Young & Unaware
A CUNA survey reveals a troubling lack of CU awareness among young adults.
An ominous statistic emerges as credit unions ponder where future loan and membership growth will come from: Nearly 70% of nonmembers ages 18 to 24 are “not at all familiar” with credit unions—the highest level among any age group, according to CUNA’s 2011-2012 Survey of Potential Members.
The future doesn’t look particularly bright if so few young nonmembers know about credit unions. Clearly, credit unions have a Herculean task in front of them to “move the needle” on awareness.
Members in this age group account for only 9% of all credit union members. Although that’s up from 6% in 2006, according to CUNA’s 2011-2012 National Member Survey, there’s plenty of room for improvement in reaching this group.
Explaining the credit union difference remains a hurdle in building consumers’ awareness of credit unions. That’s reflected in credit unions’ tepid membership growth rate, which slipped from 1.4% in 2009 to 0.7% at year-end 2010—lower than the U.S. population growth of 1%.
Such results are disheartening given the wave of positive publicity credit unions have garnered in the past two years. Numerous media outlets have extolled credit unions as a better option than banks for consumers.
Patrick Adams calls this credit unions’ “bags fly free” moment, referring to Southwest Airlines’ popular branding campaign. During the 2011 CUNA Marketing & Business Development Conference, Adams, president/CEO of $194 million asset St. Louis Community Credit Union, urged credit unions to take advantage of consumers’ anti-bank sentiments.
It appears his advice has fallen largely on deaf ears, as only 33% of nonmembers are “very” or “somewhat” familiar with the services and benefits credit unions provide. And among young adult nonmembers, that drops to an anemic 3%.
Still, some credit unions are bucking the trend and achieving solid membership growth, even with tightly stretched marketing budgets.
Also, several credit union leagues or associations have created campaigns to boost awareness of credit unions in their states, such as:
- The “iBelong” program, launched by the Pennsylvania Credit Union Association;
- “Banking You Can Trust” from the New Jersey Credit Union League;
- “Own Your Money” and “Invest in America,” cooperative advertising programs implemented by the Michigan Credit Union League; and
- “For People, Not Profit,” the branding campaign kicked off in September 2010 by the California and Nevada Credit Union Leagues.
In February 2011, CUNA and several state leagues unveiled a new Web-based tool—aSmarterChoice.org—that helps consumers find credit unions to join and focuses on consumers’ needs, not credit union jargon.
The top five items nonmembers say they’d need to begin using credit union services are:
- More branch locations convenient to home (37%);
- More free ATMs (35%);
- Better information on services, rates, fees, and advantages (30%);
- Higher savings rates (29%); and
- Lower service charges and fees (25%).
Among 18- to 24-year-olds, the top factors in selecting a primary financial institution are:
- Financial stability, safety, and soundness (33%);
- Reasonable service charges and fees (30%); and
- Trust in the institution to do what’s best for the customer, not the bottom line (29%).
Next: Aiming for growth
Aiming for growth
Given that the proportion of members who are “future borrowers” (ages 18 to 24) is only 9%, opportunities for growth among this group are abundant.
To make inroads, credit unions must boost their appeal to this demographic group and target their messages and outreach efforts.
One obvious strategy is to convince current adult members to sign up their children for credit union membership. CUNA estimates there are more than 12 million nonmembers younger than age 18 living in member households.
Targeting young adults requires knowing their habits and preferences. Consider these findings from a 2010 Filene Research Institute study, “Big, Small or Online? Young Adults’ Evolving Financial Presence,” by researcher Rob Rubin of Facilitas, the organization behind BankSwitcher and findabetterbank.com:
- 22% of generation Y (generally defined as those born between 1981 and 2000) use an online bank as their primary financial institution (PFI);
- 40% say a recommendation from friends or family played a role in their decision to open an account; and
- Gen Yers place an immediate premium on account features and interest rates, but their long-term financial preferences are less certain.
Brent Dixon, young adult adviser for the Filene Research Institute, stresses that credit unions must go beyond “looking cool” to attract young adults.
Too many credit unions get caught up in the cosmetics, he says. Instead, the best way to attract and retain young adults is by providing products and services specifically geared to their needs.
Dixon advises credit unions to:
- Examine their products and services. Are they relevant to young adults?
- Tie communications about products and services to specific life stages and behaviors. Show young adults that your credit union has what they’ll need as they move through life.
- Set up a youth advisory group to influence the credit union’s culture and initiatives. Create an ongoing dialogue about what your credit union is doing right and what it needs to fix to serve young adults.
“A youth advisory panel would be a good sounding board for your advertising efforts,” agrees Philip Heckman, CUNA’s director of youth programs. “Its members could advise you on viral marketing—although they probably wouldn’t use that term—about how to identify influential trendsetters and enlist them in your efforts, and it could help you get word-of-mouth advertising.”
Even if it’s not a formal board, he continues, credit unions can always assemble an ad hoc group. “If it’s done properly, the members will not only critique what you’re proposing but also help you form your plans and create the materials.”
Although integrating young adults throughout your credit union can take time, even in the short-term credit unions can involve them in developing marketing plans, Heckman adds.
“Avoid top-down older adult-driven advertising planning,” he says. “Involve your target market in the construction of your strategies and advertising messages.”
Next: Market to Hispanics
Market to Hispanics
Hispanics continue to represent huge growth potential for credit unions. The U.S. Hispanic population stands at 50.3 million, according to the 2010 U.S. Census, or 16% of the total U.S. population.
It’s also a young group: The median age of Hispanics is 27 compared to 41 for whites.
About half of U.S. Hispanics have no relationship with traditional financial institutions, according to the Selig Center for Economic Growth. Credit unions can do more to reach out to Hispanics, and many institutions that already have outreach programs can improve upon them.
Translating marketing materials into Spanish and hiring bilingual staff are not enough, says Warren Morrow, CEO of Coopera Consulting, a subsidiary of the Iowa Credit Union League.
Morrow suggests small steps that can go far in boosting credit unions’ appeal to Hispanic consumers:
- Hire the right translator—someone who can translate your message culturally as well as linguistically. This way, you’ll ensure your message conveys what you intend.
- Walk into your branch as if it were your first visit and you spoke no English. What barriers do you see to transacting business at your credit union?
- Don’t overhaul your branch to make it Hispanic-friendly. You could actually make non-Hispanic members feel awkward.
- Post notices in your branch, newsletter, and website about Hispanic-oriented events and marketing promotions.
- Translate credit union hours on the front of the branch. It shows sensitivity to this group and makes a good first impression.
Some credit unions have discovered that offering remittances is a good starting point in building relationships with Hispanics in their communities.
JON HALLER is CUNA’s director of corporate and market research. Contact him at 608-231-4346.
- Coopera Consulting
- CUNA Marketing and Business Development Council
- CUNA’s business to consumer publishing department
- CUNA’s 2011-2012 survey reports
- National Member Survey
- Survey of Potential Members
- Credit Union Environmental Scan