Some of our favorite “shop talk” with fellow credit union marketers over relaxing beverages are tales of losing clients because we told them the truth.
You might say that one of our traits as a company (and, honestly, as individuals) is bluntness; we’ll say and ask about things that make people uncomfortable.
It’s a gift. Or maybe a curse.
And we’re okay with that. We’d rather work with credit unions willing to shake up the status quo and do amazing things. Sometimes you just have to rip that band-aid off the elephant in the room.
Too much truth in lending
One CU contacted us to discuss a lending marketing campaign to address two problems: member aging and moribund loan growth. Yet when we checked their financials, they were less than 50% loaned out, with over 1/3 of their assets in investments, and a near-zero delinquency rate.
In other words, they were sitting on a massive amount of capital, but could not bring themselves to take on any lending risk whatsoever. They would only lend to older, high-income members with immaculate credit at rock-bottom rates.
Couple that with strong pressure from those same older members to maintain high savings and certificate rates, and you have a recipe for not a lot of loans and nonexistent margins.
However, the majority of their potentially very-profitable members and potential members were younger, had decent steady income (just not high income), and many had a few credit dings. They had a huge pool of potential high-margin borrowers sitting right there on the doorstep. Just open the door a little.
So of course, a risk-based lending program is the first thing we asked about, and…
< crickets >
We never even got a return phone call. We may have detected a single far-off horrified shriek shortly after we sent the email.
The wrong side of town
Another CU we had been working with off and on had deep roots with blue-collar workers in a good-sized midwestern town. Their downtown branches were a little threadbare but busy.
Over the years there were a few attempts at targeting their actual members; local, middle to lower-income working people. However, the promotions and products seemed to quickly disappear without much effect.
We then found out that management and the Board shared a fantasy of massive growth with little investment or risk by targeting their friends and neighbors, high-income college educated suburbanites. Yet the credit union had no branches in the suburbs, no history with this demographic, and by this time their tech was lagging.
We (very diplomatically) pointed out that you’d need Budweiser levels of marketing funding to fuel growth by poaching high-income people in places where you don’t even have branches. Why not introduce and price products tailored for the members and potential members you already have where you already are?
And, well… crickets again. That CU was merged into a larger one a few years later.
The ostrich approach
Another CU told us they were doing quite well at the moment, and hired us to research their internal and external brand perceptions and make recommendations for taking them to the next level.
When we started scratching at the surface a bit, it turned out growth had recently slowed dramatically and they were facing multiple serious long-range problems.
This included deep-seated issues with employee satisfaction and retention, member aging, and stubborn reluctance to serve younger and non-traditional members, lopsided loan portfolio, among many others. All of these were very fixable, but it would take actual change and not just an “Everything is Awesome!” brand campaign.
When we presented our research findings and recommendations, the temperature in the room dropped 30 degrees. Turns out this CU’s management wanted to hear they were brilliant and could just keep doing what they were doing without changing anything.
Oops, we did it again…
The power of plain talk
Of course, there’s a big plus side. Our bravest and most loyal clients appreciate and embrace the direct approach. We’ve helped credit unions all over the country fuel long-term, sustainable growth.
If a client calls to discuss a new idea, strategy, or problem, we’ll kick it around thoroughly, check every angle, brainstorm even more possibilities, and make recommendations. We can’t hold back. And we don’t want our clients to hold back, either – we can take it just as well as we dish it out.
It’s not because we’re that arrogant.
It’s because strong credit unions are that important.
Far more important than anyone’s ego or resistance to change.