Mark Arnold > speaking • branding • planning

E-Scan Offers Marketing Insights

Self-disclosure time: I serve as a contributing author for the E-Scan

The Credit Union National Association just released the 2012-2013 Environmental Scan. The E-Scan offers insights in 10 primary areas affecting credit unions, including legislation, compliance, staffing and of course marketing. The E-Scan is a must-read for any credit union executive and is also an outstanding planning tool to use.

As we noted, “Marketers are trying to keep Bank Transfer Day momentum rolling, retain the recent wave of new members and explore new channels for increasing brand awareness. This involves layering new communication channels with traditional marketing media to reach the right person, with the right offer, at just the right time.”

There were many strategic issues we could have examined relating to marketing but we mentioned five key areas. Below are some excerpts from the key findings.

(1)    Member retention

While member growth is welcome, member retention is far more important. Now that most credit unions have experienced this wave of new members, the more urgent question becomes: how does my credit union retain them? “The biggest challenge credit unions face in growing existing member relationships is apathy, “says Ron Shevlin, senior analyst at the research firm Aite Group. “People just don’t care that much about their choice of financial providers to make the most informed decision.”

(2)    Marketing technology

We live in a technology-driven society—where gadgets and apps dominate and access to information is immediate. Technology has put consumers in control of when and how they want to communicate. Credit unions must adapt to this new environment by changing the way they market to members and non-members. Specific marketing technologies credit unions should consider include updated and interactive websites with live Web chat, video and instant account opening; blogs; social media; mobile marketing; QR codes, and search engine marketing. 

(3)    Video marketing

There are multiple reasons for using videos in your marketing efforts. Videos can support your brand, drive traffic to your website, engage members and put a personal face to your credit union. “If done right, video is an effective way to compliment what print and traditional media have to offer,” says James Robert Lay of PTP New Media. “Video can emotionally engage and connect with people.” 

(4)    Advanced sales training

Many front-line sales training efforts focus on only the basic skills: using the member’s name, making eye contact and engaging in conversation. While those skills are necessary, it’s time for credit unions to go beyond the basics. An advanced sales training approach develops more sophisticated sales skills among your top performers, business development staff and branch managers. 

(5)    Differentiation

Thinking strategically about differentiation isn’t as easy as it seems. Credit unions must avoid “cliché differentiation.” Is there a bank or credit union that is not about service or serving its community? Try answering the question, “What makes our credit union different” without using the words service, people, or members. Differentiation is critical, but your credit union must work hard and dig deep to truly define it.

So what do you think? Are these the top marketing trends credit unions should be aware of as we move into the planning process? What issues would you add? What comments would you include with those five above topics? 

These were just a few snippets—there is obviously much more detail in the E-Scan itself. To get the full context of the marketing section and to read the other insights, be sure to purchase your copy of the E-Scan. In addition to the report itself, you can also order the full E-Scan package, which includes the E-Scan report, the E-Scan Newsletter, the E-Scan DVD, the Strategic Planning Guide and the E-Scan Research & Advice Portal. When it comes to strategic planning, there is no better resource or tool your credit union can use than CUNA’s Environmental Scan.

How to Get Staff to Understand Your Strategy

According to a recent report from author and consultant William Schiemann, only 14% of employees have a good understanding of their company’s strategy and direction. Another poll from Gallup indicated that only 26% of employees are “engaged.”

No matter how you slice the numbers, many of your employees don’t care or don’t understand your strategic plan. You know, that document you spend hours talking about and producing. The one that defines your differentiation and drives your success.

Let’s be honest: if your employees don’t “get” your strategic plan, it is doomed to failure. So how do you get your employees to understand your strategy? Here’s a hint: it’s not by going branch to branch and telling them your strategy after the planning session—it takes much more effort. Here are four tips to increase employee interaction when it comes to the strategic planning process.

1)      Involve employees—From the very beginning, get employees talking about your strategic plan and what your credit union should do. You can survey the staff, hold town hall type meetings or just chat informally with individual employees. We often involve managers (and that’s a good thing) in the planning process. But to truly gain staff buy-in we need to take that involvement to everyone in the organization. Questions to ask the staff include, “what should we accomplish next year,” “how can we improve,” “what new products should we offer,” and “if you were the credit union king/queen what would you do?” 

