8 minutes
But it's not impossible. Part one, in a three-part series.
Aging membership is a real issue in the credit union industry. While the average age of a North American is 35, the average age of a U.S. credit union member has risen to 48. And in Canada, largely considered one of the most forward credit union systems in the world, the average age is 54!
But the real elephant in the U.S. financial services industry is the absolute dominance of the top 100 banks. While the CU market share has increased slightly in the past 20 years to just under 7 percent, the community bank share has dropped by nearly two thirds—from 53 percent to less than 19 percent. Smaller banks are literally being swallowed by the top 100 banks, which have grown from less than 50 percent to more than 74 percent of the total market.
Why Big Banks?
On the surface, it seems today’s young people should be drawn to community-based, socially conscious banking options, but the numbers are proving they are not. Why? Generally speaking, young adults distrust companies and media, could care less about banking, and have no idea what a credit union is. Lack of interest in personal finance, inertia of the big banks and misconceptions about smaller institutions are the biggest hurdles to overcome.
According to The Journal of Gift Planning, in the next 30 years, North American members of Gen X, Y and Z will inherit over $40 trillion dollars. This will be the largest transfer of wealth in history with money leaving smaller institutions for large banks by the truckload because 98 percent of next gen inheritors change advisors, and move away from their parents’ existing banking relationships. And where are the young people? At the 100 largest banks. It will be a tough trend to circumvent.
Planning Your Campaign
With that background and context in mind, reaching young consumers should be of paramount importance to your CU.
Your CU needs to take a layered approach to marketing to young adults by using all marketing channels available, including traditional media, digital marketing, events, public relations and more.
Rethink the typical two- to three-month campaign mentality—year after year, most CUs mount loan promotions in the spring and deposit campaigns in the fall, each with a disjointed creative approach.
More sophisticated institutions have opted for long-term brand advertising. The same approach should be taken for young adult marketing. Because time never stops and your member base will continue to age, it’s impractical to think you can solve your age issue in a matter of months. It’s far more effective to mount a long-term initiative and build momentum over time.
Spend time up front contemplating your goals. Decide on three to four key performance indicators. Avoid getting caught up on social media vanity metrics including likes, views and followers. Instead, concentrate on real business objectives like member growth, brand awareness, new product sales, products per member increase and direct revenue. It’s up to you to determine your baselines before launching anything.
Product
Next, think about your product offering. If it’s not compelling, all your marketing activity and investment will be wasted. Your product offering needs to include at least one or two differentiators. Free checking is still very appealing to cash-strapped young adults, but you need to have a streamlined way to open accounts, ideally online. Try to bundle your products—perhaps a checking account, a starter credit card and an auto loan—to cement your relationship.
Weigh technology investments carefully. For instance, mobile banking is more important than personal financial management tools to young people and while remote deposit capture is all the rage, not many young people have to deal with checks these days. Take time to think through your complete offering to young adults.
The big Midwest bank, PNC, has a killer banking application called Virtual Wallet. It’s a great example of a product-centered approach to integrated marketing to young adults. The marketing is centered around user experience and product features expressed through real testimonial videos from Virtual Wallet customers.
If you’re looking for an off-the-shelf young adult product solution, consider Kasasa by BancVue. More than 170 community banks and CUs across the U.S. are offering this rewards checking account.
Concept
To stand out, your campaign concept should be big, new and different. In fact, it should make you feel a little nervous.
For example, our Young & Free Marketing Program is built on a big idea: Empower a local young person to be the voice of their generation and empower that generation with a head start in the form of a free checking account and related products.
To date, 31 young adults have held the Young & Free Spokester position at CUs all over the U.S. and Canada. Participating CUs have attracted more than 150,000 young adults. The concept works extremely well for CUs because they are so under the radar and the Spokesters feel really good about representing a not-for-profit, socially focused, local organization.
$630 million/78,000-member Listerhill Credit Union, Sheffield, Ala., has done an excellent job of integrated young adult marketing with its “The Hill” initiative. Everything from a campus branch and free checking account, to a quarterly newspaper and an endless stream of events and promotions has made Listerhill CU the leading financial institution among young adults in northern Alabama.
FRANK by OCBC in Singapore is a hip, stylish and trendy brand with obvious youth appeal. To launch FRANK, OCBC conducted a ton of research, developed new products, a relevant brand and a cool new store. At the time of launch, the $200 billion financial institution already controlled 26 percent of the total youth market in Singapore. FRANK is propelling that number even higher.
The concept of a complementary youth brand has proven effective for financial institutions around the world. In Canada, Scotiabank recently acquired ING Direct and has rebranded as Tangerine to create a separate, more youthful sub-brand. With the recent acquisition of Simple, the hot Internet startup bank, global bank BBVA appears to be taking the same approach in the U.S.
Platform
Now that you’ve got your product and your concept, you need to figure out your platform. For the digital aspect of your credit union’s young adult marketing, promote your own URL, not a social network you have no control over. Use popular platforms like Facebook, Twitter, YouTube and Instagram but think of these properties as outposts. Ultimately, you want full control of your content and don’t want to be held hostage by platforms that are increasingly charging to reach your followers and fans. Make sure your website is where you put your energy.
For a young adult campaign, you’ve got two choices for that destination. Choice one is a section within your corporate website. The advantage is that it has built-in traffic and it’s a single destination for your members and potential members. Disadvantages may include being lost in the complexity of the site; limitations in the content management system for incorporating social media, videos and contesting; and limited IT resources for building out something really custom within your corporate website.
Choice two is a stand-alone microsite. The advantages are total control, flexibility and simplicity. If your young adult campaign has a differentiated look from your corporate brand, it’s likely easier to build that in from the ground up on a separate website. The disadvantage is that building traffic to a new destination can cost more and take time.
If you go the stand-alone microsite route, you’ll have dozens of content management systems to choose from. Make sure to choose a platform that supports a mobile responsive theme so all your content is optimized for all screen sizes. WordPress is the most popular but will require technical chops to fully customize the look and optimize for speed and hosting. Consider a hosted CMS like Squarespace or Virb among others if you want a solid platform that doesn’t require a lot of technical expertise. This is the ideal route for a smaller marketing department to consider.
In addition to growing your following on popular social networks, you should aim to grow your email database as well. Campaign Monitor, MailChimp and CUES Supplier member DigitalMailer, Herndon, Va., are good email providers to consider.
Aim to deliver at least one email per month with a combination of useful information, chances to win simple prizes and product messages. Take every opportunity to grow your email lists. In this age of social media, email has been largely discounted, but it can be really effective—it’s an affordable way to continuously connect and stay top of mind.
Read part two of this article series, “Launching Your Youth-Focused Campaign,” and part three, “Sustaining Your Youth Campaign”.
Tim McAlpine is president and creative director of Currency Marketing. He is a credit union advocate best known for developing CUES Next Top Credit Union Exec and the Young & Free program that CUs from around North America are using to connect with new young adult members. Subscribe to his blog at www.currencymarketing.ca and follow him on Twitter @CurrencyTim.
