CreditUnions.com recently published a series of slides highlighting CUs’ industry performance through the first half of 2010 (loved the pseud0-slideshow). The headline of the second slide (the first slide with data) read:
“Credit unions are gaining members, however share growth is coming primarily from existing members.”
There’s a word in that headline that hit me upside the head: However.
Using that word in the headline implies that the news, if not bad, is something less than desirable.
Wrong!
There is nothing that CUs should be hoping more for — or working harder for — in 2010 than deepening the relationships they have with existing members — relationships that may very well be in the early stages of development as CUs benefited from the flight to safety that occurred throughout 2009.
I know that there are a lot of credit unions fixated (obsessed would be a good word here) with lowering the average of their member base, leading to a focus on member acquisition. Here’s the reality of the situation: They can’t move the average significantly in a single year. My point is that while it’s all well and fine to launch programs designed to acquire Gen Y members, CUs can’t ignore the cross-sell opportunities they have with Gen Xers and Boomers.
As the CreditUnions.com post indicated in one of its slides, the best loan growth opportunities in the first half of 2010 were in credit cards and business loans. I could be wrong here, but I’d bet those credit card and business loan opportunities weren’t driven by Gen Yers.
I suspect — perhaps unfairly and wrongly — that the use of the word “however” in the slide title referred to above is rooted in a credit union marketing mentality that is driven by some inexplicable need to convert the unwashed masses to the credit union religion and movement.
Credit union marketers just can’t seem to accept that maybe a credit union isn’t right for everyone. That maybe not everyone is going to drink the credit union kool-aid. Instead of lamenting that share growth was driven by existing members in the first half of 2010, CU marketers should be celebrating.
I have yet to find a credit union that couldn’t benefit from deepening relationships with existing members. Marketers just need to look at the number of profitable vs unprofitable members they have in their data base. Those unprofitable folks equal potential.
Courting Gen Y is not a bad idea, but in current economic times may serve as more of a strategic distraction than a plan to build capital and prepare for years of rising regulatory assessments and reduced non interest income streams.
The X and Boom generations still represent the most stable and financially sound prospects in credit union membership. You may ignore them at your own peril.
The headline on the CreditUnions.com article reflects the credit union industry’s intense fixation on growth.
JP: I’ve got no quarrel with the focus on growth — just the fixation on member acquisition as the primary driver of that growth (vs. existing member relationship growth). In a world where marketers seem to agree that “you can’t be all things to all people” and “targeting and segmentation” are critical marketing tactics, I’m struck (and I think I’ve said this before) that the CU community still doesn’t a clear picture of who they want as members — AND WHO THEY DON’T WANT. Note to the CU community: please do NOT say “we don’t want rate shoppers”. That simply doesn’t cut it. A lot of your members are members BECAUSE they’re rate shoppers.
I agree with you, and don’t have a problem with growth either. My point was that credit unions often pretend they don’t care about growth, but the reality is that growth is what many obsess over. And for what purpose? A lot of times it just seems like they focus on growth for growth’s sake. “Isn’t that what we’re supposed to do…grow?” My sense is that many of the growth goals credit unions and their boards have established are purely arbitrary.
JP: Got you. In my experience, many growth goals are established by a chain of numbers that start with the CFO’s profit target. The logic goes: “If we’re going to hit this profit target, then we’ll need X of this, Y of that, Z in sales” which produces a growth goal. Nothing wrong with this approach — if you don’t mind ignoring the realities of the market and the capabilities of the organization, that is.