2)      Engage employees—It’s not enough just to ask employees questions; we need to actually engage them in the process. You might want to include a front-line staff or two in the planning session (someone young with a lot of ambition). Doing so means they have a voice. You could also conduct mini-planning sessions for each department. Another idea is to give each strategic initiative to a group of employees and have them brainstorm the tactics for achieving the goal. You can even have them perform a skit or make a video to illustrate how to live it. 

3)      Challenge employees—A good coach will sometimes get in a star player’s face and challenge them to live up to their talents. Don’t assume the worst of your employees; assume the best.  Let them know you’ve set stretch goals for the year. Let them know you have high expectations. And while challenging them, go deep with the strategic plan. Don’t just lay it out and say this is it: tell them this is the mountain we are going to climb and we want you to go with us. People are smart and the more you communicate the plan the more likely it is they will understand it. 

4)      Train employees—Most credit unions use an outside facilitator to help them with their strategic plans. And a lot of these facilitators are also speakers who could motivate your staff. You might be able to get a discount from a speaker if you use them for your planning session and for a training event. I’ve even had some clients dovetail a strategic planning session with a training session (where I do one day of on-site staff training and then facilitate the strategic planning session the next day). This maximizes the credit union’s resources.

As the report said, “No organization can perform at its best with only 14% of its people rowing in the same direction.” Do you want your employees rowing in the same direction with your strategic plan? Then involve them, engage them, challenge them and train them.

Can Credit Unions Be Like Siri?

Many consumers, and especially Apple fans and tech-geeks, are aware of (if not enamored by) Siri. The personal digital assistant built into the latest iPhone 4S model, Siri can help its owner with a variety of tasks, from auto dialing and web searches to scheduling reminders and setting wake-up alarms. Siri also has a perky/quirky side, as evidenced by her (the American version features a default female voice) unusual answers collected at various websites.

So, have we finally entered the age of the tricorder, the fanciful gadget first envisioned by Star Trek creator Gene Rodenberry in the late 1960s? With Siri, is mankind now fully connected to the grid in a way never before seen? Fears of SkyNet domination aside, what kind of questions might your members ask of your credit union if they could plug into it at any time, like Siri?

Pondering the answers can help guide us towards better answering (and anticipating the answers) members and potential members expect of our credit unions.

XYZ Credit Union, please tell me …

• What are your Saturday lobby and drive-thru hours?
• What are the current CD and savings account rates?
• What are driving directions to your main office?
• What is the minimum deposit required to open an account?
• Do you offer a kids club savings and education program?
• Do you have an 800-number?
• Who can become a member?
• Are you on Facebook? Twitter? YouTube?
• Do you offer any business accounts or services?
• Are any of your materials available in Spanish?

Hopefully, every member of your staff, from management to back office and front-line are so well-versed in your credit union’s brand that they can answer any of these questions (except maybe an on-the-spot recitation of all your current rates). What we can all strive to do is be our credit union’s version of Siri, always ready with the answers.

If you can provide these answers, minus Siri’s sometimes dangerous flirtations with digital attitude, your members and potential members are more likely to see you as the one-stop shopping source for all things financial. Let’s just avoid handing out the credit union self-destruct codes (a little extra perk Siri offers).

How Much Debate Do You Have in Your CU?

How much debate actually goes on in your credit union? I don't mean arguments or personality conflicts. I mean debate. In other words healthy discussions.

As Ray Davis says in Leading for Growth, "Do you have a lot of vigorous debates in your company? If not, people are not empowered." Credit union executives everywhere talk about how they want empowered employees. Really? Does that mean you are okay if they disagree with you or have a different opinion?

Here are some places inside a credit union where we need more debate: 

1)      Board rooms—all board members should not think alike. In fact, they should all have unique perspectives. The more diversity in a board, the better decisions they tend to make. A strong board will actually disagree with each other from time to time. 

2)      Executive and management team meetings—if every senior executive always agrees with the CEO then there is a problem. Make sure you are not allowing "group think" to take over your meetings. Here's a tip: on a particular discussion topic the CEO should give their thoughts last. 

3)      Planning sessions—speaking of group think, let's talk about your strategic planning session. This is one place where debate is paramount. What projects should we undertake? Where should we spend our resources? Who should we target? Odds are, not everyone will agree on those answers. And that's a good thing. 

4)      Individual departments—the people working for you should not be like you. Hopefully you hired for your weaknesses and not your strengths. If that's the case then in your department your employees will have different ideas. Embrace their suggestions: even if it wasn't yours. 

