Marketing can kill your credit union

How could marketing kill your credit union? It seems like an odd question. Especially coming from the head of a marketing firm that serves over two-dozen credit unions within our movement, right? However, I do believe it’s sometimes possible for marketing to do more harm than good.

I often see marketing ideas presented to credit union with no thought or regard to how they affect the bottom line, the front line staff, or the overall image of the credit union. Without considering these risks, the impact of those ideas could cause on the organization are instant ways to kill growth— or worse—hammer nails in the coffin of your credit union.

It’s not just credit unions dealing with this problem though. For example, would you believe one of America’s most iconic brands recently committed this deadly foul? Yes, I am talking about McDonald’s and their decision to start offering breakfast all day.

Steve Easterbrook, former Chief Brand Officer became the current CEO of McDonald’s in March 2015, after former CEO Don Thompson stepped down amidst lackluster sales and poor performance. In an effort to win back business as well as grow profits, Easterbrook resurrected an idea floated by McDonald’s executives during their last downturn in the early 2000s. Meaning to turn the negative trends around, McDonald’s instituted the idea of offering the breakfast menu all day. “Some people say it’s desperation, but they are a little bit desperate,” said Edward Jones analyst Jack Russo in a recent interview with Fortune Magazine.

It was a great marketing idea. But this frantic move made by Easterbrook to reverse slumping sales had little input from others inside the McDonald’s team, including franchisees. The franchisees say the launch of the all-day breakfast menu has been a complete disaster. Their main complaints are the expanded menu has slowed down service, lowered average bills, and sparked chaos in the kitchens. “In small stores, the problems are vast with people falling over each other and equipment jammed in everywhere,” one franchisee said. “Customers are abandoning us in droves because we are either too slow or serve sub-par quality,” another said. One other franchisee said, “All-day breakfast is a non-starter. We are trading customers down from regular menu to lower-priced breakfast items. We are not generating new traffic.”

There are dangers of letting marketing go rogue in any organization. While the problems can be different for your credit union, they can cause the same issues.

• Front line staff: Once, in my younger years, I pulled off what I considered a successful one-day loan promotion. “Look at all of these loans we put on the books,” I declared. Marketing meet reality. I didn’t consider the problems this promotion caused. It was so successful the branch was clogged with members; phone lines were tied up all day, and the one loan officer couldn’t handle the volume. In planning this promotion, I went rogue and never considered the impact it would have on the other team members at the credit union. While it looked great on paper (and on the balance sheet), it resulted in a frustrated front line staff and surly members who were waiting way too long to do business at their credit union.
• Balance sheet: “What if we match our competitions rate at 1.75% APR?” We could, but have you run the numbers to see what the impact of that would have on the balance sheet? It’s awfully hard to write a bunch of loans at such a low rate and break even. How many of your existing members are just fine with your rates as they are? You would be trading down some higher rate loans just to get a few new loans from consumers who have zero relationship with your credit union, except for being attracted to your promotional rate. This is where the important (and usually non-existent) relationship between marketing and finance come in.
• Over-promising better service: One word that many credit unions like to hang their hat on is service. “We have better service than…” I call rubbish on this to begin with. However, if you are go out of your way to brag on your awesome service, only to have a member meet the loan officer who would rather be clipping her nails than working at her desk, you just wasted a lot of money to bring that person in to your credit union. Worse, since research indicates that 9 our of 10 consumers make major financial decisions based on word of mouth recommendations from friends and family, your best advertising (happy members) is pretty much shot.

Be authentic in your marketing message. Consider the impact of each campaign on your staff, your bottom line, and your brand. If you’re counting on the credit union version of the “breakfast all day” promotion to be a long-term strategy to grow your credit union, you’re focused in the wrong direction.