As research for this article, I must’ve read at least three dozen blogs and thought leadership pieces written by marketing gurus or solution providers purporting to offer credit unions advice as to how to build the perfect marketing strategy. However, after having done so, I hate to say it, but most of those articles didn’t really provide a lot of value.
It’s not that the advice itself was really bad, but it just seemed to be out of step with the realities that most credit unions face, in terms of the financial, technical or operational resources available to them. Or, alternatively, it was so anodyne and/or basic that it was unlikely to make much of a difference. Of course, a lot of that advice was written by someone with an agenda or something to sell. You know, the local search agency that tells you that ‘you need a localized SEO strategy’, or the app developer who tells you that ‘you need an app’, or the guy selling this super expensive thing that ‘you need this super expensive thing’, etc.
Before we go further into this, first a couple of things for me to admit:
- While I haven’t ever worked for a credit union, I did run digital acquisition for a couple of years for a leading credit card business targeting people with bad credit scores, and I think there are some valid parallels; and
- As the Director of Marketing at Buyapowa, the leading referral marketing platform for regulated industries across telecommunications, energy, banks, insurance and credit unions, I too have a vested interest. But I hope that doesn’t diminish what I write below.
What surprised me when reading these articles was the absence of some of the most obvious marketing tactics that I think are relevant for credit unions, particularly as I saw these same tactics work so well at the credit card business. When you consider that the typical credit union focuses on a tightly drawn geographic area, like a state or part of a state, and often a particular demographic in that area, it was strange to see zero mention of direct mail or door drops. And where the focus is instead on a profession, like firefighters or teachers, the lack of mention of partnerships with other organizations that target that same profession was puzzling. But what surprised me the most was just how few even mentioned a referral program!
But first let’s consider the advice I found in the typical article. More or less, the advice can be broken into 3 categories:
Anodyne and generic
By this, I mean advice like:
- Content marketing i.e. have a blog;
- Localized SEO i.e. if you’re targeting Anchorage, Alaska, write about Anchorage;
- Long-tail paid search i.e. bid on keywords like ‘credit Anchorage’’ and have a landing paid dedicated to people looking for credit in Anchorage, Alaska; and
- Make sure your customer experience is excellent.
Now you might ask, what’s wrong with this advice? Nothing, I have to admit that. But surely this is just marketing 101 and doesn’t teach you anything you didn’t know already? If not, you’re starting to worry me.
Make everything digital
Many of the articles recognized a common problem facing credit unions in that the average age of a member is getting older all the time, as younger customers prefer the sleekness and simplicity of fintechs and online banking apps like Ally and Betterment. So the advice is that to connect with younger demographics you need:
- A chatbot;
- An app;
- To digitize everything in your customer user journey from A-Z.
Of course, if you’re trying to increase your penetration among younger demographics, being more digital is not, of itself, a bad thing. It’s just that this isn’t going to change the game for you. At best you’re going to catch up with regional or national banks and fintechs, and it’s going to require quite some investment in time and money. But does anyone really think a credit union, with its resource constraints, is going to out-innovate the national banks, with their billion dollar budgets, never mind the fintechs who are often light years ahead of the big banks?
Some kind of data thing that costs a fortune
Here we see buzzwords like:
- Big data
- Artificial Intelligence
Here’s where I think some of the authors of these articles show their lack of connection with the realities facing the average credit union marketer. It’s not just that these strategies often come with seven figure sticker prices but they also often require substantial organizational changes. The reality of being ‘not for profit’ and investing any ‘profit’ back into reducing fees, paying out bonuses for members or offering better interest rates, means that there’s often very little leftover to invest in expensive strategies like these.
Without the billion-dollar marketing and technology budgets of big banks or the endless pockets of venture-backed fintechs, who can blitzscale losing hundreds of dollars on each new customer, Credit unions have to live within their means.
So why referral marketing?
While there’s nothing new in the concept of referral marketing, it’s a strategy that’s ideal for a credit union and comes without a crippling sticker price. And modern referral marketing platforms can take away all of the pain you might remember if you tried to build your own program in the past, with automated reconciliation of referrals, anti-fraud and advanced reporting and analytics, along with gamification and advanced psychology to encourage repeat referrals.
As a reminder, here’s why referral marketing is made for a credit union. In its most basic form it’s:
- A means to identify people who are positively disposed your brand;
- Where you ask them to tell friends, family and colleagues about you;
- Giving them with an easy and safe means by which to do so (e.g. send emails or texts directly from their phones in one click);
- Where the referrals are accurately tracked using tracking codes, links or memorable words; and
- Where you offer a thank you reward to the referring member and a welcome incentive to the new member for each verified action.
And because credit unions have always doubled down on customer satisfaction, and serving their local communities and members has always been the main reason to exist, they typically have NPS scores that are the envy of the whole financial services industry. This means that there are a lot of people who could become effective brand ambassadors.
And secondly, because the members often have a common link or bond, such as living in the same geographical area or being employed by the same company or government body, it’s highly likely that your members do know people who could use your services. And because people trust recommendations from friends and family ahead of any other form of marketing messaging, and you have a fantastic combination of trust and proximity to help spread the word about your credit union.
Also a credit union, like any other financial institution, can offer attractive referral rewards that encourage the use of its own offerings, such as paying a reward into the member’s account and crediting the new account of the referred-in friend.
And lastly, referral marketing isn’t an alternative to all the other marketing you’re already doing (like the door drops and partnerships I mentioned above), but something that fits in naturally with it and magnifies its effectiveness. That’s because to really get your program humming along we recommend you promote it, not just on your website, but in all your emails, newsletters, mail drops, and in your branches and call centers. And of course, if you took the advice mentioned above to get an app then, along with the customer areas of your website and your FAQs, that’s a great place to promote it. We pulled together a summary of how to promote your referral program in this guide.
How do we know this works?
Because we power referral programs for over 150 leading brands and retailers across the world, including for great credit union brands like Delta Credit Union, BCU, California Coast, First West Credit Union, Envision, Valley First and Island Savings, we get to see how and where referral marketing can work so well. And, for the reasons listed above, the credit union industry is made for referral.
And across our whole database of clients in banking, insurance, credit unions, telecommunications, energy and retail, we have seen that, when a referral program is properly implemented and promoted, clients can achieve CPAs of up to 80% less than those from other channels and often drive up to 30% of all customer acquisition from referrals.
So if you’re thinking about starting a new referral program or updating an existing one, we’d love to hear from you.