When it comes to debates inside your credit union keep these ground rules in place: 

• Never make it personal (keep everything at the business level)
   
• Cover each other's back after the meeting (if it's a group decision and you disagreed with the group don't grumble to others about it afterwards) 
• Move on (don't hold a grudge)  
• Remember that debate is healthy for an organization (different perspectives lead to better results)

Having a strong credit union means having strong people. If you have strong people that means they won’t always agree. But an organization full of “always agree” and “yes men” isn’t healthy.

Some people flee from conflict while others embrace it. But true and healthy debate is not really conflict. It's a way to improve your credit union.

Beyond a Savings Account: Becoming Your Members PFI

“Credit unions must see themselves as relationship managers. As relationship managers, credit unions better position themselves to become members’ primary financial institution.”
—CUNA E-Scan

While there is a big rush today to get more new members, one marketing strategy your credit union may want to focus on is getting more from your existing members. Most marketing experts estimate it is eight to ten times easier to expand a relationship with a current member than it is to acquire a new member. Just think about it: what would happen if every one of your members just added an additional product or service per household? Odds are, your net income would skyrocket.

Credit unions must get their members to go beyond just having a savings account and strive to become their members’ primary financial institution. “Financial institutions that make retention one of their top three priorities often enjoy deeper relationships, steadier growth and clearer focus on the core business,” says CUNA’s E-Scan.

According to CUNA, here are the odds of your credit union losing a member based on product usage:

• 2 to 1 of losing a member if they only have a saving account
• 10 to 1 of losing a member if they have savings account and a checking account
• 20 to 1 of losing a member if they have savings account, a checking account and a loan
• 100 to 1 of losing a member if they have savings account a checking account a loan and any fourth product

Product penetration and member retention are directly linked together.

Two steps your  credit union can take to going beyond just having your members’ savings account are:

1)      Offer relationship pricing

2)      Get sticky products in their hands

Offer Relationship Pricing

Relationship pricing is rewarding members who do the most business with you with special deals. The more business they do, the more profitable they are and better deals you give them. For upscale members, you might take away fees in exchange for higher balances and offer discounted rates on a loan.

TowerGroup Research showed that 70% of U.S. consumers would like to have all of their accounts at one financial institution.

“We see relationship pricing as rewarding those members who participate the heaviest in the cooperative based on their relationship with us,” says Eric Gagliano, senior vice president of MarketMatch. Prior to joining MarketMatch, Gagliano helped launch relationship pricing at River Valley Credit Union in Ohio. “We are rewarding members for their business,” he added.

Get Sticky Products in their Hands

A “sticky” product means something that “sticks” with the member in such a way that it has staying power with them. Examples of sticky products include a checking account, bill payment and a mortgage.

Having a checking account is still the classic definition of being a member’s primary financial institution. The challenge with that, however, is that many households now have multiple checking accounts. So you could have the members checking account and still not be their PFI. Having the checking account is just the beginning: you also want direct deposit and a minimum number of transactions.

Bill payment is especially important because you have to really upset the member before they will go through the trouble of making all those changes. In a recent Wall Street Journal article, a Bank of America executive noted, “Once a customer goes through the trouble of setting up electronic bill payment, he or she is 80% less likely to switch loyalties.”

A  mortgage is a relationship type of account. You have additional opportunities to market your other products and services. One financial institution had a “3M” strategy: they wanted all their customers to have a money market, a mutual fund and a mortgage.

If all you have is a member’s saving account, you really don’t have their business. Offering relationship pricing and getting sticky products in their hands can take your members beyond just having that savings account.

This article first appeared in the Texas Credit Union League's Lone Star Perspectives.

Your Credit Union’s Blind Spots

We all have them. Blind spots. Whether we are driving down a street, riding a bike or running while listening to headphones, blind spots exist in our lives.

Blind spots also exist in your credit union. These are areas where we don’t always see the hidden dangers. But they are there. And they can wreck your credit union. Here are three potential blind spots along with solutions to overcome them:

Sales culture—It seems like every credit union says they have a sales culture. But do you really? Let’s be honest: a sales culture means more than the basic skills of your employees calling members by their name and making eye contact. In a true sales environment, your product penetration, member retention and other key numbers will consistently move upward. You will also conduct regular and consistent sales training. If your sales numbers are not improving and you aren’t devoting budget dollars to sales training then you are merely paying lip service to a sales culture and it’s become blind spot.

The solution: Conduct an honest assessment about your sales numbers. Examine if your sales culture is more of a glorified service culture. Consider conducting advanced sales training (more than just the basics) for your top sales staff.

