By Bo McDonald
CUToday.info ran an article recently that focused on reasons why some credit unions aren’t growing. The piece cited a CUNA Mutual report which found that credit unions with assets greater than $1-billion reported membership growth of 6.3%, while credit unions with assets less than $20 million showed membership declining by 1.6%.
Why? The study attributed it to technology, or the lack of it at smaller credit unions. “The reasons for the decline are many, including small CUs simply not having all of the products and services of the bigger organizations,” said Steve Rick, Chief Economist for CUNA Mutual Group.
I strongly disagree. I’m not saying the numbers or the CUNA Mutual study is wrong. But I think it’s incorrect to assume that smaller credit unions can’t compete. Three of the dozens of credit unions that my firm works with have less than $50-million in assets. All three have seen huge growth in 2014. The names shall remain anonymous, but here are the numbers*:
$14M Credit Union:
Loan Growth: 26.63%
Net Income: $231,691
$35M Credit Union
Membership Growth: 2.86%
Loan Growth: 12.97%
Net Income: $265,944
$40.5M Credit Union
Membership Growth: .92%
Loan Growth: 23.15%
Net Income: $160,642
*All numbers from 9/30/14 NCUA 5300 Call Reports
I would love to attribute it all to the marketing we do for these credit unions, but there are several other factors that play into their success.
- Attitude: Never do these credit unions say “we’re too small to…” If there’s a will there’s a way. They understand that they may not be able to compete on the same level as their larger counterparts. They find creative solutions to obstacles. All adapt to overcome what others may see as impossible problems.
- Culture: While they may not all be perfect, through the last two years there have been culture shifts at these credit unions. Leadership at all three understand the need for staff and volunteers to believe in and use their credit unions. Without that, they can’t truthfully and enthusiastically share their passion for the credit union with members, their family and friends. In many cases some staffing changes have taken place, which was not easy for the leaders in an industry that truly cares about the people who work for them. There were some hard decisions made, but for the greater good of fulfilling the mission of the credit union they were necessary.
- Mission: Speaking of mission, each of these three credit unions has defined a niche. We built a profile of what their “perfect” member looked like in many different areas, including the obvious age, lifestyle, habits etc. Old products were sun-setted, new products were introduced, and different advertising media were added (such as remarketing and Pandora). Marketing messages are now speaking specifically to the needs of the niche. These credit unions stopped being “everything to everyone” and embraced who they were and want to serve. At a smaller credit union, it’s easier to work with a reduced budget when you know exactly when and where your messages should be placed.
- Competition: Often we only look at other credit unions as our competition. The average slice of the pie for many credit unions in their respective markets is between 4% and 6%. That’s a small portion considering another 90% and some change that could be served up. That includes large national banks, community banks, payday lenders, buy-here pay-here lots, online FI’s and more. Our focus was more on what ALL of our competitors are doing, not just other local credit unions.
- Look Outside the Industry: Too often we go to chapter meetings and conferences to find out what our peers are up to. We look to our colleagues for new ideas. While that’s not a bad thing, there’s a whole new world of concepts out there many of us don’t consider. Read Fast CompanyorInc. magazine and you’ll find a fresh perspective on what innovative companies and brands are up to. You might even find some ideas you never considered before, that would give you an exclusive edge on your competition.
Saying you’re “small” is no excuse for declining membership and loan balances. As a small credit union, you are a David among many Goliaths. Success and growth are possible. Believe first, then grab your slingshot and shoot your competition right between the eyes. Your slingshot won’t come in the form of a direct mail campaign or a radio ad. Rather, find your niche, think differently, and embrace new technologies and opportunities available to you.
Bo McDonald is president of Your Marketing Co., Greenville, S.C., and can be reached at email@example.com.