Self-disclosure time: I serve as a contributing author for the E-Scan
The Credit Union National Association just released the 2012-2013 Environmental Scan. The E-Scan offers insights in 10 primary areas affecting credit unions, including legislation, compliance, staffing 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, “Marketers are trying to keep Bank Transfer Day momentum rolling, retain the recent wave of new members and explore new channels for increasing brand awareness. This involves layering new communication channels with traditional marketing media to reach the right person, with the right offer, at just the right time.”
There were many strategic issues we could have examined relating to marketing but we mentioned five key areas. Below are some excerpts from the key findings.
(1) Member retention
While member growth is welcome, member retention is far more important. Now that most credit unions have experienced this wave of new members, the more urgent question becomes: how does my credit union retain them? “The biggest challenge credit unions face in growing existing member relationships is apathy, “says Ron Shevlin, senior analyst at the research firm Aite Group. “People just don’t care that much about their choice of financial providers to make the most informed decision.”
(2) Marketing technology
We live in a technology-driven society—where gadgets and apps dominate and access to information is immediate. Technology has put consumers in control of when and how they want to communicate. Credit unions must adapt to this new environment by changing the way they market to members and non-members. Specific marketing technologies credit unions should consider include updated and interactive websites with live Web chat, video and instant account opening; blogs; social media; mobile marketing; QR codes, and search engine marketing.
(3) Video marketing
There are multiple reasons for using videos in your marketing efforts. Videos can support your brand, drive traffic to your website, engage members and put a personal face to your credit union. “If done right, video is an effective way to compliment what print and traditional media have to offer,” says James Robert Lay of PTP New Media. “Video can emotionally engage and connect with people.”
(4) Advanced sales training
Many front-line sales training efforts focus on only the basic skills: using the member’s name, making eye contact and engaging in conversation. While those skills are necessary, it’s time for credit unions to go beyond the basics. An advanced sales training approach develops more sophisticated sales skills among your top performers, business development staff and branch managers.
Thinking strategically about differentiation isn’t as easy as it seems. Credit unions must avoid “cliché differentiation.” Is there a bank or credit union that is not about service or serving its community? Try answering the question, “What makes our credit union different” without using the words service, people, or members. Differentiation is critical, but your credit union must work hard and dig deep to truly define it.
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?
These were just a few snippets—there is obviously much more detail in the E-Scan itself. 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. In addition to the report itself, you can also order the full E-Scan package, which includes the E-Scan report, the E-Scan Newsletter, the E-Scan DVD, the Strategic Planning Guide and the E-Scan Research & Advice Portal. When it comes to strategic planning, there is no better resource or tool your credit union can use than CUNA’s Environmental Scan.
According to a recent report from author and consultant William Schiemann, only 14% of employees have a good understanding of their company’s strategy and direction. Another poll from Gallup indicated that only 26% of employees are “engaged.”
No matter how you slice the numbers, many of your employees don’t care or don’t understand your strategic plan. You know, that document you spend hours talking about and producing. The one that defines your differentiation and drives your success.
Let’s be honest: if your employees don’t “get” your strategic plan, it is doomed to failure. So how do you get your employees to understand your strategy? Here’s a hint: it’s not by going branch to branch and telling them your strategy after the planning session—it takes much more effort. Here are four tips to increase employee interaction when it comes to the strategic planning process.
1) Involve employees—From the very beginning, get employees talking about your strategic plan and what your credit union should do. You can survey the staff, hold town hall type meetings or just chat informally with individual employees. We often involve managers (and that’s a good thing) in the planning process. But to truly gain staff buy-in we need to take that involvement to everyone in the organization. Questions to ask the staff include, “what should we accomplish next year,” “how can we improve,” “what new products should we offer,” and “if you were the credit union king/queen what would you do?”
