How CUs Can Appeal to Consumers' Search for Safe Haven in Financial Storm

Amidst the stock market collapse, bank failures, and negative press there may be a silver lining for credit unions. According to Forrester Research's Recession Marketing report (December 2008), consumers "look for brands they know and which support their need to connect to their peers. To thrive even in these economic hard times, brands can benefit by focusing more on demand retention and upsell than on acquisition."

The current state of economic affairs can actually present opportunities to credit unions. How so? Credit unions poised for success today are tailoring products, pricing, and messaging on a platform of stability.

They will compete by engaging consumers. And they're targeting specific demographic groups, including traditional and emerging markets. Sophisticated credit unions differentiate themselves from banks through a message of stability, liquidity, willingness to lend, and community involvement.

Recession Marketing

During uncertain times, consumers retreat to safe havens — and what better place than their credit unions? Recession marketing calls for the direct communication of trust, solidarity, and customer advocacy, which are general hallmarks of the credit union experience. Retention efforts that interweave a message of security will be more readily received by consumers.

Successful recession marketing also requires a focus on connectivity. This means proactively engaging with the customer. Being connected means redefining and reprioritizing customer segments and marketing channels to optimize profitable communications.

Measurement is a third component of effectively marketing during a recession. One expression that is worth living by is: "If you can't measure it, it's not worth doing." Credit unions must direct marketing dollars on measurable marketing only — that which can demonstrate a return on investment.

As a benefit of measurement, one can feel more secure in increasing investment in up-sell, cross-sell, and retention testing-as well as rebalancing investments in direct and brand media to see what works and what can be altered.

We've all been living with the impact of the banking tsunami. Turmoil in the financial markets is negatively impacting tenuous customer relationships, and firms are experiencing their lowest ratings for customer advocacy. The overall perception among consumers is that banking firms do what is best for its bottom lines — not what is best for its customers.

There is an opportunity for credit unions to build upon the belief that customer/member advocacy drives future purchase intent. According to a study by Forrester Research, Inc., members of credit unions rated their firm higher on customer advocacy than customers of banks (61% versus 32%, respectively).

The same study indicates that consumers, on average, prefer small firms. Seventy-five percent of credit union and regional/local bank customers responded that their firm "always honors its promises or guarantees" as compared to 60% of large bank customers. Sixty-three percent of small firm customers responded that their bank "offers the best prices, rates, or fees" as compared to 47% of customers of large banks. Sixty-one percent of small firm customers responded that their bank "even if not regulated, would do what's right for the customer" as compared to 47% of large bank customers. Finally, 53% of small firm customers reported that their firm "shows me fair price rate or fee comparisons" as compared to 39%of large bank customers.

Developing a Winning Strategy

With trust and confidence as a solid foundation, it is incumbent upon credit union marketers to play to their strengths while adapting to current market changes.

For one, as consumer media consumption and habits continue to shift and expand, credit unions should commit to multichannel integration. Smart firms will take their messages of trust and comfort and adopt them across channels — from direct mail to the Web to contact centers and everywhere that customers interact with people, products, and services.

Credit unions will treat the Web as both an informational and transactional channel. They will figure out how to leverage social media...integrate search engine marketing into the total media mix...deploy end-to-end analytics of a transaction (beyond the click)...and transition from simply providing an online service to demonstrating online engagement. Savvy credit unions will also use dedicated microsites to deliver personalized messages.

Credit unions seeking to succeed will embrace the growing importance of individual-level customer data. They will leverage member data to create and deliver relevant, targeted offers and messages. They'll use data to develop relationships that transform prospects into customers and customers into advocates. They will take care to close the marketing loop by driving targeted marketing messages across channels — from lead generation through to conversion and retention.

To position themselves to win in a downturn economy, credit unions will:

  • Get the attention of the target audience by communicating product/service advantages quickly and succinctly; which will translate into a sense of trust.
  • Create desire and need for the product now through benefit-laden copy.
  • Demonstrate value in all marketing and member service efforts.
  • Establish credibility and differentiation.
  • Meet the consumer's need for education.
Opportunities do exist for credit unions to be a safe haven for consumers. Now is the time for credit unions to leverage their inherent strengths as they strive to retain and acquire customers throughout a period of uncertainty.

Warren Hunter is chairman and CEO at DMW Worldwide LLC, a full-service direct response advertising agency. He can be reached at 610-407-0407 or whunter@dmwdirect.com.