Staff—Credit union executives are good people with big hearts. But sometimes that can get our credit unions in trouble. We can tend to hold onto people longer than we should. We think we can “fix” people. The reality is you probably have staff members who are disengaged employees. They’ve quit—they just haven’t told you yet! Maybe at one time they were strong employees, but now a new set of skills is required. Perhaps someone is resistant to the changes you want to implement. If you are merely hoping your employees will improve, then there is a distinct possibility your staff is a blind spot.

The solution: Fire your underperformers (that may sound harsh but it’s true). You probably already know who they are. You want passionate people. The more you hold onto underperformers, the more they drag down your credit union.

Strategic planning—How creative is your strategic plan? As Jim Stengel says in Grow, “Remain stuck inside your current business model and your business’ days are numbered.” Too many times our strategic plans are “cut and paste” versions from previous years. We use the same old SWOTs (why?) that haven’t changed any. When was the last time you discussed and implemented a bold, new idea? If it’s been longer than 12 months, then your strategic planning process may be a blind spot.

The solution: Do something different this year for your planning session. Whether it is using a new facilitator, conducing the Myth of Excellence exercise, preparing a Five Star Analysis, throwing out the SWOT or asking hard questions, don’t get stuck with the same strategic planning model.

Those are a few potential blind spots that possibly exist in your credit union but there are others. What additional blind spots should we be on the lookout for or what are other ways to overcome the ones mentioned above?

Working Front Lines Gives Execs Insights

 In a recent CUES Skybox post, Lisa Hochgraf wrote about “Prepare the Soil.” In referencing a session at the CUES Symposium: A CEO/Chairman Exchange, she noted that Lou Centini “made the point that CEOs need to be in touch with employees to prepare the organization so their leadership vision can take root.”

But how can we do that at credit unions? Executives could occasionally work the front lines. Too many times the more we move up the credit union ladder, the farther away we get from our actual members. And that is not necessarily a good thing.

While I was senior vice president at Neighborhood Credit Union, we made sure our senior team visited the branches on a regular basis. And a branch visit did not mean the cursory “fly-by.” You were actually required to spend the entire day in the lobby visiting and helping both members and staff. Neighborhood Credit Union executives still make sure they are regularly visible on the front lines.

“It’s important to understand what is going on in the trenches,” says Carolyn Jordan, senior vice president for Neighborhood Credit Union. “We may have this idea in our offices of what is going on, but that may not actually be the case.” Jordan pointed out three advantages working the front line does: gives feedback, communicates approachability to the members and makes staff feel good about the credit union.

“At our level, some things are filtered,” Jordan noted. “But when you are talking directly to members, they don’t filter their comments through a survey or through staff.”

Today, both Jordan and Chet Kimmell, Neighborhood Credit Union’s CEO, frequently visit branches. It is more of an informal process, with Kimmell going to branches weekly. When Jordan is in a branch she makes a point to not be in an office. She is either right at the teller line (in their case, teller pods) or in an open area where she can dialogue with members.

“Members love to see the senior folks,” Jordan says. “It communicates that we are approachable and truly care about the member.”

Here are some questions you can use as conversation starters that also provide keen insight on your credit union:

(1)   Why are you a member of our credit union?

(2)   Why don’t you have more of your business with us?

(3)   What can we do better to serve you and earn more of your business?

“We can sit up here in our offices and do processes and not realize what is going on in the trenches,” Jordan added. She pointed to a recent example of when the credit union launched instant issue debit cards. “We created this whole process that wasn’t user friendly to staff. I had no idea until I went down into the trenches.”

Down in the trenches—it’s a place credit union executives tend to avoid. But spending occasional time down in those trenches can yield incredible insights into your credit union.

Note: This post was first posted on CUES
Skybox.

Choosing the Best Service Provider for Your CU

In a recent white paper (Choosing the Best Service Provider for Your Credit Union) now available for download through Synergent Technology Services, we explored the growing number of credit unions opting to outsource technology services to a qualified service provider or vendor. By counting on a service provider to help operate the behind-the-scenes side of IT, credit unions can then focus more freely on what they have always done best: superior member service. The research looked specifically at related topics including when outsourcing makes sense, the value of partnership, comparing value to price and outsourcing as sound fiscal policy.

