Battle of the Budget

by Lyle Heller, CU-VO

In the midst of seemingly endless depressing daily news about the state of the economy, there is a glimmer of good news as far as credit unions are concerned.  The improvement for credit unions means there will be interesting challenges for developing the upcoming marketing plan and budget.

According to NCUA Board Chairman Debbie Matz “credit union net income has risen significantly since 2010, and lending has grown for the first time in four quarters. NCUA’s 2010 rule providing for short-term or payday loan alternatives has contributed to the recent growth. In the latest quarter, credit unions made 52 percent more of these alternative short-term loans.”

Credit unions’ second quarter 2011 net worth ratio bounced back, as return on average assets (ROA) continued to rise and quarterly net income moved higher. Aggregate net worth ratios increased from 9.97% last quarter to 10.14% this quarter.

Credit union marketing budgets have been under severe pressure in the recent past.  One credit union related that their marketing budget had been slashed to only 25% of what it had been prior to the economic downturn.

The improvement for credit unions certainly adds spice to development of marketing plans and budgets for the upcoming year.  Just like budget battles in Washington, spending money is easier when business is good and revenue is occurring.

But, what should be done when the economy has not been good and in spite of signs of improvement, many remain pessimistic?  Should the marketing budget be trimmed and count on improvement occurring “naturally”?  Or should the marketing budget be expanded with the expectation that the sparks of improvement may be fanned into a fire?

Flip Wilson, a comedian of years ago, created Reverend Leroy, the “religious minister” of the Church of What’s Happening Now.  Rev. Leroy was trying to grow his church, so he preaches, “If this church is going to get anywhere, it has to learn to crawl.”

And the congregation said, “Let it crawl, Rev. Let it crawl!” Then he said, “And after it learns to crawl, it has to learn to walk.” And the congregation said, “Let it walk, Rev. Let it walk!” Then he got excited and said, “After this church learns to walk, it has to learn to run! And if this church is going to run, it’s going to take money!” And the congregation said, “Let it crawl, Rev. Let it crawl!”

Like Rev. Leroy’s church, some marketing budgets have been forced to be content with crawling through life, since the congregation does not see the need to spend money.

But, marketing is more than a caretaker situation.  (The budget for credit union light expenses is pretty much fixed and serious management may consist of reminding people to turn off un-needed lights.)  On the other hand, the marketing budget is one of allocating money to obtain results.  Some marketing plans work and some don’t.

If past marketing approaches have been wildly successful, most people will continue doing what they have been doing.  If past results have been less so, then doing more of the same may not be the best approach.

Suggesting new innovations and approaches are called for, but they require ability to convince those who approve the budget that those approaches will bring results.  (This situation has been a traditional challenge for marketers.  A marketing campaign is developed, tested, and implemented and still results cannot be guaranteed.)

What strategy should be used, especially if your marketing budget had been slashed in the past couple of year?  How do you approach those who will be approving your marketing budget?

Do you increase amounts for the same approaches and media used before, because it will be easier to explain in order to obtain approval?

If your credit union did not have the cheery results NCUA reported, then clearly something must be done.

Daring to be different and innovative is a challenge.  Obtaining budget approval is also a challenge, but this situation is one that marketing officers have been faced with for years.

This series is authored by Lyle Heller of CU-VO.  Mr. Heller holds a Bachelor of Science degree in Mathematics from University of Wisconsin – Whitewater and a Masters of Business Administration in Production and Operations from Marquette University.  Mr. Heller served as Executive Vice President of two CUNA organizations.  He has lectured at the university level in Quantitative Decision Analysis, Simulation, Systems Analysis, and Marketing for more than ten years.  Additionally, he was a top-ranked winner of the 2005 Wisconsin Governor’s Business Plan contest.  CU-VO is a strategic partner of CUNA Strategic Services to provide video overlays to credit unions.  Learn more at www.cu-vo.com and follow CUVOTweet.