Recession coming? Don't tell that to credit union marketers
Despite 18 months of gloom and doom predictions about a possible recession in 2020, credit union marketers are plowing ahead with an eye toward continued growth.
A recent study from the Financial Brand shows credit unions are getting more aggressive with their marketing budgets. Of the 227 credit unions queried (all of which were at least $250 million in assets), 46% increased their budgets by 10% or more between from 2015 to 2018. The report also found that each dollar spent on marketing generated a net income of $16.39, a 34% increase from 2015.
Marketing budgets are among the first things to get cut when times get lean, but credit union marketers say they have no plans to pull back for 2020 despite recession risks and an uncertain political climate.
Greenville, S.C.-based Your Marketing Co. offers strategic planning and marketing services for about 40 credit unions, and none of its clients are trimming marketing budget for next year, said CEO Bo McDonald.
“The majority of them stay about the same and we have a few that are increasing,” McDonald said. “Of course, the word ‘recession’ keeps coming up, but it hasn’t really scared anyone away from marketing.”
Part of the rationale behind maintaining or even increasing marketing spending in advance of a potential downturn is to be better position for growth in market share, McDonald said. Credit unions learned through the 2008 financial crisis that by keeping marketing budgets consistent during challenging times, they can "increase their voices" among members and nonmembers while projecting an image of stability, he added.
Douglas E. Strickler, founder of HOT Inc., an Atlanta-based brand communications design collaborative, seconds the opinion. While the increase in marketing spend may be modest as some credit unions remain cautious about the divisive political climate, Strickler sees consistent signs of encouragement regarding budgets for 2020.
“We see more investment in branch renovation and branding, reinforcing and refreshing the brand to make sure the message on institutions are clear and delivered consistently, whether it's in-branch, online or through social media,” he said.
Marketing strategies vary by credit union, of course, but also by an institution’s field of membership. MIT Federal Credit Union in Cambridge, Mass., for example, is SEG-based, meaning marketing must be targeted more specifically. With that in mind, the credit union is increasing its marketing spend next year to improve targeted mobile outreach while maintaining direct mail. That mix will better enable it to reach a variety of age groups and demographics, said Madeline Anderson-Balmer, marketing manager at the credit union.
One change, she noted, is that the budget has become more fluid and less dedicated to any one specific marketing channel.
“With all the digital measurements that are available, you can see if somebody clicked on a link and came through to apply,” she said. “We’re doing short-term contracts rather than signing up for a year with an agency.”
Unlike MIT FCU’s focus on digital solutions, Partners Federal Credit Union in Burbank, Calif., relies on traditional channels such as direct mail and plans to significantly increase its marketing budget by as much as 25% in 2020, compared to marginal annual increases of 2% to 5% in prior years.
This bold move is driven by Partners FCU’s record growth this year, with assets reaching $1.8 billion and membership surpassing 173,000 as of June 30. That’s a 7% and 11% year-over-year increase, respectively.
“We’ve grown so much that we need to deepen our relationships with members,” said said Royce Ngiam, VP of marketing and business development at Partners FCU. “There are segments in our membership that prefer traditional means and we plan to increase the mix to bring in more direct mail.”
While the whirlwind of political activity and financial risks may not yet be trickling down to marketing budgets, those factors do impact the sorts of loans credit unions offer, said McDonald. Some institutions may begin to reexamine the type of loans they offer and credit scoring, while others may do a broader reevaluation of underwriting criteria if economic winds do shift.
“As we head into 2020, credit unions should be acutely aware of what’s their risk tolerance, what type of loans they’re remarketing, what kind of messages to put out there to bring in that right member, and what are the changes in member needs,” he said.