By Frank J. Diekmann
Hey, maybe, just maybe, it was more than a coincidence.
Recently, on the same day and at nearly the same time, a couple of outsiders to credit unions were addressing CU audiences about 30 miles apart in South Florida when both used different words as they attempted to get credit unions to see the same thing.
“The most important word in credit union isn’t credit, credit is super easy to get right now,” author and consultant Seth Godin told CO-OP’s THINK Conference in Miami Beach. “The most important word is union. It’s about what it means to belong to something.”
Godin then challenged the traditional concept of the marketing funnel, which focuses on the broad top of the funnel––in other words, mass advertising–with a goal of pushing consumers out of the other, narrow end–in other words, make them members.
“That’s not the answer,” he said. “The answer is to take the funnel, turn it around and make it a megaphone, and hand it to your best customers and let them tell your story,” said Godin. “The idea we can become a human to someone creates remarkability. You win not by going after the largest possible audience, but the smallest possible audience you can live with. If you can delight those people and blow them away, they will tell the others. And only then can you make the impact you seek.”
(In a Q&A that followed his remarks, by the way, Godin didn’t think much of CUNA’s plans for its Open Your Eyes to a Credit Union campaign, which you can read about here).
Your Best Marketers
Thirty miles north, Erik Qualman was making much the same point to credit unions in Fort Lauderdale for Trellance’s Immersion 19 meeting.
“Your members have become your best marketers, if you are doing things well,” Qualman told the meeting.
Those two have hardly been the only ones to look at credit unions from the outside in and wonder, “How can you not see this?” In other words, why are credit unions not leveraging the hell out of theunionof members extending the credit to one another to tell their stories?
It’s a truism as old as marketing and advertising itself—word of mouth beats every other form of media available. As Godin noted, why have so many people signed up for Netflix? It wasn’t because of an ad campaign, but rather because of what Netflix customers were telling everyone around them (and we’re not counting all the people using someone else’s account to binge on their favorite series).
Credit unions frequently spend some big dollars to hire actors or even celebrities to be their spokespersons, yet Godin and Qualman and so many others keep repeating that CUs already have the best spokes-people they could ever want. In fact, about 115-million of them.
That’s the Ole CU Spirit
I overheard one person tell another during the NACUSO meeting that it was their first time attending. And then, really feeling the spirit of CU cooperation, this person added, “They sent me here because they want me to create some sort of CUSO that will make us a buncha money.”
What Trillion-Dollar Competitors?
A new report by Keefe, Bruyette & Woods called“The Non-Bank Chronicles: The Rise of Credit Unions,” is part of a series the company said examines various non-bank competitors, analyzing the scope and methods to which each competes, and how banks can effectively fight back to protect and profitably grow their market share.
The report notes that since 2005, credit unions have seen their market share of U.S. consumers steadily grow, with deposits expanding 108% from $578 billion to $1.2 trillion or approximately 9.2% of all federally insured deposits in the country.
Despite holding less than 10% marketshare of deposits, and super-despite the fact the vast majority of credit unions have less than $100 million in assets, a survey of 114 bank executives by KBW found 52% identifying credit unions as the “greatest threat” to their ability to profitably grow in the future. Sixty-eight percent indicated they expect credit union market share to increase in future years.
JPMorgan Chase? BofA? Wells? Apparently, the community bankers have never heard of them.
It’s Manually Automated
Steve Wofford of Kohl Analytics Group, which specializes in the study of the profitability of loans and deposits, shared a spreadsheet worth of interesting insights into loan profitability during that recent NACUSO meeting, which you can read about here.
One teensy little thing dragging down margins on loans, according to Wofford, is that while it’s true many CUs have spent the money on automated underwriting, one survey found just 30% actually use the software. In some cases, credit unions use the automated underwriting, but then also manually review and approve, meaning they are paying twice.
But I guess the examiners are happy.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.infoor @FrankCUToday.