With National Credit Union Youth Week having just taken place, ask yourself these questions: Would you diet for just one week? Would you exercise for just one week? So why just one week to focus on targeting younger members?
Due to a variety of factors, including being chartered to serve select employee groups consisting of working aged individuals, younger people are often uninformed of the benefits they can reap from credit unions as an alternative to banks. Young people are seldom specifically targeted by marketing, and the result is the median age of a member is older than the average American. While as credit unions we support National Credit Union Youth week and participate fully, it is just a start.
A strong movement has already started toward enlisting more young board volunteers. The new endeavor ought to be to attract more young members. There is a need among young adults to begin saving for retirement, benefit from higher money market rates, reduce interest on credit cards, pay off an affordable car loan, secure funding for their first home and educate themselves about personal finance. These millenials desire to save money to see that rock concert or travel to that ski trip with friends. High levels of student loan debt, damaged reputations of commercial banks, and an overall higher cost of living in many areas afford credit unions the opportunity to play a lasting role in the lives of the young public.
A Paradigm Shift
This is a paradigm shift the industry can benefit from long term. Older populations, which statistically are a greater percentage of savers then borrowers, are not as fertile a market for loan growth as the younger demographic. Since loan interest generates approximately 85% of our revenues, the financial possibilities in recruiting younger members are very promising, even in a low-rate environment. Younger members can also be easily shown the advantages of a credit union rather than a bank before they become more accustomed to our more heavily advertised counterparts.
The short-term return on investment from marketing to younger members may not be as favorable as for older groups, whose more consistent balances and larger direct deposits are important for our liquidity and solvency ratios. Yet the key to this new focus is a longer-term view. Investment in obtaining younger members will result in greater returns over the lifetimes of loyal members. Long-term. repeat business also reduces costs relative to obtaining new members. Product utilization rates of new technology will increase with greater proportions of the younger generation, alleviating the cost/benefit analysis of investing in these services. Finally, increased lending rates now mean greater capital ratios in the future.
How can we cater to this target market? The entire marketing mix requires reevaluation. New products, promotions, prices and places should be inserted into our current marketing budgets. The newest technologies for products should always be considered. Special efforts should be made to attract new 20-something-year-old employees as members when they first start a job. Select employee groups such as student associations and organizations, colleges and other institutions with many young people should be emphasized. Scholarships should be offered to some studious young members. Those who were minors in custodian accounts should be offered special deals on accounts as they transition into adulthood. Products designed for younger members, such as low interest and low limit credit cards, student loans and financing options for apartments, cars and weddings should be offered.
For community CUs, infiltrating towns with large youthful populations can be a strong boon. Finally, membership drives during March Madness, homecoming weekends and other events can further place credit unions into popular culture.
As a community we can make obsolete the need for a National Credit Union Youth Week. Our survival may depend on it.
Matthew Sirlin is a Supervisory Committee Member with Xcel FCU, Bloomfield, N.J., and Operations Manager with American Broadcast Employees FCU, New York.