CUNA recently announced that they intend to raise $100 million to fund and maintain a research-driven credit union awareness campaign initially dubbed, “Open Your Eyes to a Credit Union.”
I say, “Bravo!”
This couldn’t come at a better time as bankers, through their associations, are ramping up their anti-credit union rhetoric focusing on the credit union tax exempt status. Apparently, their recent legislative defeats in Washington and Iowa have left them feeling irrelevant with their member banks. So, they’re now turning to making noise with the media so they can project to their members that, even though they’re losing on the policy front, they really are trying to beat down credit unions.
Wait … haven’t we seen this tactic before?
In fact, in June of 2004, Michele Heler wrote an excellent opinion piece in the American Banker publication titled, “A Battle Banks Can’t Win But Keep Fighting” in which she called it the “dirty little secret” of bank lobbying. That is, that their credit union bashing is a waste of time and that fighting the credit union tax exemption is a battle that bankers know they can’t win but know they must fight.
In a recent Wall Street Journal (WSJ) opinion piece on August 15, Florida Bankers Association CEO Alex Sanchez opined that “Credit Unions Shouldn’t Get a Free Ride.” It would seem the author lacks a bit of credibility on this subject given his title, but it his opinion piece is just the latest example of bankers taking to the airwaves now that they have again lost the policy battle in the aftermath of the recent significant tax reform package passed by Congress and signed into law by the president.
Perhaps the bankers should “Open their Eyes” to the realities of why credit unions are growing so fast and getting so large. It’s because people like credit unions more than they like banks. The tax status isn’t the bankers’ biggest problem. Their image and level of service are the real culprit. And I seriously doubt that the public, which includes the WSJ readership, will be sympathetic to the behemoth banking industry’s call for the taxation and destruction of credit unions.
Tax policy is tied to corporate structure, not services or marketing tactics. Lawmakers understand this. That is why some 2,500 banking institutions with fewer than 100 shareholders essentially pay no taxes because they have opted for the Sub-S tax structure. This structure eliminates the double taxation of a C-Corp by passing earnings on to individual shareholders to be taxed at personal tax rates.
Bank lobbyists successfully lobbied for this structure option in 1996 even as they were fighting against the credit union tax exemption and seeking to limit access to credit unions through the federal lawsuit against the NCUA. The infamous H.R. 1151 Credit Union Membership Access Act overturned a Supreme Court decision that severely limited access to credit unions. That legal action was of course initiated by the banking industry and Congress saw fit to correct the problem because lawmakers on both sides of the aisle understand that the public needs credit unions.
Federal and state lawmakers in Washington and in state capitals have opened their eyes to the benefits of credit unions time and time again. They realize that any foregone federal tax revenues are more than offset by the financial benefits to middle class households and small businesses in our economy. This is especially true for those consumers and small businesses who are financially challenged and need access to fairly priced and trusted financial services. It’s good tax policy — period.
And as we always say, if banks think the playing field isn’t level, they can give up their C-Corp stock structure, their executive stock ownership and insider enrichment, and opt instead for the credit union model where earnings cannot be distributed to outside shareholders. The benefits of the banks’ stock structure flow right back to the boardroom and the corner executive offices. Of course, bankers will never “level their playing field” by opting for the credit union tax-exempt structure for that one reason.
So, bankers: “Open Your Eyes” to why credit unions exist and why consumers and small businesses are joining credit unions in record numbers: It’s because they love credit unions and trust them more than they do banks.
The “Get a Mac” campaign was a television advertising campaign created for Apple by the company’s advertising agency, TBWA. It ran from 2006 to 2009. That campaign reminds me of the problem faced by banks today. Credit unions are just cooler and more attractive than banks. I always hear people say that they love their credit union. When is the last time that you’ve heard someone say that about their bank?
In the case of the Mac, many people just like the functionality and user-friendliness better. Look at how Apple has done the same with the iPod, iPhone, iPad, iTunes and so many other products. Bankers could learn from this. Improve your products and services and stop carping about your competition and their tax status.
The “Get a Mac” advertisements in the campaign became easily recognizable because each ad followed a standard simple template: against a minimalist all-white background, a man dressed in casual clothes introduced himself as a Mac (“Hello, I’m a Mac.”), while a man in a more formal suit-and-tie combination introduced himself as a Windows personal computer (“And I’m a PC.”).
The two then acted out a brief vignette, in which the capabilities and attributes of Mac and PC were compared, with PC — characterized as formal and somewhat polite, though uninteresting and overly concerned with work—often being frustrated by the more laid-back Mac’s abilities.
The ads were playful and funny, but also aggressively competitive. However, they managed not only to make Apple the good guy—the kindhearted Mac was always telling sad sack PC not to be so hard on himself—but also got people to pay attention and care about the boring part of computing. Security, viruses, rebooting and even syntax errors became watercooler conversations.
That good-natured humor, along with the fact that competitive ads were easier if you’re the “little guy,” worked to Apple’s advantage. It galvanized Mac loyalists with pride and inspired the PC user to take action in regard to their PC woes.
Back then, Apple was the David swatting at the Goliath PC industry. Of course, Apple’s good fortunes since then have become legendary.
There are amazing parallels that can be drawn in the credit union vs. bank messaging that we’re in the midst of as bankers once again ramp up their public relations campaigns against credit unions. I hope our industry exploits these differences with a well-coordinated “Open Your Eyes” campaign led by CUNA and state leagues.
Credit unions are the little guys taking on the Goliath banking industry. Our growing number of billion- dollar credit unions referenced in the WSJ opinion piece are taking on the growing number of trillion-dollar banks and they’re doing it along with much smaller credit unions who are better liked and more trustworthy than the bank competition. Today there are 5 U.S. banks with over 1 trillion dollars in assets. That number is essentially the total assets of all U.S. credit unions. And Chase has nearly 3 trillion in assets or three times the size of the entire credit union industry.
