Does Growth Matter?
by: Michael Downs, VP of Marketing, Momentum
For decades, it has been drilled into our collective, corporate consciousness that if businesses aren’t growing they’re dying. And without question, there are a number of Credit Union directors and executive management teams who wrestle with the question of growth every single day. Facing a myriad of obstacles and new competitive pressures, these leaders continue to weigh the potential impact of growth on the long-term financial performance of their Credit Unions. In doing so, they are realizing that growth is not simply about investing in increasing membership, but that it also requires an investment in the growth and development of key staff. Finally, they recognize that despite the ability of some credit unions to sustain adequate capital and return on assets without significant increases in membership, there are long-term risks associated with a continued lack of membership growth.
The problem with lack of membership growth, regardless of the financial soundness of the Credit Union, is that it leaves the organization vulnerable to two primary long-term dangers. First, it creates a threat associated with the inability to achieve the economies of scale necessary to compete when yield curves are flat or inverted and market competition is fierce. Second, and potentially more crucial over the long-term to Credit Unions, is the threat posed by the general aging of the membership population. Despite overall financial health, without the addition of younger members to their membership base, many credit unions will face an extremely difficult uphill battle over the long term. So, the question of whether growth matters quickly becomes a question of, “how much growth do we want?” and, “what is the best way to get there?”
As directors and executive management teams evaluate options and determine how aggressively they want to pursue membership growth, there is an assortment of strategies that can propel those efforts. These commonly include charter expansion, business development with select employer groups, indirect lending, small business market development, or branch network expansion. The actual mix of strategies that a Credit Union chooses will depend on its market dynamics and available resources. However, in the end, the most sustainable path to long-term membership growth will come from a well-trained relationship development team.
Regardless of the growth path a Credit Union decides to pursue, success will ultimately come from a trained, willing member growth and relationship development team that reaches out to new markets. The investment in membership growth strategies needs to accompany a commitment to the growth and development of the staff that will reach beyond the walls of the branch. This requires Credit Union leaders to invest in helping branch managers and other key team members grow into roles as community outreach leaders. At the same time, Credit union leaders should continually train and nurture branch personnel in ways that fosters their talents and enables them to become internal ambassadors for the brand and the core value proposition of the Credit Union. In the end, growth does in fact matter, but it is the growth of people that will ultimately generate long-term success
Michael Downs is the Vice President of Marketing at Momentum, a national design-build firm. Mr. Downs and the Momentum team work with Credit Unions to facilitate strategic planning, evaluate facilities growth needs, and implement systems for ongoing measurement and benchmarking. Mr. Downs holds both a Bachelors and Masters of Business Administration, completed the ABA School of Bank Marketing at Southern Methodist University, and has more than twelve years of experience working with clients on strategic planning and marketing. Learn more at www.momentumbuilds.com or connect at www.twitter.com/plandesignbuild
