Cultivate Membership Growth

CU360
May 6, 2008 | COMMENTS

Growing a credit union's membership requires more than fancy ad campaigns, agree three CEOs. Focus, patience, and unique approaches pay off in measurable membership growth.

Membership has grown by leaps and bounds at Navy Army Federal Credit Union, Corpus Christi, Texas. "In the 19 years I've been here, membership has grown 190%—from 20,000 to 58,000 members," says Wayne Vann, president/CEO.

Most growth has occurred since January 2003, when the credit union converted to a community charter. Since then, membership increased 61% and assets grew 135% to the current $550 million. These results aren't due to what Vann calls a single "magic bullet." Instead, he says the results reflect the credit union's focus and energy, innovation, and training, and simple but clever advertising campaigns.

"We sat down and said service—pure and simple service—is what differentiates us in this community," says Vann. The community is 70% Hispanic. It's primarily a blue-collar area that draws revenue from the military, tourism, and petrochemicals. "We developed an advertising campaign that spoke to the average community member," he says. Sample slogans: "Building our community one family at a time" and "Everyone can join."

Navy Army Federal used a range of media outlets to publicize its charter expansion. "Don't be afraid to spend capital to get your message across," Vann advises. "We've been in the community since 1955, so we decided a name change wasn't an option. But telling people they could join was."

While successful, the campaign brought new challenges. "We discovered when you invite the public in, you kiss a lot of frogs," he says. "You increase your opportunities for mistakes. You have to accept the fact that you'll have more losses, and it's vitally important that you understand how to lend to your growing clientele.

"We're the seventh worst county in the U.S. for credit scores," he adds. "So when you have more than a 95% loan-to-share ratio, you have to understand how to lend to marginal credit."

Vann makes it clear membership growth requires hard work. And while loan yields might increase, so will losses. His advice: "Understand the community you're competing in, and have a stomach for grappling with various hurdles involved in membership building."

Attainable Goals

In 2007, when $182 million-asset Clackamas Community Federal Credit Union, Oregon City, Ore., set a membership goal of 100 net new members per month (new member accounts minus closed member accounts), it seemed like a lofty target. But President/CEO Diann Owen-Gaines says it worked. By September, 2007, the credit union achieved its goal, and it finished the year with 1,431 new members.

Owen-Gaines explains the strategy: "We wanted to attract younger members. Specifically, we set up attainable goals that would allow staff to focus on membership growth throughout the year. Then we implemented a comprehensive branding campaign, including a new logo, collateral materials, and a new user-friendly website. That branding campaign allowed us to attract a younger market share."

To continue momentum, the credit union plans to roll out a series of new products and services this year. "We'll offer a lifestyle loan for needs such as cosmetic surgery, vacations, or to finance a new hobby," she says.

A "green" account and loan program featuring the bundling of several existing products and services is in the works. And the credit union will offer new business services and a lending platform to attract new members.

"We've also reached out to geographical areas within our field of membership that we haven't reached before. We want to attract new members not just to the credit union but to the credit union movement as a whole," she says.

One of the biggest challenges of growth is "you have to be able to control it," she notes. Otherwise you may have staffing issues, training, capacity, and management problems." Last year, Clackamas Community Federal opened two branches—an in-store retail branch and an administrative branch.

Looking back over growth during 2007, she offers this advice: "Be innovative. New products and services help attract new members. Not everyone wants a toaster as a giveaway. Try something new. Then have a plan for retention."

Community Connections

Making dreams come true is a specialty at Tuscaloosa (Ala.) VA Federal Credit Union, which has experienced 12.8% membership growth in the past five years. Yet Cathy Boiling, president/CEO of the $61 million asset credit union, says growth has been steady more because of strategic planning than innovative changes.

"We expected growth when we became a community charter in 2005, but we were pleasantly surprised by the level of growth we've experienced," Boiling says. The credit union has four locations. One branch—opened in July 2005—brought in 667 new accounts in the first year, representing a 17% increase in membership.

Though the credit union used newspaper and radio ads to announce the additional branch, it hasn't placed any media advertising since then. "One thing that has made a difference from the growth perspective was the revamping of our lending program," she says. "Most referrals are due to word-of-mouth advertising. We can quantify that because people come into the credit union telling us various individuals referred them."

While the credit union can take loan applications in minutes, the revamped program encourages loan officers to meet with applicants for about 30 minutes to learn more about their needs and educate them about the credit union.

A successful community endeavor is the recently launched individual development account (IDA) program the credit union sponsors in conjunction with the local United Way . It's a two-year program encouraging members to save for specific goals. Members who consistently save at least $25 monthly and complete asset-specific financial courses may receive funds to be used toward wealth-building assets.

"If they save up to $2,000 in an IDA, they'll receive $2,000 in matching federal grants and an additional $2,000 in matching local funds from the credit union, for a total of $6,000," Boiling explains. Members can use funds for a down payment on a house, college tuition, or small business start-up expenses.

Boiling concedes managing the program is time consuming, but the payoff is worth it. "Programs like IDA offer an excellent way to connect with the community and give members a leg up on reaching their goals. They also provide us with new ways to grow our membership."