More credit unions now see outsourcing as a critical step to take in order to better serve member needs. Debbie Guiney, CEO at AllCom Credit Union in Worcester, Massachusetts ($56 million assets, 3,900 members) addressed the issue for her credit union by saying “We’ve always outsourced our data
processing functions. We see a very clear value proposition in any sized credit union in turning these duties over to trained IT professionals rather than trying to handle it internally.”

Once a credit union decides that outsourcing is an option worth investigating, finding the right service provider is critical. And with such a substantial outlay of capital and human effort, making the fit right for both parties from the start is key to the future performance of the relationship and member service
excellence.

When seeking a service provider to establish this partnership, keep the following questions in mind:

• Are they a credible resource that addresses your credit union’s needs?
• Do they help your credit union improve overall member service?
• Can they make your staffs’ jobs easier and more productive?
• Will they offer immediate service and assistance, regardless of time or date?
• Could you see your service provider support team as an extension of your staff?

Obviously,credit unions want and should receive the very best value for their outsourcing investment. The best possible personalized service to your credit union and its members is worth the investment in the right partner.

The past few years have been an economic roller coaster ride. With government bailouts, unemployment benefits and a volatile market, consumers’ minds are understandably unsettled. In an uncertain economy, outsourcing can make a lot of sense, for your credit union and its members.

Check out the white paper for more details.

Marketing Without Marketing

 

During the opening session of CUNA’s Marketing Management School, we had the opportunity to hear from Jon Wolske, Culture Evangelist for Zappos. His take on marketing was simple: your best marketing tool is experience. In other words, don’t drive marketing to your members, drive an experience for them.

“Zappos is powered by service,” he said. “We want to build personal emotional connections with our customers.”

Wolske noted that by focusing on connections instead of marketing Zappos gets the following things from engagement:

• Inspire employee happiness and engagement
• A sense of ownership and pride
• A workforce who make business decisions based on their core values
• A team who is willing to do what’s right for our customers and our company

“We invest in our people and in our brand,” he noted “It’s not a cost; it’s an investment.”

Zappos is famous for its “wow service.” Wolske noted that Zappos uses no scripts, empowers their representatives and has no call time limits.

Zappos focuses on the experience because they believe in the power of repeat customers, in word of mouth marketing and in solid brand identity.

Wolske cited the following data regarding how experience and results:

• About 75% of purchases are from returning customers
• Repeat customers order >2.5 per year
• Repeat customers have higher order size vs. first time customers

Zappos doesn’t do a ton of marketing. But they do a ton with service, with customer experience and with their employees. So maybe it’s time we market without marketing.

Time To Adjust the Marketing Budget

It’s getting close to mid-year budgeting time at most credit unions.  That usually means one thing for many marketers: we have to cut our budgets. If a credit union is not hitting its net income numbers the first place to cut is often marketing.

Here’s a multiple choice question for you to consider:

Cutting the marketing budget to hit overall net income is:

1. Not a wise strategic move
2. Absolutely crazy
3. Short-sided
4. All of the above

If you guessed “4” you are a marketing genius (or are marketing biased!).

The reality is that if you aren’t hitting your loan, checking and new member goals you set for the year, cutting the marketing budget is not going to get you closer to your numbers. If you don’t spend in marketing, you won’t hit your strategic goals. Please note I’m not saying you should increase the marketing budget just to increase the marketing budget. Everything you do at your credit union should be done for strategic reasons. This includes your budgeting process.

Here are some reasons credit unions should increase their marketing budgets for the remainder of 2012:

• Unforeseen expenses occurred—If other areas (H.R., fee income, dividend expenses) hit your credit union in the first two quarters, don’t take it out on marketing by cutting its budget. Look for other areas to pick up those numbers.
• Smart marketing means more growth—Don’t expect growth without marketing. Members and potential members must know about your products. It doesn’t happen magically. And it doesn’t happen without spending a few bucks in marketing.
• Election could increase media  expenses—Keep in mind that in September and October political ads will blitz the airwaves. That means media buys will cost your credit union more money. If you choose to do mass media in the Fall, be prepared to spend more.
• Marketing is an investment, not an expense—Too many number crunchers look at marketing as a line item expense. That’s the wrong perception. Remember the “I” in marketing ROI is investment.  Cutting the marketing budget is not actually cutting an expense; it is actually cutting an investment in your credit union.
• Branding leads to growth—As Jim Stengel points out in Grow, every company that experiences exponential growth did so by committing dollars to their brand. They didn’t grow by cutting marketing: they grew by expanding it.

So when those budget meetings start and you look for ways to control expenses, be sure to adjust your marketing budget: higher!