The credit union indifference
“Credit unions offer better rates, better service, and fewer fees” says the voice on the radio “And almost anyone can join!”
To summarize: “take our word for it: our commodity offering is better than our competitors’ commodity offering. Plus, we do not specialize in serving the specific needs of people like you.”
Spend enough time with any group of credit union marketers and someone will inevitably make a case for a marketing message like the one above, saying “Don’t waste money promoting the credit union difference. Members don’t care about it. All they want is better rates.”
This always seems like curious logic to me. If it were true that members only care about rates, then banking would be a true commodity, and brands like Umpqua and Simple would be no more exciting than Morton’s salt. But, even if that were the case, do you know who does get excited about the ups and downs of Morton’s salt? The people who own Morton’s Salt. Even an unremarkable commodity brand like this has emotional value to someone who knows they stand to profit when the company does well.
But detractors of the credit union difference messages are right about one thing: members don’t care about it. And they don’t care about it because they don’t know about it. How could they when we promote only the byproducts of member-ownership, while ignoring the core elements of the cooperative structure that make it all possible?
We eliminate exclusivity from our brands:
Compare the radio message above to one of thriving financial brands like USAA, Navy FCU and Simple. The message at these organizations is “People like you are special to us and we’re familiar with your specific financial needs. No, we aren’t for everybody. You either gotta’ BE somebody or KNOW somebody to get in.” At USAA and Navy, the exclusivity is mandatory as part of their charter. But what about Simple? For some time, in order to be a Simple customer, a person had to be invited by a friend just to get on a two week wait list, which was more than 12,000 people long.
Like a bouncer at the door of a night club, dutifully filtering the riff-raff from the big shots, these organizations make their brands more desirable with every new person standing in line outside. “Is your name on the list?” they ask before removing the short velvet rope separating the haves from the have-nots. Only a select few are allowed to pass, while most are banished to the long line in front of the club. It doesn’t matter that other clubs in town welcome everyone with open arms and charge $3 for a beer, the line grows. In fact, the exclusive nature of this club is why they can charge $20 for a drink in the first place.
Without exclusivity, there is no margin, there is no brand value, there is no reason to expect any other result than public disinterest, market irrelevance, commodity status and eventual failure. And yet, the same credit union marketer who approved the “everyone’s welcome” radio campaign might lay awake at night wondering why he has to cut loan rates below market averages in order to get foot traffic.
We’ve got to be the only industry trying to seem less exclusive, and it’s written right in to our charters. But this is only one attribute of credit unions that is a built-in differentiator. There are many more. And our industry, by and large, tends to find ways to make sure members never find out about them.
We don’t promote our annual meetings
The best way to let members know that they are owners with a stake in the credit union is to let them know they are owners with a stake in the credit union. That sentence should be banished to the innermost pedestal at the Captain Obvious Memorial Library, but instead I had to use it here because it’s such a foreign concept.
How can we expect our owners to feel like they have an ownership stake in the credit union if they don’t get to do what owners of other companies do? Inviting members to the Annual Meeting, and asking them to vote on important issues, is an effective way to let members know they are owners.
We love disclosures
There is not a single asterisk on the entire Simple Banking site. Look it up to see for yourself! But no matter how transparent the brand can be, it must always word around the fact that it answers to stockholders and is legally obligated to act in their best interests instead of the customer’s. Credit unions can be fully transparent, and the end result is admitting that we really are, in fact, legally and ethically obligated to serve our members.
We don’t pay dividends
Members don’t know they are owners because there is nothing tangible or different about a better rate. A better rate = cheaper salt. In fact, any old bank can purchase a radio ad and say they have better rates, fewer fees, and better service. But what if the company you bought salt from sent you a $5 check in the mail and told you it was because you owned a profitable company? You’d never tweet about cheaper salt, but you just might tweet about getting a check for buying it.
We avoid talking about our tax exemption
If members don’t know why we are not paying taxes, and correspondingly, why we are able to offer amazing rates, then what reason will they have to defend us when banks lobby against us? There is no shame in telling members how their wise decision to bank cooperatively and eliminate an outside profit motive is a good way to avoid the corporate income taxes paid by for-profit banks. It’s also a built-in reminder that outside parties are not profiting from member deposits.
We avoid using words like “member” in our ads
Are you a customer of your favorite sports team, or a member of their fan base? Are you a customer of your political party, or a member? If membership is an important factor in loyalty, then why would we avoid it when we rely on our members to advocate for us?
The credit union difference is not “better rates, better service, and fewer fees,” no matter how many times we hear it on the radio. It’s member-ownership. And with so many credit unions trying to avoid talking about the true reasons credit unions are different, then perhaps the best way to differentiate within our industry is to highlight them.