unions can compete—just find your niche.

I was listening to the radio a few weeks ago and heard that the game show Jeopardy was introducing a new category called Alex Meets Auto Tunes. Auto Tunes is a voice enhancement technique used primarily by rap artists to add digital sound effects to their songs. In this Jeopardy category, host Alex Trebek performs the verse of a song with technological help. The contestants have to answer with the correct name of the song. The category debuted with nursery rhymes and folk songs like The Farmer in the Dell, Oh Susana and Danny Boy.

The radio station and a few random blogs “presume” this new segment is the show’s attempt to engage a younger audience. I have found nothing to confirm this however, and from a marketing perspective, I find it hard to believe that such a long running show would jeopardize (no pun intended) its brand to engage young people with irrelevant content.

Think about it. Jeopardy has a very consistent brand and a very consistent audience. Changing one category that doesn’t even appear on every show is the equivalent of a credit union claiming it engages youth because it publishes a youth newsletter a few times a year. Unfortunately, a youth newsletter, on its own, doesn’t engage kids anymore than a folk song does.

The real way Jeopardy engages a younger crowd is by inviting them on the show. There are several college weeks in each season when all the contestants are college students. Last week, Jeopardy hosted kids week. All 15 contestants were school age kids, and all categories were kid friendly. During college week and kid week, Jeopardy doesn’t change its format or its brand. It simply offers questions that are more age appropriate for youth with above average intelligence.

That’s the way credit unions should engage their youth members—with age appropriate products and services. Taking the fee off your regular checking account and calling it a youth account is not engaging your young members. Offering them accounts with age appropriate features and benefits is.

Some credit unions host summer money camps. Kids learn key money skills like writing a check, using credit and making a budget in a fun environment. Some credit unions have partnerships with area school. They offer age-appropriate financial education in the classrooms. Some even make their own curriculum. Some credit unions use age appropriate blogs to start conversations with and among their youth members about financial topics important to those youth. Others also have youth advisory boards.

What comes to mind when you hear the word car? Do think of the word car or do you see an image of a car? What does that car look like? Is it your car or is it someone else’s car?

These are the kinds of questions partners from Attune ask during a typical interview session with consumers. Attune has developed a new marketing methodology based on how the brain processes information. Their research reveals two important details about the way people think:

1. People think in images and metaphors


2. People make 95 percent of their decisions subconsciously.

“Our senses process more than 11 million bits of information per second. Our consciousness can only process 20 - 40 bits per second, from all sources. We make decisions constantly without being consciously aware of it,” said Maya Bourdeau, founding partner of Attune.

Attune’s research found that words do not equal thoughts. Images and metaphors do, like in the car example above. The image in your mind’s eye might be your own car. It might be a dream car. It might be a car from a previous life experience. That’s because the mind is searching for something familiar.

“Linking what you don’t know to what you do know is a metaphor,” said. Bourdeau. “Words transfer or communicate that particular image or metaphor.”

Now think of the term credit union. What are some images that may come to consumers’ minds when they hear that? It could be money, a credit card, maybe a stack of unpaid bills, or perhaps a house or car or something else they obtained with credit. Maybe it’s a union atmosphere, such as a blue collar work environment. Like anything else, a credit union ends up being defined in consumers’ minds based on what they already know, not on what you’re trying to tell them.

If the words, metaphors and pictures you use to communicate your marketing message are not in line with their thought processes, your message will not be effective. Even if you’re trying to change their perception, you have to start with images they relate with and use those images to create a new perception.

“Marketers tend to use surveys and focus groups to figure out what consumers are thinking. Focus groups may scratch the surface of the subconscious, but they never really get to the deeper reasons why people make the decisions they make,” said Jiao Zhang, the other founding partner of Attune. “We get so deep into the subconscious that people get very emotional. It’s not uncommon for them to cry and really open up to us.”

"These kids have ambition and aspiration coming out of their ears. They want to be leaders when they grow up. They want to change the world."

—Small Business Labs (Talking About Gen Y)

In the Spring, I wrote about “Recruiting Generation Y.” In that piece, I offered tips on how to recruit those twenty-something Generation Yers. While those five tips might help you in the interview process, perhaps a bigger question worth exploring is “why would I even want to hire someone from Generation Y?”

Turns out there are lots of reasons. Of course, this generation is smart and energetic (perhaps more so than any previous group). In many cases, they have unbridled passion. They blend the work ethic of the Greatest Generation, the fun-loving nature of the Baby Boomers and the technology of Generation X. This hybrid makes them an uber-generation of sorts.

Perhaps one of the best reasons to hire someone under 30 is simply to have them observe your credit union (or company) to examine ways you can improve. Gen. Y is a group of keen observers. Not only that, they will ask lots of questions. Yes, lots! While that may annoy you at times those questions could also result in you digging deeper. Deeper into your policies. Deeper into your procedures. Deeper into products. Deeper into why you do the things you do.

