Comments on: Who Are Credit Unions Trying To Attract?

By: Bryan Link

Bryan Link — Tue, 01 Dec 2009 19:19:54 +0000

This issue of target marketing vs. “something for everyone” is a real problem for larger consumer-oriented coop’s. As a bank, management has no obligation to serve everyone–there only job is to make profits for the bank. CU management, on the other hand, does have a responsibility to meet the needs of all members. So, the larger the CU, the more diverse the membership population is likely to be, and therefore the responsibility to meet a broader and broader set of needs, i.e. be all things to all people. I think this is a real structural issue for CU’s that banks, and even other co-op’s (particularly producer co-ops like farmers), don’t face. REI is maybe an exception, but they are by design a niche retailer (outdoor clothing and equipment).

By: Niche Banking

Niche Banking — Mon, 30 Nov 2009 20:36:28 +0000

Ron, thanks for the prompt–I was in a turkey-induced blog coma and missed the comments on this post.

As you suspected, I do have a different take on the situation than Mark has offered. I would say that the most COMMON credit unions have something for everyone, but I would not say that the most successful ones do. In my opinion and experience, the most common credit unions (or banks, for that matter), have created an experience that’s tailored very closely to a narrowly defined set of people. Their products and services are geared to that group of people, and nobody else. People outside that narrowly defined group may still choose to do their banking with the CU, but chances are they will not particularly enjoy the experience they get…because its been created for somebody very different. This is the key difference between “eligibility” and “target market”–Person A may be eligible to join a particular CU, but isn’t necessarily at all in the target market, and may dislike the experience as a result.

By: Ron Shevlin

Ron Shevlin — Mon, 30 Nov 2009 17:52:59 +0000

Mark: Interesting comment about “the most successful CUs having something for everyone and customize their product and service offerings to each segment. ” I’m hoping the author of the Niche Banking blog will weigh in on that comment.

By: George Pasley

George Pasley — Fri, 27 Nov 2009 16:50:07 +0000

I remember having a few “rate shopper” discussions. I got the usual comments of the customer leaving for .5%. When I asked what we did to keep them instead of leaving for an extra $25 in a year, I usually heard crickets. On the occasions I didn’t hear crickets, I was told they either leave or we match the rate. There was nothing about customer service or other products and services we have that they could use to manage their finances better.

By: Mark Curran

Mark Curran — Thu, 26 Nov 2009 15:17:32 +0000

Good discussion regarding who a FI does not want to target for membership. In most cases, the least desireable membership segment for credit unions are the very people who serve on their boards of directors. The net savers. These people pay zero in interest and fees and expect the borrowers and overdrafters to subsidize their membership. They are also the most rate sensitive group and will move their money for 2 basis points.
As I see it, its OK to target “everyone” for membership in the credit union (at least all eligible potential members), but where they fail is in having a single strategy for targeting everyone. Each segment needs its own focus and strategy. If the focus is just on attracting Gen Y, then Boomers may begin to feel that the credit union is no longer interested in them and their needs. The most successful CUs have something for everyone and customize their product and service offerings to each segment.

By: CU Water Cooler » Blog Archive » CU Water Cooler – 11/26

CU Water Cooler » Blog Archive » CU Water Cooler – 11/26 — Thu, 26 Nov 2009 05:18:19 +0000

[...] • An interesting perspective on Overdrafts: Who are credit unions trying to attract? [...]

By: Ron Shevlin

Ron Shevlin — Thu, 26 Nov 2009 01:42:12 +0000

I’m glad you made this comment. I actually think I was the one who got off track from what the core point of the post was intended to be: Namely, about targeting.

One other thing: I hear the same thing that you do — that they don’t want the “rate shoppers”. NOBODY owns to wanting that “segment” (if you can really call them a segment). But after I hear that, I ask “oh, so you yourself don’t shop on rate, and will gladly take a lousy interest rate, or pay extravagant fees for what you perceive to be superior service?” To which the common answer is “um… er….uh…uh”. My point: Rate shopper is not a valid segment. You can identify them when they walk in the door, and everybody wants to believe that they shop on rate TO SOME EXTENT.

By: uberVU - social comments

uberVU - social comments — Thu, 26 Nov 2009 01:31:41 +0000

Social comments and analytics for this post…

This post was mentioned on Twitter by CUWarrior: RT @rshevlin: New blog post: Who Are Credit Unions Trying To Attract? http://bit.ly/6Et80C…

By: nichebanking

nichebanking — Thu, 26 Nov 2009 01:20:50 +0000

I love the title of your post, but feel the comments have gotten off-track and focused too much on the education value of fees, etc. Your statement about their being no rhyme or reason is who credit unions are trying to attract is right-on. There’s no real strategy in place. But heck, that’s the same case for banks, which don’t have much more of a clue who they are really targeting. Almost no existing financial institutions really do. That’s why I’m so bullish on the opportunity for niche banks.

I like to ask credit union execs and bankers this question: “are you trying to be everything to everyone? The typical answer is, of course, “no”. Then I ask, “so who are you want to just stay the heck away from you?” And there’s never any answer to that question (except when they say “rate shoppers,” which is like a “duh” answer). You can’t say you’re not trying to attract everyone until you can define who you are trying to actively NOT attract.

By: George Pasley

George Pasley — Wed, 25 Nov 2009 18:49:20 +0000

Ron,
I admit to having a little “cu envy” myself, for the same reason. For credit unions, it’s a part of their mission to do what’s best for the customer. In banking, it seems that there are individual employees that do this.

As for OD fees, I saw the controversy coming a mile a way. I think I even have a blog post or two about it myself. I agree that CUs may want to think carefully about attracting these higher OD customers. From some numbers I’ve seen, these also tend to be your higher “churn” customers. But perhaps a CU can better help change the customers’ behavior.