2) Engage employees—It’s not enough just to ask employees questions; we need to actually engage them in the process. You might want to include a front-line staff or two in the planning session (someone young with a lot of ambition). Doing so means they have a voice. You could also conduct mini-planning sessions for each department. Another idea is to give each strategic initiative to a group of employees and have them brainstorm the tactics for achieving the goal. You can even have them perform a skit or make a video to illustrate how to live it.
3) Challenge employees—A good coach will sometimes get in a star player’s face and challenge them to live up to their talents. Don’t assume the worst of your employees; assume the best. Let them know you’ve set stretch goals for the year. Let them know you have high expectations. And while challenging them, go deep with the strategic plan. Don’t just lay it out and say this is it: tell them this is the mountain we are going to climb and we want you to go with us. People are smart and the more you communicate the plan the more likely it is they will understand it.
4) Train employees—Most credit unions use an outside facilitator to help them with their strategic plans. And a lot of these facilitators are also speakers who could motivate your staff. You might be able to get a discount from a speaker if you use them for your planning session and for a training event. I’ve even had some clients dovetail a strategic planning session with a training session (where I do one day of on-site staff training and then facilitate the strategic planning session the next day). This maximizes the credit union’s resources.
As the report said, “No organization can perform at its best with only 14% of its people rowing in the same direction.” Do you want your employees rowing in the same direction with your strategic plan? Then involve them, engage them, challenge them and train them.
Many consumers, and especially Apple fans and tech-geeks, are aware of (if not enamored by) Siri. The personal digital assistant built into the latest iPhone 4S model, Siri can help its owner with a variety of tasks, from auto dialing and web searches to scheduling reminders and setting wake-up alarms. Siri also has a perky/quirky side, as evidenced by her (the American version features a default female voice) unusual answers collected at various websites.
So, have we finally entered the age of the tricorder, the fanciful gadget first envisioned by Star Trek creator Gene Rodenberry in the late 1960s? With Siri, is mankind now fully connected to the grid in a way never before seen? Fears of SkyNet domination aside, what kind of questions might your members ask of your credit union if they could plug into it at any time, like Siri?
Pondering the answers can help guide us towards better answering (and anticipating the answers) members and potential members expect of our credit unions.
XYZ Credit Union, please tell me …
- What are your Saturday lobby and drive-thru hours?
- What are the current CD and savings account rates?
- What are driving directions to your main office?
- What is the minimum deposit required to open an account?
- Do you offer a kids club savings and education program?
- Do you have an 800-number?
- Who can become a member?
- Are you on Facebook? Twitter? YouTube?
- Do you offer any business accounts or services?
- Are any of your materials available in Spanish?
Hopefully, every member of your staff, from management to back office and front-line are so well-versed in your credit union’s brand that they can answer any of these questions (except maybe an on-the-spot recitation of all your current rates). What we can all strive to do is be our credit union’s version of Siri, always ready with the answers.
If you can provide these answers, minus Siri’s sometimes dangerous flirtations with digital attitude, your members and potential members are more likely to see you as the one-stop shopping source for all things financial. Let’s just avoid handing out the credit union self-destruct codes (a little extra perk Siri offers).
How much debate actually goes on in your credit union? I don't mean arguments or personality conflicts. I mean debate. In other words healthy discussions.
As Ray Davis says in Leading for Growth, "Do you have a lot of vigorous debates in your company? If not, people are not empowered." Credit union executives everywhere talk about how they want empowered employees. Really? Does that mean you are okay if they disagree with you or have a different opinion?
Here are some places inside a credit union where we need more debate:
1) Board rooms—all board members should not think alike. In fact, they should all have unique perspectives. The more diversity in a board, the better decisions they tend to make. A strong board will actually disagree with each other from time to time.
2) Executive and management team meetings—if every senior executive always agrees with the CEO then there is a problem. Make sure you are not allowing "group think" to take over your meetings. Here's a tip: on a particular discussion topic the CEO should give their thoughts last.