Here’s how it could work. Hire someone just out of college and pay them a reasonable salary. Then have them spend a month in each department both observing and doing the work that group does. Each Friday management could sit down with the employee and ask them what they observed. Pretty simple stuff. But it could turn enlightening.

With today’s economy it might be impossible to hire someone like this just to do some observing. An alternative is to task every new young hire with observing their job and one month later develop two new ideas for how the company can improve. Catch them while they are fresh and not tainted by office politics or your current work culture.

This idea of having young people share and implement their ideas is being fostered at the upcoming Southwest CUNA Management School. The school has developed something called “Connect to Collaborate,” which is a way to engage those under 30. You can read more about it in this CU Grow blog post.

Brands don’t just happen. Brands are built. And one of the keys to building a successful brand is building a winning position statement. According to entrepreneur.com, a position statement “helps establish your product’s or service’s identity within the eyes of the purchaser. A company’s positioning strategy is affected by a number of variables related to customers’ motivations and requirements, as well as by its competitors’ actions.”

So how do you build that position statement? Here are five elements every position strategy should have, along with a couple of examples (one non-financial institution and one large financial institution).

(1)    Who—To the target audience who seeks/desires/believes

(2)    What—Our brand is the category/player/frame of reference

(3)    Rational benefit—That offers/creates/delivers a point of difference

(4)    Emotional benefit—So target can feel/realize/achieve

(5)    Reason to believe—Because it offers a proof of point

So now that you have the words/formula, let’s look at a couple of well-known brands’ position statement.

Ben & Jerry’s Ice Cream

• To ice cream lovers who don’t do things by halves (who)


• Ben & Jerry’s is the ice cream (what)


• That fills your face full of flavor (rational benefit)


• So you can feel gloriously righteous about your indulgence (emotional benefit)


• Because it’s outrageously packed full of the stuff you love to love (reason to believe)

Ben & Jerry make their position statement extremely clear. They tell who they are targeting, what they are about and why someone should just their ice cream.

ING

• For Main Street USA (who)


• We are the online bank (what)


• That exists to save you money (rational benefit)


• So you can enjoy life (emotional benefit)


• Because we operate entirely online, through the mail and over the phone and pass savings onto you in the form of the best interest rates in the marketplace (reason to believe)

ING also clearly spells out what they are about and then explains why you should believe their offerings.

Once the foundation of building a position statement is complete, then you can begin to build your marketing plan.

Self-disclosure time: I serve as a contributing author for the E-Scan

The Credit Union National Association just released the 2010-2011 Environmental Scan. The E-Scan offers insights in 10 primary areas affecting credit unions, including legislation, compliance, H.R. and of course marketing. The E-Scan is a must-read for any credit union executive and is also an outstanding planning tool to use.

As we noted, “Marketing isn’t always about how much money is in the budget. It’s about how you use that money.”

There were many options we could have examined relating to marketing but we narrowed our focus this year to five key areas. Below are some excerpts from the key findings.

(1)    Recession Marketing

Marketing in a recession can actually improve long-term results. Most businesses, including credit unions, take a knee-jerk approach to cutting marketing budgets during a recession. That leaves a void in consumers’ minds for proactive marketers to fill. There’s less clutter for markets to compete with—fewer direct-mail pieces, more empty billboards, and fewer sponsors at community events. A recession actually gives credit unions a prime opportunity to differentiate themselves without spending a lot of money.

(2)    Regulatory Changes

There’s a tremendous amount of activity in Washington right now that could affect your credit union and its members. If you haven’t communicated regulatory and legislative activities to members, there’s a good chance most members are in the dark or misinformed.

(3)    Inertia Marketing

Like it or not, banking relationships rely on inertia. Once relationships are formed, tremendous amounts of energy are needed to motivate people to move. The law of inertia as it applies to marketing means

consumers will remain at rest (stay with their current providers) unless some force compels them to make a change. To overcome inertia, credit unions have to do something truly remarkable. But “remarkable” might be more attainable than you think. There’s something remarkable, compelling, and unique about every credit union—and it’s not service. Service is not a compelling differentiator, especially when everyone says it. And nobody ever claims to give poor service.

(4)    Social Media

Social media—or Web 2.0—has changed the rules of the Internet. What was once a static library of online information has become a dynamic, free-flowing social center. As a result, credit unions have a chance to turn change into opportunity. “There’s a great opportunity right now for credit unions to use social media to connect and build relationships with members and nonmembers,” says James Robert Lay, founder of PTP New Media, a viral and social marketing company. If your credit union wants to connect with members and nonmembers using social media, Lay recommends blogs, Facebook, Twitter, podcasts, and Web video (YouTube, Blip.tv, or Vimeo.

