Marketing Challenge:Overcoming Consumer Inertia

“In the absence of force, a body either is at rest or moves in a straight line with constant speed”
—Newton’s Law of Inertia (also referred to as Law of Motion)

Isaac Newton was not a marketer, but his first law of physics (see above) is also a marketing truth. The Law of Inertia as it applies to marketing means consumers will rest (stay with their current provider) unless some force compels them to make a change. When it comes to getting consumers to switch from their current financial services provider to your credit union the biggest obstacle you face is just sheer inertia: folks don’t like to change (especially things that might involve money).

I was visiting recently with Neil Goldman, senior partner with Member Research, about our Net Promoter Score. Over the course of our e-mail exchange we discussed how hard it is to get potential members to join (or even try) your credit union. The major obstacle: there is a great deal of inertia built into consumers.

Neal said, “Inertia has a HUGE impact on financial service usage. You’d be amazed what I hear consumers say in focus groups about what they’ll put up with from banks in fees and poor service before leaving. As such, the big boys have tremendous inertia; we have to make it both compelling AND exceedingly simple for consumers to move to the credit union. Consumers now don’t generally see that, so they continue to pay through the nose to banks.”

So how do you overcome consumer inertia? Here are a few suggestions:

(1) Create a compelling reason to do business with your credit union—Why should someone join your credit union? You have no more than 30 seconds to answer that question. And the answer better not be “service” because everyone else is saying the same thing.

(2) Provide an offer to switch—Since so much inertia is involved you must incent people to move. But be careful: while having an offer plays a role consumer research shows it takes at least $100 (or much more) for people to change financial service providers. And even then, those that switch just for money are less likely to be loyal. After all, there are so just so many cup holders and toasters one person can own.

(3) Market consistently—Marketing is not a onetime promotion. In fact, marketing is now 24 hours a day, 365 days a week. Someone may not join your credit union because they saw your billboard, watched your TV commercial, drove by your branch, heard your radio ad, received your direct mail, saw your social media efforts, or visited your booth at a community event. However, all those impressions (with a consistent message and brand) put together over the course of time could cause them to act.

(4) Start young—Since we know consumers don’t tend to switch their financial institutions (unless they get really, really mad!) then the most strategic thing you can do is to be their first financial institution. In other words, you become the inertia: the service provider from which they won’t switch. Get those teenagers (yes before college) their first checking account, auto loan and credit card. Use inertia to your advantage.

As blogger John Dodd said on Make Marketing History, “you have to do something remarkable to get people to change their habits.”

Best Way to Prepare Your Marketing Budget: Task Approach

Whenever I speak about marketing topics across the country, invariably I’m asked how much should a credit union spend on marketing. I always have a three word answer: “More, much more!”

But seriously, what is the best way to prepare a credit union marketing budget? In this post I’m going to first give you three ways not to prepare your 2010 marketing budget (although I see too many credit unions doing  it these ways):

(1) Percentage Increase From Previous Year

This is the laziest way to prepare your budget. You just see what you spent last year and increase it five or 10 percent. If you are preparing your marketing budget with this approach you are not thinking strategically.

(2) Dollars Per Member

This is not the best way, but it does serve as a useful guide. I’ve seen these numbers all over the board (as low as $5 per member to as high as $30+). There are many problems with this approach, including that many of your competitors (i.e. banks) are probably spending much more than you are. Of course, the biggest negative with the dollars per member approach is that every credit union is different (see section below about “other factors”).

Even if you don’t use this approach (and I recommend you don’t) you should do the math and know what your ratio is. A great resource when comparing marketing budgets is’s Marketing Budget Report (if you are not already a member, it is free to register). This a “must-have” when your CEO and CFO want to start cutting your marketing budget. It is the single best source for marketing budget comparisons.

(3) Percent of Gross Income

This is a little bit better. Community banks spend an average of 1% of their gross income for marketing. You want to multiply your credit union’s gross income by .01 and you’ll have a benchmark used by many banks (and
some credit unions). Of course one of the problems with this approach is that it is one size fits all (every credit union is unique). And keep in mind this is gross income (not net).

So what is the best way to prepare your 2010 marketing budget? The Task Approach works best.
In this approach, the marketing budget is determined by objectives & tasks outlined in the marketing and strategic plans. It is not based on spending of past years or on competitors, but rather on what needs to
be done to accomplish your current and future objectives.

