For the first time in three years, Partners Federal Credit Union, Burbank, Calif., saw a positive net membership growth of 2.2% in 2010—about triple the national credit union membership growth rate of 0.7%.
Partners Federal, $938 million in assets, is just getting started; it’s aiming for 4.5% membership growth for 2011. The effort revolves around one core principle that drives Partners Federal: Provide top-quality service based on solid information about members’ needs.
“You need to find your unique tie to the community you’re serving—your unique proposition,” says Mike Terzian, the credit union’s vice president of marketing and business development.
Terzian believes this approach can work for any credit union, with any type of membership base. Partners Federal has one sponsor—The Walt Disney Co.—which is made up of about 200 different companies. All Disney employees are known as “cast members,” including the people who work at the credit union.
“So our unique proposition is that we’re cast members serving cast members,” Terzian says. That means the credit union staff promise to deliver the service quality that fellow cast members are used to giving and receiving every day on the job.
“The Walt Disney service level is legendary,” Terzian explains. “So the bar is already high, and we have to provide that same quality of service. “
It’s a tall order but essential in the current market. Opportunities for credit union growth remain plentiful, according to CUNA’s 2011-2012 Survey of Potential Members, but the window of opportunity could be narrowing as consumers’ opinions of banks begin to bounce back from record lows.
Where’s the growth?
Credit union membership grew to nearly 92 million at the end of 2010, with about one-third of U.S. adults belonging to credit unions. Still, stronger membership growth remains an elusive goal.
In the 1980s, annual average membership growth rates were about 4%. They’ve been declining ever since. In recent years, the growth rate slipped from 1.4% in 2009 to 0.7% at the end of 2010.
Such results are especially disheartening in light of the wave of positive publicity credit unions garnered in the past two years. Numerous media ranging from The Huffington Post to The Wall Street Journal extolled credit unions as a better option than banks.
The sluggish membership growth rate stands in contrast to nonmembers’ perceptions of eligibility for credit union membership. Among nonmembers, 81% say they either know they’re eligible or could be eligible for membership, according to the Survey of Potential Members. That compares with 72% in 2008.
The gap between membership and eligibility is evident in the 18-to-24 age group. In this group, 90% of nonmembers say they know they’re eligible or could be eligible to become members. That’s up from 84% in 2008.
If so many consumers know they are or might be eligible to join credit unions, why aren’t they acting on that knowledge and becoming members?
Consumers’ familiarity with credit unions’ unique benefits and not-for-profit business model might be part of the problem. Among nonmembers, 33% are “very” or “somewhat” familiar with the services and benefits available at credit unions, the same proportion as in 2009. Among young adults, that drops to only 3%, down from 25% in 2009. Levels of familiarity have hit rock bottom among young adults at a time when credit unions have been getting a lot of positive media coverage.