“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.