The CUNA “Open Your Eyes” campaign will help contrast credit unions in ways very similar to the Mac vs. PC ads that ran some ten years ago with such great success. And hopefully the research-based campaign and creative will spawn scores of state and local campaigns where the funding and advertising spend are all local. This will assure buy-in by credit unions and a greater likelihood of long-term funding success.
In my opinion, state and national credit union associations have four fundamental roles: Advocacy, awareness, solutions (including education) and compliance. Of course, at the very core, associations exist to help credit unions do things together that they can’t do as effectively on their own. So, of course lobbying and promoting the industry should be at the top of the list. But the fact is, those two roles are intertwined because advocacy is a lot easier if those being lobbied understand the credit union difference.
CUNA and its state league partners are collaborating on how best to execute this bold vision. Led by CUNA’s chief strategic communication officer, Douglas Kiker, this campaign will surely be a success. He is a great thinker and collaborator as he works with different constituencies in the industry to formulate vision and strategy by listening to all, processing input and then pivoting to the best execution plan.
Throughout my 30-year career as a state credit union association leader in Utah, Washington State and Michigan, I have always made cooperative awareness campaigns a pillar of our state league efforts with varying levels of success. In Michigan, for decades now, our credit unions have supported a multi-million-dollar campaign called CU Link that currently uses the theme, “There’s Real Strength in Our Numbers.” We’re in the process of seeing how we can align this state campaign with the CUNA “Open Your Eyes” messaging beginning next year.
There are a few important principles that I have learned again and again as my teams, and more importantly, our credit unions, have planned and executed these awareness campaigns. I suggest the following five principles that I believe CUNA and credit unions should consider:
1. Research: Make the campaign messaging and success metrics research-driven. CUNA has done this and so have we in Michigan, in coordination with CUNA. Consumer perceptions vary from market to market and these differences need to be considered. In Michigan, perceptions of membership eligibility are already strong and positive. But our market does share the research-driven myths that credit unions are not as convenient or mobile-enabled.
2. Stay Local: In addition to the need for local messaging differences, a cooperative awareness campaign will be well-funded and sustainable if credit unions know that the ads will show up in their media markets. A successful campaign should assure that fundraising and spend are localized but by employing contemporary media mix strategies. Digital online advertising, social media and music streaming ads can all be localized just as with cable, radio, billboard and other traditional media. Incentives for tie-ins to credit unions’ own advertising can also be accomplished in order to leverage the cooperative campaign through individual credit union advertising.
3. Message Properly: Changing the master theme every few years is okay but it should allow for important sub-themes. “Open your Eyes” is a great theme today and it may endure for a number of years. But when it changes in a few years, it’s the research-based sub messages that really matter. Convenience, mobility, alignment with life decisions, trust, and value are just a few examples of why people should “Open their Eyes” to a credit union.
4. Know the Audience(s): Realize that the target audiences include existing members, credit union leaders and policymakers, not just potential members. This ties directly to broader advocacy efforts. Awareness is directly linked to advocacy for associations. When lawmakers and staffers and community leaders hear and see our ads, it will help them understand that the credit union difference and tax status benefits their constituents and needs to be preserved.
Similarly, share of wallet with existing members is enhanced through cooperative advertising. Savvy credit union marketers know that expanding the relationship and service usage with existing members is easier and more important than onboarding new members.
And like it or not, if credit union leaders and staff don’t see and hear the ads in their markets and on their computer screens, they will be less likely to continue funding the campaign.
5. Keep it Voluntary: Resist the temptation to make participation mandatory through dues assessments. Many state campaigns have failed by making participation mandatory, especially when tough economic times return. A good cooperative campaign can stand on its own merits. And like with all cooperative endeavors, whether PAC giving or grassroots lobbying, not all credit unions or state leagues have to participate to make the awareness campaign a success.
Success is defined by incremental gains, market by market, year over year. That is how it always works in our credit union industry. Great ideas spread and success grows. If the value proposition and execution are right, credit unions will engage and drive success voluntarily. A hallmark of our movement is cooperation through united association efforts.
CU Solutions Group is a national CUSO that provides services to credit unions in areas of technology, marketing and HR performance solutions. Specific to marketing, CUSG works with a progressive marketing company named Focus IQ to assist credit unions with their marketing and branding.
In Michigan, the Michigan Credit Union League’s CU Link Awareness campaign is driven by Focus IQ in cooperation with CUSG. They help with the research, creative and media buy execution as well as integration campaigns with individual credit unions. They understand the five principles above and have helped the Michigan credit union community achieve success metrics like 51 percent population penetration and a market share of consumer household deposits of almost 20 percent.
Most important, when we poll Michigan consumers, they are twice as likely as bank customers to say that they would refer their credit union to a friend or family member. Likewise, they are roughly twice as likely as bank customers to say they trust the credit union is looking out for their financial wellbeing. That’s incredibly powerful data and it is in part driven by Michigan’s multi-decade, well-funded and sustainable cooperative awareness campaign.
As the war of words ramps up yet again between banks and credit unions, our credit union community needs to support the CUNA vision for helping everyone to open their eyes to credit unions. This means not just the credit union value proposition, but also the reasons for the credit union tax-exempt status. And the public messaging helps strengthen our lobbying communication strategies.
Sadly, the bankers will continue to fight a battle that they can’t win, to eliminate the credit union tax exempt status. But this will only be true if we, as advocates for the credit union model, support the right mix of lobbying and communication strategies so that what is right for people and our economy can triumph over the self-serving money interests of the banking industry.