(5)    Marketing To Women

It’s time to take an inventory of your credit union’s marketing materials. Do any of them speak primarily to women? If they don’t, it’s a sign your marketing materials could be outdated and missing the mark. Even if your graphics are relevant to women, you’re only one-third of the way there. Your message and the way you deliver it represent the other two-thirds of the equation.

These were just a few excerpts. To get the full context of the marketing section and to read the other insights, be sure to purchase your copy of the E-Scan.

So what do you think? Are these the top marketing trends credit unions should be aware of as we move into the planning process? What issues would you add? What comments would you include with those five above topics? 

I recently called one of our business partners, the Raddon Financial Group, to inquire about an issue we were experiencing. As I did so, I was absolutely struck in awe with how Vickey, their operator/receptionist answered the phone. It wasn’t so much what she said—it was how she said it.

Her tone not only was friendly—it was enthusiastic. It conveyed that she was thrilled to talk to me and that I was her number one, top priority. She even engaged me in conversation, genuinely asking about my day.

What’s even more amazing is that Vickey consistently answers the phone that way. I have never had a bad phone experience with her (and I call Raddon multiple times a month).

When asked about why Starbucks was so successful, Dave Olsen, Starbucks Chief Coffee Guru (yes, that’s his real title), said, “everything matters.” And he is right. Everything matters—even how your employees answer the phone.

Here’s an example for our credit union. At Neighborhood Credit Union, our brand tagline is “World-Class Service. Neighborhood Convenience.” So our member service center is trained to answer the phone, “We’re having a wonderful day at Neighborhood Credit Union. How may I help you?” That greeting sets the right tone for our members and our organization.

But you can recite a script all day long—the key is how you deliver those words.

Here are five tips your employees can use to improve their greeting:

(1)    Bring energy—It’s not just the words you say, but how you say it. When answering your phone do so energetically. Act like there is nothing else in the world you’d rather be doing right now than talking to the person on the other end of the line.

(2)    Be consistent—Referring to the story above, I’ve never heard Vickey have a bad day. I’m sure she has, but the key is she never communicates that on the phone. Of course, the key with consistency is to be consistently good!

(3)    Engage the member—Don’t just transfer the call but ask how their day is going. Genuinely talk to the member in an interested way. Of course, you have to be careful of the long-winded members but maybe your time is just what they need.

(4)    Talk clearly and slowly—I admit: I’m a fast talker. So when I answer the phone I have to remind myself to be clear and slow down. Your employees have to do the same thing; do not rush through the member greeting.

(5)    Smile—When all else fails, smile! Even if they cannot see you, if you are smiling members can tell. Some people even put the word “smile” on their phone to remind them to answer the phone with a smile on their face.

A few weeks ago I had the opportunity to attend a leadership summit sponsored by CUNA Mutual. One of the speakers was Dave Colby, chief economist for CUNA Mutual. He regularly publishes the Credit Union Trends Report (a must read for any credit union executive).

He addressed strategies credit unions could use to conquer economic and marketplace uncertainty.

“Credit unions have managed through 20 recessions over the past 101 years,” Colby said. His point was that credit unions can actually thrive during these challenging times but that we need to employ specific strategies to do so. His suggestions included:

(1)    Trust Factor

“In a time when no one knows who they can trust, leverage your trust factor,” Colby said. He emphasized a key differentiator now is trust and community. He recommended going back to the “people helping people” philosophy. The sense of community to emphasize is local ownership, local control and local decisions. In other words, leverage your credit unions local nature to build trust.

(2)    People

Colby recommended that you begin with a strategy that focuses on your team. Specific questions he said credit unions should ask include, why are we here and what’s our business. The biggest takeaway was that many credit unions say their greatest asset is people, yet how are they taking care of their employees financially? Do your words match your employees’ pocketbooks?

(3)    Focus

“Members are looking for guidance, solutions and credit with reasonable terms,” Colby said about lending. When it comes to deposits he said, “some members need to learn how to save, others are looking for asset preservation.” In other words, focus on your existing members first: both their lending and savings needs. He recommended finding loans to re-write and promoting “thrift” as a debt alternative. He suggested credit unions promote “diversification”: that your members should diversify their savings portfolio.

(4)    Promote

There are three things credit unions should celebrate, Colby said: your member successes, community investments and employees who made a difference. “Let your community know how you make a difference,” he added. Colby specifically cited a credit union that encouraged its employees to increase the members’ cash flow (through refinances, higher savings rates, etc.).

(5)    Plan

“In their strategic planning sessions, credit unions need to be forward looking and ask questions about their members,” Colby commented. “Who will your members be in five years and what will they need five years from now.” Credit unions that focus on planning now will define their success going forward.

So credit unions that build trust, encourage their people, focus on key products, promote loans and savings and conduct a strategic plan will overcome the current economic environment.