Membership Growth: The Better Thief Wins

Rich Jones
February 18, 2008 | COMMENTS

How do you grow a credit union in static or congested market?

Growth is static in Elevations Credit Union's primary market, Boulder, Colorado. The 2004 census information was depressing— Boulder County grew by 957 people.

That's not to say we're in a depressed market. Our market is very robust. It's a high-income area with lots of entrepreneurs, stable major-growth companies, and a diverse employer base.

The problem is that the high cost of housing is creating a type of urban flight. The average home value in Boulder County is over $400,000. As a result, 49,000 people commute into the county daily to work. When a key driver to asset, core deposit, and member growth is physical proximity and convenience to branches, this creates a real challenge to growth.

Now add to this flat growth the fact that there are 113 bank and credit union branches in Boulder County . That means there's one branch for every 2,500 residents.

How does a credit union grow in a static population base with significant competition? By stealing customers from banks, and becoming a better thief than the banks.

How do we become a better thief? By being different and better. And we have to tell the community how we're different and why we're better. We have to tell them in terms that matter to them, free of jargon and exaggeration. When we tell them why we're better and different, we have to deliver on that promise each time.

Educate Members about Rates, Fees

Do our rates make us better? Maybe, but not likely. There's so much deceit around rate offers today that consumers might not know what they're really paying. To understand rates today, a consumer must be diligent and disciplined in reading and understanding all account terms and conditions. The direct mail offer usually is only part of the story. The fine print behind the offer defines the true cost of the product or service.

Plus, rates are used to attract consumer's attention, and it's virtually impossible to always have the best rates all the time. It's got to be more than rates.

Is it our lower fees? Not likely. Fees, like rates, can also be deceiving. Fees often are hidden or masked. Have you seen the “fee-free checking account” offer that requires a debit card with a $35 annual fee? Or a “no-fee” equity loan that requires a minimum balance of several thousand dollars at activation or fees are attached?

With most bank websites, fee listings are difficult if not impossible to find. Because we believe in full disclosure to our members, we provide clear links to fee schedules on our website. This transparency creates a perception that we have more fees than banks when just the opposite is true.

Credit unions use fees to underwrite the cost of doing business or to penalize “bad” behavior. Banks use fees to increase shareholder returns and profits. But since consumers probably don't know this, we've got to help members understand the value and purpose of fees.

Be Worth the Drive

We've seen studies showing how proximity to a branch drives core deposits and member engagement. But the super regional banks have much deeper pockets for branching than credit unions. So how can we drive the perception of convenience without the expense?

We need to help members use and understand all of the remote access tools the credit union has available. Branches need to be strategically placed to create the perception of convenience. Credit unions also can couple their automated teller machine placement strategy with their branching strategy to increase this perception of convenience.

But the most cost-effective answer to branch convenience is to be worth the drive and to acknowledge members for making the trip. They have a lot of choices between you and their home or workplace that may be more convenient. We also need to communicate why we're worth the drive.

Let Members Define “Good” Service

Good service is essential for a credit union to acquire members. But members, not the credit union, determine what good service is.

Plus, the perception of good service often is driven by members' circumstances. If a member is in a hurry, good service is defined by short or no wait times, and transaction speed and accuracy. Everything else—cross-selling, happy faces, engaging conversation—is unimportant, inconsequential, and, at times, annoying to the member who's in a hurry.

If the member has a question, good service is defined as straightforward, honest advice and information from a knowledgeable, interested staff person. If the member has a problem, good service is a sympathetic ear plus ideas and assistance with solving the problem or, when necessary, an introduction to the person most appropriate to solve the problem.

To create a consistent perception of good service, credit unions should:

• Read the member and know what the member needs now. Is it friendly banter, speed, accuracy, advice, or problem solving?
• Discover what members need versus what they say they want. We're the experts about our products and services and how members will benefit from them. We need to establish our expertise by diagnosing members' situations and offering the best solutions. This is a great way to exceed members' expectations.
• Make members feel connected and important. They're the most important thing in front of you.
• Exceed members' expectations. Surprise them, dazzle them, amaze them, greet them, and thank them. They're the sole reason we're in business.

Understand the Credit Union Difference

The business model of a bank is to derive profits from customers—period. There's no other motive because a bank's business won't survive if it doesn't earn a return for shareholders.

Banks will do anything to legally increase their profits and shareholder returns. We can never lose sight of this fact. That's not to say they don't want to provide good service or be competitive. But their job is to boost profits—that's the bottom line of every decision they make.

Our business model is, “not for profit, not for charity, but for service.” We have no hidden agendas. We're here to serve our members, not to benefit shareholders or increase profits. It's that simple.

Achieving sustained growth, regardless of your market situation, requires knowing your competition, knowing what's important to your members and your market, and deciding what you want/need to do to earn their business so that they'll go the distance to do business with you.

Once you've defined how you want to differentiate your credit union, become 'cult-like' in your pursuit of these differences. Become consistent, creative, and purposeful in communicating these differences. Make your differences part of your credit union's DNA.

Rich Jones is vice president of marketing for Elevations Credit Union, Boulder, Colorado and CMBDC Executive Committee member. Contact him at rich.jones@elevationscu.com or 720-565-6046. This story first appeared at www.creditunionmagazine.com and is reprinted with permission.