3) Planning sessions—speaking of group think, let's talk about your strategic planning session. This is one place where debate is paramount. What projects should we undertake? Where should we spend our resources? Who should we target? Odds are, not everyone will agree on those answers. And that's a good thing.
4) Individual departments—the people working for you should not be like you. Hopefully you hired for your weaknesses and not your strengths. If that's the case then in your department your employees will have different ideas. Embrace their suggestions: even if it wasn't yours.
When it comes to debates inside your credit union keep these ground rules in place:
- Never make it personal (keep everything at the business level)
- Cover each other's back after the meeting (if it's a group decision and you disagreed with the group don't grumble to others about it afterwards)
- Move on (don't hold a grudge)
- Remember that debate is healthy for an organization (different perspectives lead to better results)
Having a strong credit union means having strong people. If you have strong people that means they won’t always agree. But an organization full of “always agree” and “yes men” isn’t healthy.
Some people flee from conflict while others embrace it. But true and healthy debate is not really conflict. It's a way to improve your credit union.
“Credit unions must see themselves as relationship managers. As relationship managers, credit unions better position themselves to become members’ primary financial institution.”
While there is a big rush today to get more new members, one marketing strategy your credit union may want to focus on is getting more from your existing members. Most marketing experts estimate it is eight to ten times easier to expand a relationship with a current member than it is to acquire a new member. Just think about it: what would happen if every one of your members just added an additional product or service per household? Odds are, your net income would skyrocket.
Credit unions must get their members to go beyond just having a savings account and strive to become their members’ primary financial institution. “Financial institutions that make retention one of their top three priorities often enjoy deeper relationships, steadier growth and clearer focus on the core business,” says CUNA’s E-Scan.
According to CUNA, here are the odds of your credit union losing a member based on product usage:
- 2 to 1 of losing a member if they only have a saving account
- 10 to 1 of losing a member if they have savings account and a checking account
- 20 to 1 of losing a member if they have savings account, a checking account and a loan
- 100 to 1 of losing a member if they have savings account a checking account a loan and any fourth product
Product penetration and member retention are directly linked together.
Two steps your credit union can take to going beyond just having your members’ savings account are:
1) Offer relationship pricing
2) Get sticky products in their hands
Offer Relationship Pricing
Relationship pricing is rewarding members who do the most business with you with special deals. The more business they do, the more profitable they are and better deals you give them. For upscale members, you might take away fees in exchange for higher balances and offer discounted rates on a loan.
TowerGroup Research showed that 70% of U.S. consumers would like to have all of their accounts at one financial institution.
“We see relationship pricing as rewarding those members who participate the heaviest in the cooperative based on their relationship with us,” says Eric Gagliano, senior vice president of MarketMatch. Prior to joining MarketMatch, Gagliano helped launch relationship pricing at River Valley Credit Union in Ohio. “We are rewarding members for their business,” he added.
Get Sticky Products in their Hands
A “sticky” product means something that “sticks” with the member in such a way that it has staying power with them. Examples of sticky products include a checking account, bill payment and a mortgage.
Having a checking account is still the classic definition of being a member’s primary financial institution. The challenge with that, however, is that many households now have multiple checking accounts. So you could have the members checking account and still not be their PFI. Having the checking account is just the beginning: you also want direct deposit and a minimum number of transactions.
Bill payment is especially important because you have to really upset the member before they will go through the trouble of making all those changes. In a recent Wall Street Journal article, a Bank of America executive noted, “Once a customer goes through the trouble of setting up electronic bill payment, he or she is 80% less likely to switch loyalties.”
A mortgage is a relationship type of account. You have additional opportunities to market your other products and services. One financial institution had a “3M” strategy: they wanted all their customers to have a money market, a mutual fund and a mortgage.
If all you have is a member’s saving account, you really don’t have their business. Offering relationship pricing and getting sticky products in their hands can take your members beyond just having that savings account.
This article first appeared in the Texas Credit Union League's Lone Star Perspectives.