The task approach is the most strategic way of budgeting. As credit union marketing guru Constance Anderson says, “Budget for where you want to be, not where you are today.”

With the task approach, the executive management team and board determine what overall strategies the credit union wants to undertake. Then tactics are assigned to those strategies. After strategies and tactics are in place then you put the pencil to paper and determine the costs.

It’s at that point you
may have to pick up your CEO and/or CFO after they’ve passed out or fallen from their chair. Don’t worry—when they see the price tag involved for the strategy and tactics and say the credit union doesn’t have the money you then ask a very fair question, “Which one of the strategic initiatives do you not want to accomplish?”

The bottom
line is you may not be able to budget for all your credit union wants to accomplish. For example, the leadership team may feel the credit union needs strategic initiatives in youth marketing, Hispanic outreach, social media, overall branding and branch marketing. However, if each of those will require a $100,000 investment ($500,000 total) and the reasonable budget at this time is only $400,000 then the team must determine which one of the five strategies should be cut.

In other words, it is best to focus your budget instead of spreading your budget.

Keep in mind other factors to consider when determining your 2010 marketing budget:

•What economic conditions your credit union is facing—For example, if you are in a capital raising mode you probably will not be spending as much on marketing.

•What type of organization your credit union is—Every credit union has a culture; it might be a marketing/sales culture, a cost-cutting, culture, etc. Your culture plays a factor.

•What type of credit union—This is perhaps the biggest factor when determining your budget. For example, community charter credit unions will have to spend more on marketing than non-community charter credit unions. In fact, you can’t be a community charter credit union on a single-sponsor or SEG-based marketing budget.

What other suggestions do you have for preparing your marketing budget?

It is not just how much you are spending on marketing, but rather how your budget aligns with the credit union’s strategic tasks.

Marketing To Females: Is Mom Your Missing Segment?

Marketing To Females: Is Mom Your Missing Segment?

Note: This post is compliments of Colleen Cormier, the owner of Cameo Marketing. I’ve worked with Colleen for a number of years and she is a wonderful marketing executive, writer and person.

When Mark sent me a list of Top 10 Online Activities for Moms released by the Marketing to Moms Coalition, it piqued my curiosity as both a mom and a marketing executive. From a mom standpoint, I was curious to see if my online habits matched those of the survey respondents. They do. From a marketing standpoint, I wanted to capitalize on the best opportunities for marketing to women.

The survey revealed that American moms with children 18 and under spend about three hours a day on the internet. Their most common activity is checking and sending e-mail. When I thought about how many e-mails I get daily from retailers, it dawned on me that many marketers are still missing the boat when it comes to marketing to females—especially moms. I think it’s because they don’t truly understand us.

Are you familiar with commercials promoting AT&T’s rollover minutes? They always feature the same mom lecturing her husband and teenage sons about their careless treatment of rollover minutes, which never expire. These commercials are a favorite among the moms in my social circles because we can relate.

My friends and I are the mom in these commercials. We are willing to make ourselves and our families just a little bit crazy sometimes in the name of practicality. It’s what we do. Most moms—whether they make a salary or not—are their family’s CFOs. They make the budget, pay the bills, do the shopping and maintain the checking accounts. The every day decisions are usually up to them.

I’m not sure financial institutions understand this. I get more solicitations from them than anyone else, and they have yet to understand that my checking relationship doesn’t hinge on a free DVD player or even random cash. If they really want a mom’s business, they should:

Promote Value and Savings

I’m a sucker for a sale and so are most moms I know. We buy expensive toys on clearance after Christmas and save them for birthday parties of our kids’ friends. We fill our freezers with chicken breast when it goes on sale. We transfer credit card balances when the offer is zero or low interest for a year or more. Show us how you can save us the most money.

Promote Benefit

We’re almost always willing to sacrifice our own needs for the needs of our family. If you can convince us your product or service will benefit our families, we’re more inclined to listen and buy. What is the long term benefit of a relationship with your financial institution?

Promote Convenience

When I founded the local moms club in my town, I bypassed my own credit union to set up an account at a bank with a drive-thru. Any treasurer in the group would have a least one kid and would not want to lug a kid or a baby carrier anywhere just to deposit some checks. Promote convenience services to busy moms.

Moms are worth more than $2.1 trillion to American brands today. It’s worth your while to get their attention.