Credit Union Geek

Marketing, Strategy, and The Force by Joe Winn

Author: Joe Winn (page 2 of 58)

Your Members Hate Keeping You In Business

“Free is the greatest product never sold.” – Me, just now

Did I just come up with some crazy insight? Who knows. I just heard quotes at the beginning of an article lead some to get “hooked” and continue reading. See? You’re reading.

Back on topic, what do you offer for free at your credit union?  Of those things, which are premium services at other financial institutions, be they banks or other credit unions? I’d like to ask why you decided they should be free. Is there a cost to you? Is it a benefit to the member? If the answer to both of those questions is “yes”, then wouldn’t it make sense to ask, “what’s the benefit worth to the member?”

I’m all for lower or eliminated fees. They are punitive forms of payment (and research shows they are overwhelmingly burdened by those least able to afford them). That means your members aren’t happy when they have to pay. However, many subscribe to Netflix, Amazon Prime, Birchbox, and Blue Apron. The money spent is done so happily, as these companies offer more perceived value than the cost. Their products/services are a reward for spending, not a punishment resulting in forced spending. 

So, let’s review. Your credit union makes its money through things people don’t want to pay, like interest rates and fees (even if yours are lower than competition). There is a proven model in society of paying for things you do want. Credit unions should be things people want. What if you could change the dynamic, so your members are excited to “renew their membership” with their credit union?

It’s time to turn the whole model on its head. Instead of jumping about cheering for free and boring, let’s charge for value. Use that income to reduce or eliminate punishment fees. Shift the cost burden for your operations from those who can least afford it to those who want to pay for the benefits. Create an environment where members are happy to pay for all they receive from you. Guess what also comes with it? Members remember who you are. They consider you first for financial solutions. They recommend you to family and friends (your referral platform is ready, right?).

Will all members see the value and want to pay? No, and that’s fine. You can maintain basic, free services for those members. Remember the ones who couldn’t afford to pay? Now you’re really doing them a favor and living the credit union mission.

Sure, things like interest rates cannot go away. And you’ll have to keep some fees, just to protect the credit union. But what’s so bad about (partially) becoming a pay service offering incredible value? Netflix couldn’t offer what they have without charging. Blue Apron’s recipes and food would be pretty awful if they were in a race to free.

So go ahead, step out of the free zone and get uncomfortable. We all know you need to make money to survive. It’s just that none of us want to be the one who does the paying. How can you change that dynamic?

Disclosure: My company offers fee-based checking solutions to credit unions and community banks which deliver ongoing and substantial value to members.

Your Mission Demands It

Originally published on CUInsight.com

Why does your credit union exist?

Go ahead and think about it for a moment. I’ll wait.

Is it to provide safe storage and management of your members’ money? To help those in troubled financial situations? Maybe it’s to create a community of similarly-employed citizens.

Whatever your reason, it should matter. If your purpose for existence is just another version of Wells Fargo’s mission, then why even bother? (For reference, this is their vision statement: We want to satisfy our customers’ financial needs and help them succeed financially.)

So what makes your credit union different? This seems to get lost in the day-to-day of marketing pushes, car sales, core conversions, and more. It’s a question only you can answer.

Here’s an idea:
We exist to provide top-of-class financial services, education, while offering a unified voice in support of our members’ best interests. 

You probably aim to achieve the first two parts today. Ask yourself: How are your financial services? Would you bank there? Even better, would you encourage friends and family to do so? (Then why aren’t you referring them?!) Financial education is crucial to every member, yet few have the knowledge needed to maximize their savings potential. I’m sure you do what you can to help educate them, right?

And then there’s the last part: “Offering a unified voice in support of our members’ best interests”. This is where it gets fun.

Ask a credit union or industry trade group to support the tax exemption and you get cheers all around. They’ll “hike the hill” 5000 strong to demand “common-sense regulation” that reduces the time and financial burdens on credit unions large and small (but primarily the latter). If you are fighting for survival, then you’re automatically fighting for your members, right?

Not. Even. Close.

I support the tax exemption for credit unions. I also agree treating the vast majority legislatively the same as a national bank is unnecessary. Theresa in compliance cannot possibly provide the same level of, well, anything, that the 200-person team at Bank of America can (and should) offer. Of course, we’re getting sidetracked. I said, “members’ best interests”, not credit unions’. And it’s where we are doing a disservice to 1/3 of Americans.

The next few posts will dive into, issue by issue, areas where credit unions have a responsibility to speak out in support of their members. You’ve already seen my take on Net Neutrality (and my interview in CUtoday; many thanks to them for the focus!). Next up: The allure of Free. Then payday lending. And taxes. With a dash of de-regulation for extra flavor. Because what you don’t have to do can still hurt your members.

Credit unions and their lobbyists love to talk about how they are representing a large portion of America. It’s about time they use their voice to improve peoples’ lives.

Are You A Dumb Bank? (Part 4ish)

Originally published on CUInsight.com

This is a spiritual continuation of a series from a while back, titled Are You A Dumb Pipe. The idea is related; read on to understand how. 

For every 100 members buying a car, 8 will pay in cash and 30 will lease, leaving around 60 which continue to be an opportunity for your credit union. Of those, many will simply finance at the dealer, signing with captive or another indirect lender. Was it yours? Maybe. Probably not.

Since most people pay for cars at the dealer, it only makes sense to pour resources into indirect, right? Operating in this fashion reminds me of my post on being a dumb pipe. Take a look.

Indirect lending is making your credit union a dumb bank. Your members won’t know who you are. They don’t care. You’re a line in their bill pay platform, and it’s probably set to automatic, anyway.

I’ve spoken to the lending teams at many credit unions. The allure of indirect is strong. Do nothing, get auto loans. As long as you approve and fund them in good time, you’re done. I’ll be honest; I have lost some business to it. However, it is costing the credit unions much more. It’s no different than the internet providers being just a dumb pipe (which, with the loss of Net Neutrality, is sure to change). You become a faceless lender.

Credit unions see financial interactions in a different way than any other institution. It’s what makes you, well, you. And not a random bank. Right? I mean, if I’m wrong, say so and continue down the path you’ve set. Become the faceless money storage and lending facility.

It’s true, there are a lot of people who will never care about their bank, credit union…whatever. When it does what they expect, it’s another utility which receives little attention. If something goes wrong, well…”geez, this bank just sucks!” You can try to engage them, but the decision is theirs.

However, if you are in any way trying to fulfill your mission statement, this is not the path forward. As your services become commoditized, your interactions devolve into support requests and complaint resolutions. You lose the ability to help your members in all the unique ways available to credit unions. Financial coaching? That would have been nice. Investment guidance? I’m sure they’ve got it handled. Even a simple grasp of how fee structures or interest rates can affect someone long-term? Hey, if they don’t know you, they don’t engage.

Am I saying indirect and other “faceless” services are bad? Not at all. They serve a valuable role in boosting asset volume in many credit unions. If it fits your strategy, and is properly accounted, then why not enjoy the growth it can deliver? However, I have noticed a growing trend of institutions putting more resources into this basket…at the expense of their direct channels.

There are a lot of industries where your company can remain unknown while also a part of everyone’s life. That works if being faceless yet ubiquitous fits the mission. I don’t believe it does for the credit union industry. Do you?

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