Credit Unions Just What Consumers In A Recession Ordered

In the last year, the subprime issue has upended the mortgage market; numerous trading firms and banks have declared huge losses, and the dollar’s value has even dipped below the Loonie. Americans are overwhelmed with this financial upheaval and are seeking stability and credibility.

Luckily, credit unions are just what the doctor ordered. Credit unions have long since toiled in the shadows of the flashier financial organizations, quietly and effectively serving their members, charging lower fees and offering better rates. Finally, people have a true appreciation for the solid, conservative approach that has lead to the prosperous 100-year history of our industry. I liken credit unions to Warren Buffett, who many criticized when he eschewed investments in the high-tech sector for companies like Dairy Queen and GEICO. Today, Warren Buffett’s conservative approach is lauded throughout Wall Street, and he continues to reign as the “Oracle from Omaha.” As a matter of fact, his company’s stock, Berkshire Hathaway, has returned an average of 20% over the past 20 years, dwarfing many others with its solid, consistent returns.

Likewise, credit unions can stand on a firm foundation of achievements, with nearly 90-million members and more than $750 billion in assets. In addition to our solid financial management style, our commitment to member service has also been a key factor in reaching these outstanding results. Going forward, we must strike a fine balance on continuing to serve our existing members and attracting new ones. As Marshall Goldsmith, author and featured speaker at NAFCU’s 41st Annual Conference and Exhibition, so wisely captures in his book, “What Got You Here, Won’t Get You There,” we must build upon our strengths to reach out to new markets. Our marketing and branding efforts should reflect the new “Web 2.0” reality and the changes in demographics that will provide us with a wealth of growth possibilities.

According to CUNA Mutual, retiring boomers represent $46 trillion in assets, $17 trillion in investable assets and $489 billion in IRA rollover dollars. Credit unions must work diligently to keep these members happy as they move into their retirement years. But we have to recognize that today’s retirees are not sitting on a porch. Many are starting new businesses, traveling the world or taking up mountain climbing. So we have to adjust our paradigm to suit this segment of our members’ needs. Security, reliability and convenience are important qualities to these members but in different ways from retirees of yesteryear.

In terms of younger members, research indicates there are roughly 78 million people born between 1977 and 1995 who make up Generation Y. Yet statistics also indicate that only 23% of credit union members are between the ages of 18 and 34. Researchers have found that this group responds to empowering, authentic messages that tie in with a connection to community and social responsibility. This group also seeks convenience and reliability so online access to accounts and wide network of surcharge-free ATMs work for them. But in addition, you might want to have a MySpace page, produce a YouTube video or create an online community through a blog to keep them interested.

The Hispanic market also offers a wealth of eligible members. There are more than 45-million Hispanics in the U.S., with a median age of 27. They represent the fastest-growing minority, and many of them are starting small businesses at an increasing rate. They, however, have varying levels of financial literacy, and building their trust takes time. So “word-of- mouth” recommendations, greater community involvement and financial education programs might go further to develop this market.

So how do you successfully brand your credit union? Ask yourself what distinguishes your credit union from your competitors. Your response should be compelling, distinctive and bring value to your existing and prospective members. Management expert and author Tom Peters defines it as a “feature-benefit” model. According to Peters, every feature (or as in the case of credit unions, product or service) should yield an identifiable and distinguishable benefit for their customer or client.

Over the years, companies have successfully grown because they see their brand as evolutionary. Coca-Cola, McDonald’s, Honda and Nike have managed to continuously develop their brand. Today, Nike does not just manufacture shoes. Nike brings its slogan “Just Do It” to life through online training programs and a customized shoe design program. The other common characteristics of successful branding are consistency, reliability and a satisfying experience. McDonald’s, Honda and Coca-Cola have been able to offer a variety of products for different consumers, but the core element of what they offer does not change.

Fortunately, credit unions have some of their own consistent truths that serve as a great foundation for any branding effort that you may want to do locally.

Everybody Loves Their Credit Union. Every time I mention where I work, every single person states, “I love my credit union.”

Solid History. Funds in credit unions are insured, and credit unions have never cost taxpayers a penny in losses.

Members Always Come First. Being member-owned and operated means member satisfaction is a top priority for us.

Profits Are Returned To Members. Our competitive rates and low fees are just one of the ways our members benefit from our not-for-profit structure.

In closing, it is a “brand” new day for credit unions. There has never been a more opportune time for us to clearly differentiate ourselves from banks and other financial institutions. And our centennial is a ready-made occasion to remind folks of the stability of credit unions. We have some tips on how to integrate the 100-year anniversary into your marketing efforts at www.nafcu-sandiego.org/100anniversary.html. Also, check out NAFCU’s compliance blog and become part of an online community.

Finally, I would like to leave you with this thought from branding guru Stephen King: “A product can be copied by a competitor; a brand is unique. A product can become outdated; a successful brand is timeless.”

Now, like our friends at Nike say, “Just do it!”

Fred R. Becker, Jr., is president and CEO of NAFCU in Arlington, Va. He may be reached at fbecker<at>nafcu.org. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com