The issue on everyone’s mind today: Growth. Credit unions of all sizes, CUSOs, and even consultants and vendors serving the credit union industry are all wrestling with the struggle to grow. I am not going to recount overall industry growth rates or trends in the financial services industry. The growth challenge is most acute at the personal, individual credit union level among credit union CEOs, board members, branch managers and marketing people. Everyone is feeling the heat.
There is no magic bullet to growth. But there are some basic truths that can help as you look for growth in new accounts, assets, and product and service penetration.
The Basic Truths
* A strong brand is vital to communicating effectively with members and prospective members. It helps them quickly grasp who you are and what you can do for them. A clear brand identity with a fully integrated brand strategy is imperative for sustained profitable growth today.
* For new members to have a positive impact on the credit union they must bring more than a savings account and perhaps an auto loan. Meaningful new accounts include checking with direct deposit, debit card and drive them to use your e-services. Unprofitable accounts only add to operating expense.
* Credit unions experiencing impactful growth today are those that conduct and are successful at aggressive retail lending. Indirect lending (through car dealerships and other third parties) does not fuel profitable growth or long-term growth and in fact leads to long-term increased operating expenses and in some cases increased loan loses.
* Current members are the best source for asset growth. Cross selling is critical to successful growth. Credit union management and employees need to get over the idea that educating members on the products and services available to them is somehow unwelcomed or pushy. Over the next decade the number of credit unions in the U.S. will drop dramatically–the ones that survive will have a sales culture with a highly effective cross-selling backbone. Focus on increasing your product and service penetration.
* Growth costs money. You cannot do it with web tiles on your home page, statement inserts, cluttered branches and newsletters filled with copy. You must commit to an on-going, cohesive retail marketing campaign which will most likely consist of direct mail, digital messages and in-branch signs and statement receipts. In markets where it’s affordable television and/or radio offer strong awareness building. When allocating funds for any project you must ask if that investment will help fuel growth. If not, reconsider.
* Grow or die–and live it every day. Every employee must understand the importance of growth and the ways their position can contribute to growth and this effort must be tied to your brand strategy. Compensation, promotions and other rewards must have significant basis in contributions to growth.
* Don’t give up accounts without a fight. When a member asks to close an account sell to keep it. Set up accountable closed account processes and track/adjust accordingly.
* When new accounts come on board adhere to a schedule of core communications and sale efforts especially within the first 90 days of joining. When the account is opened your job has just begun!
* Very few credit unions employ successful business development reps. Bad or ineffective reps can actually hurt your brand in the marketplace by creating negative impressions of your CU. If you hire them, pay to attract effective sales professionals and demand results. Business development reps are only as good as they are managed!
* Convenience drives new account growth. Banks understand this and therefore the reason why banks are aggressive in expanding their branch networks. CU’s need to clearly communicate their e-services, Internet home banking platforms, shared branching and ATM networks.
Where The Bottom Line Lies
As more credit unions adopt community charters or otherwise expand their service areas focusing on effective growth opportunities becomes even tougher. Even with a community charter credit unions must hone in on key select employee groups and other narrow target market segments.
Bottom line: ramp up lending and market to support it aggressively with retail messaging and do not use template messaging from so called marketing groups and/or print houses–these groups water-down your brand and messages with cheap, cute, clever photos and clip art–focus on your core values and benefits.
Demand cross selling every day at every level of the organization. Increase core product and service penetration with a special focus on checking with direct deposit and debit card usage–drive members to use your e-services. If you don’t have the resources needed to grow look for cooperative partnerships or consider merging to achieve critical mass.
It’s a tough marketplace out there. The banks are more focused on new account growth than they have been in decades. Everyone is fishing in the same ponds. You need to be aggressive, committed, brand-consistent and demanding of your people.
Paul Lucas can be reached at paul<at>pauljlucas.com. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com