Economic Quake Means Opportunities for Credit Unions

The economic tsunami that has affect businesses over the last two years has created both opportunities and challenges for Credit Unions. On the one hand Credit Unions faired better than banks in terms of stability. Callahan reports that Credit Unions experienced “accelerated member growth and an increased presence in key business segments, with national market share in mortgage and auto lending reaching new highs in 2009.” In a 12-month report recorded on June 30, 2009, U.S. Credit Unions reported a 8.4% growth in shares account balance. But on the other hand some glaring cracks have opened up. These cracks have revealed some incredible opportunities and challenges for Credit Unions.
Clarocision Research & Marketing did a comprehensive consumer perception study featuring Credit Unions in Broward and Miami Dade counties. This study was done over the period of July through September of 2009 and used a sample size of 372 respondents. Several major themes became evident. The following is a minor sampling of such themes.

In spite of the efforts of some Credit Unions to make the public aware that they are open to the community, still over 50% of the public are generally unaware (54.8%). This has significant implications for how Credit Unions market themselves. Credit Unions must carefully segment their market and utilize all the various forms of marketing to get their message out. If after one hundred years more people are not aware of the services offered by credit unions, then obviously, the message is being stymied somewhere.

When consumers think about choosing a Financial Institution their needs shape such decisions. Therefore Credit Unions must position themselves and their products to be one of the choices among many. Since Credit Unions cannot compete on the same monetary level as banks, they still have to offer products and services that are at least as good or superior to those of the big banks. They might not be able to win the brick and mortar challenge but Credit Unions can surely offer unique and diverse products to capitalize on the shaken confidence that many currently have in banks.

One might assume that a good way to attract new customers is to offer them great incentives. Interestingly, only19.9% of respondents chose a primary financial institution based on the incentives offered. The top reason for choosing a Financial Institution was that the bank or Credit union gives a sense of financial security. Credit Unions could benefit much from this sentiment since they are seen as more stable and secure. Unlike banks, where close to one hundred failed in the last year, only very few Credit unions failed over the same period. Since 2009 a total of 69 banks have failed and 8 credit unions, according to BankInfoSecurity.com.

Based on the research done by Clarocision Research & Marketing, thirty-point eight percent (30.8%) of people who do not have an account at a bank are likely to switch or to open an account at a Credit Union. This means Credit Unions have to ensure that they build customer loyalty. This response correlated with the reasons most respondents gave for making a bank or Credit Union their primary financial institution. The more products persons have at a financial institution the more likely they are to say that this is their primary financial intuition. This means Credit Unions can build greater member loyalty by listening more closely to the needs of their constituents and offering them more products that are unique to their life style. This is where careful research and profiling are necessary. According to Kristin Witzenburg, CEO of Market and Sales Logic, Credit Unions can improve their marketing strategies by focusing more on content based marketing. This content based marketing has to be research specific and involve the consumer. Members have to be educated in as many ways a possible about Credit Unions and their services. Otherwise even the ones who currently have accounts at Credit Unions could switch.

An opportunity for Credit Unions is that, with all the efforts that they are making still 60.8% of respondents in Broward and Miami Dade did not have an account at a Credit union. This is a very large market for Credit Unions. This can be seen as both a challenge and an opportunity. On the one had it is a challenge Credit Unions are not getting their message out very well. But on the other hand they have a very large market to which to appeal. The wise approach is to carefully segment and profile this market and develop specific member acquisition campaigns to reach them.

These are just a minor sampling of some of the major themes that arose from the study. If you are interested in the full result or a member acquisition campaign you may contact Clarocision Research & Marketing at www.crmfirm.com or call 954-741-2234.