How to Differentiate Your Credit Union in an Over-crowded Marketplace

by: Tim Blake, CEO, Blake Design

In recent years, credit unions have done an amazing job of defining the differences between credit unions and banks. All of the not-for profit, member-owned, cooperative movement, higher interest rates, lower loan rates, we didn’t take part in the bailout proclamations have been highly effective. So much so, that in a PrimePerformance survey, rating 34 different industries, credit unions had the most positive rankings of any service sector industry. And according to an August, 2012, NCUA press release, “In April, May, and June…membership increased by 643,322 individuals to reach a new record high for the industry.” That’s great news for credit unions.

Now for the bad news.

All of this rapid expansion has created an overabundance of credit unions. Many credit unions are consolidating or changing their original charter, to become even larger, and many more are sprouting up to ride the wave. This outbreak means stiffer competition for your credit union.

What makes you so special?

That’s not meant as a personal indictment. Rather, it’s a question about your credit union’s brand, and one you had better be able to answer. As I mentioned, continued industry growth means increased competition. Therefore, differentiating your brand is now absolutely critical to your survival.

Not that many years ago, credit unions didn’t have to compete…at least not with each other. If a credit union’s field of membership was encroached upon, the offending credit union was usually forced into backing down. However after the signing of HR 1151, the rules changed. Many credit unions saw this as an opportunity to no longer be bound by their original charter. So they changed the meaning of common bond to include any creature with a pulse. All of this means that you now have to compete — not only to attract new members — but to retain the ones you currently have.

So I’ll ask again, what makes you so special? In other words, what makes your credit union stand out from all of the others?

It’s NOT Service.

Ask any credit union executive what differentiates his or her credit union from any other and most will answer “Service.” In fact, that’s probably the answer you’d give too. But this can’t be. Everyone can’t have the same answer and call it their unique differentiator.

Besides, isn’t “service” already an implied function of being in a “service” industry? And just what do you mean by service? Is it the fact that Suzy, your head teller, knows every members name and greets them as they walk in? Is it that you provide online banking to all of your members? While those things are terrific, they don’t differentiate you from your competition. Guess what, the credit union down the street not only has a teller who recognizes every member and provides online services, but they offer investment services as well. Oh…you do too? Well then, exactly how is your credit union any different?

If you are going to claim that “Service” is your unique differentiator, then the way your services are administered had better be unique enough to distinguish you from everyone else. Otherwise, you’re fooling yourself. And remember, you still have to compete with banks too. Banks, which are often on the cutting edge of technology long before your small credit union can afford to be.

So now that we’ve established the need to distinguish your credit union’s brand, and that “Service” is not a differentiator, let’s look at a few ways you can potentially make your brand stand out.

Purpose.

Distinguishing your brand starts by defining what business you’re in and what your core purpose is. So creating a purpose statement is the basis of your brand. It’s the inherent promise you’re making to your members. This is not a list of your current products and services. Instead, it should concisely state what makes you unique and what your organization exists to do — what needs you meet for your members.

A good starting point, for creating your purpose statement, might be found in your original charter. This document contains some vital information — your original intent. Now it may not fully represent your credit union today, but it’s a great jumping off point for defining who you are and why you exist.

Preferential.

Because of your charter, your credit union has an advantage over a lot of other service providers…it’s exclusive. This means that not just anyone can walk in and become a member. Now this “exclusivity” may be seen as a limitation. But I can assure you, your members don’t see it that way and neither should you.

American Express has differentiated its card from every other credit and debit card out there by simply treating its card holders as members. In fact, people are willing to jump through hoops to belong to their exclusive club.

That same “exclusive” status allows you to focus your resources on your exclusive members. You don’t have to be the credit union for everyone, just the exclusive, trusted financial services provider for a select few. Your “exclusive”, common bond is the very thing that makes you different.

Another example — Navy Federal —  is the worlds largest credit union. They started out as a credit union serving Navy Department employees in the District of Columbia. Today, their membership includes members and contractors from every branch of the military around the globe. Even though they’ve changed their original charter — several times — they’ve never lost focus of who they are and who they serve. This “exclusive” focus gives their members an emotional and patriotic attachment to their brand.

Perspective.

Your brand exists entirely in the minds of your members and prospects. So the whole rationale for defining what makes you different is to give them a clear, definitive choice.

Don’t assume that you have all the answers. Instead place yourself in their shoes. Survey your members and employees and you will most certainly gain insight on how others see your brand. You can then use that information to structure your brand.

Past.

The combined experience of your credit union — perhaps in making small personal loans — is another way to differentiate. Take a look back and see if there are places where you’ve been able to consistently feel a void. This review may surprise you. You may not have even been aware of this niche, but you can certainly take advantage of it now. Remember, being “exclusive” is a good thing.

Personnel.

Finally, the people who work for you can help set your brand apart. Now I’m not talking about Suzy, the head teller. But perhaps your employees have recently undergone special training or received certification. Maybe a recent hire brings a special skill. These experts can help differentiate your brand. Just be careful to not become reliant upon any one employee. Instead, set up a special department and begin to incorporate this unique expertise as part of your overall brand.

There are a lot of factors that go into building and maintaining a successful brand, and differentiation is just one element. But without it, credit unions are just lemmings in brick and mortar boxes — a little Sting reference. So start searching and see if you can discover what makes your credit union unique and ultimately successful.

Tim Blake is Principal/Owner of Blake Deign, a design and branding consultancy based in North Carolina. Tim has over 25 years experience in the design and marketing industries. When not writing insightful articles he uses his expertise to help businesses and organizations communicate their ideals and connect with their desired audience. You can read more astute observations and peruse the strategic solutions Tim has created for his clients at BlakeDesignSolutions.com. Connect with Tim on: Linkedin, Google+ or Like the Blake Design Facebook page.