CUs’ targeted, relationship-based marketing campaigns are bearing fruit.
Many consumers are redefining value, postponing purchases, trading down, and negotiating harder at the point of sale. Instead of reacting by cutting marketing budgets, many credit unions are successfully launching new products and marketing campaigns.
Marketing strategies are more important than ever, CEOs concur, to educate members and potential members about credit unions’ value-added services and products.
More marketing dollars
Challenging times bring new opportunities at $1.1 billion asset Michigan Schools and Government Credit Union, Clinton Township.
Peter Gates, president/CEO, explains the credit union’s marketing approach in terms of volatile economic times. “If there’s one word that sums up our marketing and sales strategy right now it’s ‘relentless,’” he says. “We’re using all our tools to increase our market and product penetration.”
The credit union’s persistent marketing effort is paying off. “Through the end of May, we saw a 22% increase in our consumer-secured loan volume compared with the same period last year,” notes Gates. “Our unsecured and Visa loan volumes also increased by 42% and 26%, respectively.”
By contrast, the credit union’s mortgage loan volume dropped. This decrease—combined with a decrease in its overall portfolio—yielded overall loan growth for the period of 2.3%, Gates says.
Since several area banks failed last year, the credit union has stepped up marketing in those geographic locations.
“Members and consumers are frustrated by the volatility of the market and the instability of the banking industry,” says Gates. “They’re looking for a safe place to do business. We’ve seen unprecedented growth by targeting customers looking for new banking relationships.
“We know that in one particular area where there was a bank closure we opened over 1,000 accounts during several weeks following the closure,” he explains. “That’s about a 33% increase in membership for that office.”
Another recent strategy focuses on direct selling at the member service desk. “Employees scour every credit report and use intelligence from credit reporting agencies to identify loan opportunities,” he says. “Then the credit union provides incentives for originating loans. This gave one of our best producers the opportunity to win a Caribbean cruise.”
Targeting the ‘talkers’
Northwest Resource Federal Credit Union, with $90 million in assets, is intensifying its focus on growing relationships with current and prospective members.
“Our marketing budget has remained the same for three years, but now we’ve narrowed our scope,” says Charlotte Shinn, president/CEO. “We’re spending more on building relationships in neighborhoods.”
The Portland, Ore., credit union is becoming more data-driven. Each of its 6,000 members has an average of 2.4 credit union products. The credit union introduced a rewards program in 2009 that tripled new credit card account applications in the first six months.
“Nineteen percent of our members have credit cards,” says Shinn. “Since 60% are probably eligible, we want to increase that to 25%. If members don’t have Visa cards or they don’t use them regularly, we send them educational pieces by mail and e-mail.”
In 2009, Northwest Resource Federal began strategically marketing to downtown Portland businesses and neighborhoods where credit union branches are located. “We used to send coupons to people moving into the area. Now we’re targeting the ‘talkers’ by working with businesses to get people talking about us,” Shinn says.
The credit union created awareness at businesses such as pet hospitals, restaurants, and bike shops. “We do bike loans and finance bike accessories at a 7.5% rate,” says Shinn. “We have only nine bike loans. That’s not huge, but it has resulted in huge online discussions about the fact that we do these types of loans. That counts for a lot.”
In another awareness campaign, Northwest Resource Federal gives gift cards to random wait staff in neighborhood restaurants. The cards include this message: “Northwest Resource Federal Credit Union would like to buy you dessert.”
Awareness campaigns like these get the conversation started, says Shinn. Most of the credit union’s new business comes from referrals. “About 75% of new accounts are referrals, so we want to make sure our services are referable,” she says. “The positive things people say about you are powerful.”
Three focus areas
Maine State Credit Union, Augusta, didn’t curtail marketing spending during the recession.
Instead, it identified three focus areas for expanding and promoting credit union products and services: the convenience of shared branching, Maine State’s credit card program, and its mortgage portfolio.
“We chose not to pull back marketing dollars, because our capital position is strong,” says Normand R. Dubreuil, president/CEO. “We did spend more resource time and money, however, communicating to members that their funds are insured to $250,000 and that the credit union is safe and sound.”
The $298 million asset credit union also promoted its newly relocated branch. “This was a great move on our part,” Dubreuil explains. “We’ve been rewarded with the fruits of our labor with exceptional growth at the relocated branch.”
The credit union also recently released a new product—the Advantage Checking account, an interest-bearing and rewards checking product, which pays 4.07% annual percentage yield.
“We opened 1,133 new accounts in nine months with new deposits of $11.6 million, as of December 31, 2009,” says Dubreuil. “And as of May 31, 2010, we had 1,428 accounts with a balance of $15.8 million. That’s an amazing 37.25% growth as of December 31, 2009, and 44.5% growth in our overall checking account balances as of May 31, 2010, in an area that has been stagnant for years.”
This year, Maine State decided to refresh its brand. “We knew it was important to send a message regarding our image during these volatile financial times,” notes Dubreuil. “We’ve lightened up our marketing efforts and now use the tagline, ‘A better place to…’ and fill that in with messages like ‘put your money,’ ‘get a loan,’ and ‘get a mortgage.’”
Maine State is asking for more feedback from members. “We can no longer assume members want a product or a service—we need to get input from them,” explains Dubreuil. “Feedback from members drives our marketing decisions.”
The credit union also is developing return on investment components to quantify its marketing success. During tight economic times, says Dubreuil, it’s “important to get the biggest bang for the buck from our marketing dollars.”