Five modest proposals
The only thing that’s stayed the same for credit unions is that things are changing fast. Sources of fee income are shrinking, expenses are rising, and margins are squeezed tighter than ever. Things are getting Weird with a capital “W”.
It’s time to
Think the unthinkable and ponder the outrageous.
“When the going gets weird, the weird turn pro” – Hunter S. Thompson
1) Annual Membership Fee
Sam’s Club and Costco do it. Why can’t credit unions? Just imagine all the lovely things your CU could do for your members with $50 in fee income from every member, every year. Pretty soon, the members who don’t participate enough would either bring in more business or hit the road. Of course, you’d better deliver that added value in a way people can see.
2) “Give me your tired, your poor, your huddled masses yearning to breathe free.”
More and more people have some bruises on their credit ratings these days. Invite them in with products designed for people with financial boo-boos — stored value cards, alternatives to payday lending, credit builder loans, small secured loans, safer checking, etc. Charge reasonable fees and manage risk, and you’ll find a lot of new fans — and very profitable new members.
3) Profit and Loss Reports
Once a year, send every unprofitable household (or member, if you can’t aggregate households) a profitability report. Explain the situation to them — here’s how much they’re costing their fellow members. All they need to do is bring the accounts they have elsewhere back to the credit union. Point out that a credit union is a service cooperative where everyone benefits the more they participate. Perhaps the profitable members get nice thank-you note and a dividend.
This much transparency is a radical change in current thinking. But it’s also a step back to our co-op roots, and a way to make it crystal clear to members that they’re not just customers at some faceless bank with a funny name. And besides — can you just imagine the type of red-carpet service a credit union could give if just about every member were profitable?
4) No More Penalty Fees
Punishment fees are the single biggest point of friction between consumers and financial institutions, and so far CUs are just aping what the banks do. Let’s look at the real costs of making members feel like angry children and Do Something Different.
5) Quadruple Your Marketing Budget
Let’s face it: credit unions are pretty much already near rock bottom in terms of cost-cutting, operating efficiency, spending freezes, mergers, and general belt-tightening. Worse, operating on the cheap damages your brand with skimpy member service, nickel-and-dime policies and fees, and lame, threadbare marketing efforts.
On the other hand, growth is an essentially unlimited process that benefits every member.
By making smart investments in marketing, you can grow your way out of just about any mess.
What kind of returns could you generate and what kind of powerhouse brand could you build and live with a quadrupled budget? If marketing is making money and winning members, it makes sense to any CEO to invest everything they can in marketing.
It’s up to marketers to show your work, track your results, and make sure their Boards, CEOs and CFOs understand that Marketing Makes Money.
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