This month I had the privilege of facilitating Linn Area Credit Union’s strategic planning session for the second year in a row. They are a $250 million credit union located in Iowa. While they are a top performer in many areas (loans, growth, ROA, etc.) I was most impressed with their approach to staying young. The national average for credit union membership age is 47. At Linn Area Credit Union it is 37.
You read that right—10 years below the national average. So how do they do it? I asked Alice Hagerman, Linn Area Credit Union’s vice president of marketing the following questions. I believe her insights will help other credit unions with this critical issue of reaching young folks.
(1) Why do you think Linn Area Credit Union has such a young average membership age when compared to the national average?
It’s a combination of many things. First, we have worked hard to attract the 16 – 22 demographic with our Plugged In program. We are very forward thinking when it comes to trusting young people on that first car loan, first credit card and first checking account. We are also quick to establish new types of technology that young people want, i.e., MyMoney for Facebook, Mobile Banking and text alerts.
(2) What strategic decisions have you made to help maintain that low membership age?
A big contributor to keeping our average age low is what we don’t do. We don’t focus on attracting Certificates of Deposit (preferring to attract funds through a high yield checking account) and we don’t put a lot of emphasis on the Senior Club. We avoid doing the bus trips, senior lunches and things that other area financial institutions do that attracts savers instead of borrowers.
(3) What are some tactical things you are doing to reach the youth population?
We teach checking account and credit classes at the middle and high school level (during which we hand out brochures about our Plugged In program). We have an active kid’s club for those up through age 12 that makes kids want to stay involved with the credit union. We advertise in high school newspapers (with ads that kids think are funny) and we send direct mail to those turning 16 years old (along with a separate letter to their parents) encouraging them to utilize the products we designed specifically for them.
(4) How have you structured your product offerings?
We give kids as young as 16 a lower limit credit card at the same low 9.90% APR rate we offer our best members. We bribe them by offering a free t-shirt if they take an online “quizlet” that explains everything about our credit card, how to use it and how important it is to their credit rating to make every payment on time. We also have a totally free checking account—with a “quizlet” that teaches them how to avoid fees, use a checkbook register and handle their checking account responsibly. In addition, we will make them a car loan at the same low rates as experienced members—most often without a co-signer if they have sufficient income.
(5) What tips can you give credit unions that want to reduce their membership’s average age?
Provide what young people want… free services, low fees, the latest in technology and, most importantly, treat them like they have a brain. Young people want to be trusted and respected – even if they’re covered with tattoos.
Thanks so much to Alice for taking the time to answer these questions. Hopefully her answers will help your credit union as well.
“The Sky is The Limit” is not just the theme for the upcoming Marketing & Business Development Conference. It’s the reality. If you are not signed up to attend, the first thing you need to do after reading this blog is register. (Full disclosure note: I am one of the speakers at the event)
If I wasn’t speaking I would certainly be attending. In fact, I’ll catch as many sessions as possible when my breakouts aren’t going.
Because of the economy many people are cutting back on training and marketing. But the opening session, “Tough Tactics for Tough Times: Winning More Business in Today’s Soft Economy” more than justifies the conference’s minimal costs. You want more marketing business? Then come to this session and conference and learn how to win in this economy.
I’m especially looking forward to a combined session with Matt Davis, a.k.a. the Credit Union Warrior, and Brent Dixon. These two are rock stars when it comes to social media and technology. Any time they talk, I want to listen.
If that wasn’t enough, then check out the cleanup hitter they are bringing in for the closing session: Greg Cangialosi from Blue Sky Factory. Blue Sky Factory is an industry leader when it comes to e-mail marketing. It’s always important to hear what non-credit union industry folks have to say.
This may seem like a shameless pitch to attend. In reality, it’s a challenge: I’m challenging you to come to one of the best conferences you’ll ever experience. Everyone always talks about return on investment (ROI) when it comes to marketing. When it comes to the ROI on the Marketing & Business Development conference, the return is a hundred fold. I guarantee you will walk away with strategic and tactical ideas you can implement at your credit union (no matter your asset size or experience level).
Don’t believe me? Then check out what the gang over at CUGrow has to say.
Every credit union executive knows the importance of having their members’ checking account. Aside from the income it drives, the checking account is often used as the primary financial institution definition.
Whether or not free checking will survive is still a question worth debating. Some financial institutions have already pulled the product; others are moving to a relationship approach; some are making the strategic decision to use free checking as a loss leader product.>
I recently had the opportunity to listen to a Raddon Financial Group webinar on how checking accounts were changing. (Full disclosure: Neighborhood Credit Union is a Raddon Financial Group client). They noted there were four checking decisions that credit unions need to address:
(1) Should you continue to offer free checking?
In today’s pressing environment, that is a legitimate question. If you’re not already asking that question as part of your strategic planning process you should. How you answer that question will help drive your product offerings.
(2) If “yes,” how do you take advantage of an evolving marketplace?
If you take the free checking account as a loss leader approach, then it has to do just that: LEAD. That means you must cross sell more products and services into those checking households. More likely than not, if a household only has free checking with you then it is an unprofitable household.
(3) If “no,” what changes should you make to your checking product line?
There are many types of different checking account products you can offer other than free. Raddon provided four ideas: a menu of checking accounts, a minimum balance fee, relationship pricing and behavioral/channel pricing.
(4) How will the debit card change?
Just like checking accounts, debit cards are changing as well. Raddon noted that it’s possible there might be an annual fee for debit rewards. They also suggested financial institutions generate enough transaction growth to offset revenue declines. And they asked the question, “Will PIN fees re-emerge?”
These thought-provoking questions from Raddon are ones every credit union needs to answer.