ON BRANDING: Lessons From CU's 5 Stages

I entered the credit union industry back in 1995, three years before HR 1151 was passed. In 1995 the U.S. bailed out Mexico's collapsing economy with $20 billion in support-a bargain at today's bailout prices!

Since 1995 I've experienced five distinct stages of credit union history and marketing and we're just entering a sixth. Looking back at where we've been is important. Complacency is a risk in our business. If we don't see how the world is changing around us we are in danger of getting trapped in time and failing to understand the changing needs and wants of our membership.

The post-HR 1151 world: On Aug. 7, 1998 our CU industry changed dramatically. This bill signed by President Clinton overturned a Supreme Court decision earlier in the year that would have kept tight restrictions on CU membership. HR1151 blew the lid off our growth potential by allowing us to combine various member groups within a single CU.

The retail marketing era: Opening the floodgates of membership possibilities meant CUs had to learn new ways to market to capitalize on the opportunity. Strong retail messaging allowed forward-thinking CUs to reach out to potential members as we started the arduous job of educating consumers on the CU difference. Female decision makers became a primary marketing target. A few CUs jumped out of the pack to aggressively pursue growth; many others ignored the opportunity in hopes of avoiding change.

The Internet rocks everyone's world: As we entered the 2000s the Internet began changing the way people shop, get information, communicate, and learn. The impact continues to reverberate across the world marketplace. People have access to vast piles of information-and they're starting to make more buying decisions based on reviews from fellow users. For CUs the Internet makes it possible to reach shoppers who weren't aware of CU options when they were still looking up "Banks" in printed Yellow pages.

Banks as predators: In this decade banks have become even more aggressive. And as the mortgage market slowed they came after deposit accounts with claws and teeth bared. With major mergers, continued losses on bad mortgages and a slowed economy we can expect banks to continue attacks on all competitors, including CUs.

2008 economic turndown: To those of us in the financial services industry the meltdown in the mortgage market was not a surprise, we anticipated it for two years or more. But we were caught off guard by the speed, severity and worldwide impact of the sudden implosion of the value of American mortgages. The memory of this experience will drive consumer behaviors for decades to come. Just as our Depression-era grandparents never again trusted their own affluence, today's generations will always know the bottom can fall out with little warning and no easy solutions. Trust will no longer be assumed, it will be earned.

The new branding reality: As we all move forward and work to salvage our loan portfolios and earnings we must face a new reality. Branding is now critical to success. Tossing an aggressive rate into the marketplace with a strong retail message will no longer pass for a marketing strategy. Decision makers will demand a relationship based on trust of the brand and banks will make huge investment to strengthen their brands. Just as a few CUs embraced retail messaging in the late 1990s, a few industry leaders will now commit to a new level of brand development to fuel future growth.

We are navigating uncharted territory but there are a few certainties: the banks will only get more aggressive, and more determined to neutralize CUs; change won't stop happening; most CUs won't commit to branding until they are forced to do it to survive; mergers and consolidation will continue to reshape our industry.

"They say that time changes things, but you actually have to change them yourself." -Andy Warhol.

Paul J Lucas is a national marketing and branding consultant. For more information log on to www.PaulJLucas.com or email paul@pauljlucas.com.