Optimizing Opportunity for Growth

Mergers, new membership groups, innovative delivery channels, and novel products and services all present opportunities for growth. Moving from opportunity to reality—in the form of sustained and sustainable increases in members and assets—requires that everyone in the organization stands united behind a strong brand, with marketing guiding the way.

“Leadership—the board and executive team—needs to lead the brand, staff needs to live the brand, and membership needs to love the brand,” says Mark Arnold of On the Mark Strategies, Carrollton, Texas. “If all three are saying the same thing about your brand, then it’s probably pretty rock solid.”

A central component of brand identity is understanding what sets your products and services apart from those of other financial service providers, as exemplified by the credit unions featured here. Arnold suggests trying to identify what differentiates your credit union from competitors without using the words community, members or service.

“Dive deeper. Everyone uses those words,” he advises. “Credit unions that are growing, especially in membership, are very clear about what sets them apart—and everybody knows it.”

Learn the ‘Cadence’ of New Members

While mergers expand membership, it can take a committed effort to encourage those “new” members to widen their relationship with the continuing credit union. Texas Trust Credit Union grew its membership by 29 percent in 2013—thanks in part to a merger with Security One Credit Union, which accounted for 9,000 of its 15,773 new members—and boosted its loan portfolio by 19 percent. Leading loan growth, at 32 percent, were mortgages, including 450 new home loans. The Mansfield, Texas, credit union also drove up used vehicle loans at a 29 percent clip and new vehicle loans at 22 percent growth in 2013.

With the message of “Better Together,” Texas Trust CU welcomed former Security One CU members by keeping their familiar branches open and staffed by many of the same employees—while at the same time introducing newcomers to the wider access afforded by the full array of branches and online services.

In addition, the continuing CU has forged ties with the General Motors union and retiree club to acknowledge the continuing connection of the merging credit union’s main sponsor to those members, says CUES member Amber Danford, SVP/marketing/business development for the $847 million credit union with 71,000 members.

Texas Trust CU is also building on an alliance as the official credit union sponsor of intercollegiate athletics at the University of Texas at Arlington, opening an on-campus branch this month and several ATMs across campus. To connect with UTA’s 38,000 students, the CU designed a college checking account with a unique fee schedule that offers significantly lower overdraft protection charges, Danford says. The CU also developed an online account opening process for students and offers affinity-style “Maverick” debit cards representing the university’s various sports programs.

In addition, the CU has launched a new rewards credit card in conjunction with the UTA alumni association, with the option to donate points or a certain percentage of each purchase to the association.

That approach is consistent with the credit union’s commitment to connect with each of the communities it serves, by teaming up with the local school district, joining the chamber of commerce, and supporting local theater groups and other community associations.

After its membership numbers jumped in 2013, Texas Trust CU is holding steady in overall membership this year—by design—as it seeks to either grow its relationship with single-service members or make it easy for them to close that one account. Toward the latter end, the credit union charges a $5 monthly single-service fee to members who have only one account and less than $300 in their share account.

Texas Trust CU has set a “stretch goal” of reaching $1 billion in assets by 2016, Danford says, and the most effective path toward that goal will be building stronger member relationships. “We really don’t want to add members just for the sake of adding members,” she notes. “We have 66 percent of our members engaged with at least two to three products, including active checking accounts.”

Leverage Opportunities

Emotions ran high following the economic devastation of the Great Recession, spawning the Occupy movement and Bank Transfer Day. FirstOntario Credit Union “leveraged that environment to deliver our message,” says EVP/Marketing Mary De Sousa, by launching a campaign in which people completed the statement “If I owned my own bank, I’d…” with examples that underscored the credit union difference.

FirstOntario CU, Hamilton, Ontario, continues to take “gentle jabs” at banks, by offering a “Bank Therapy” no-fee checking account and emphasizing that membership allows people to be part of a financial institution that gives back to its community.

There is plenty of opportunity to grow membership, says De Sousa, citing research during a recent Credit Unions of Ontario awareness campaign showing that CUs have only a 4 percent market share in the province. FirstOntario CU conducted its own research in November 2011, a “brand health study” to benchmark what residents of its home base city of Hamilton knew about the CU.

Then it launched a major media campaign with the aim of moving the awareness needle. In a follow-up survey six months later, the number of respondents who were familiar with First Ontario CU went from 12 percent to 24 percent, and that rate remains in the 26 to 27 percent range.

“I won’t say we bought the business, but we’ve become more competitive in the marketplace to showcase our brand, to convey the strength and stability of credit unions, and to make the point that money credit unions earn goes back to the members, the organization, and the community,” De Sousa says. (The credit union’s marketing budget represents about 0.1 percent of its assets under management.)   

As a result of that concerted marketing effort, FirstOntario CU gained more than 10,000 new members in 2013 and has grown membership from 65,000 to 100,000 over the past five years. Its assets have also expanded from $1 billion in 2007 to the current $2.7 billion. Some of its recent membership growth owes to a “combining of operations” with Rochdale Credit Union, which brought 6,500 members on board over last winter, but “the majority of our growth has been organic,” she says.

The CU’s “significant investment in marketing across channels”—including TV spots, billboards, ads in major newspapers, a strong online presence, and branch promotions—and a PR push that earned mentions in regional financial press and the Canadian Business News Network have paid off. 

“The community starts to talk. People were telling us, ‘You guys are everywhere,’” she says. “Then the staff feels like we’ve ‘arrived,’ and that’s when you start to see some magic start to happen.”

Behind the magic is a lot of hard work and the support of the CEO and executive team “to push the envelope on the messaging in the campaign,” De Sousa adds.

Celebrate Milestones

With membership growing at a 10 percent clip, GTE Financial Credit Union made a big splash “counting up” to welcome its 200,000th member in 2013. The CU launched radio and newspaper ads, posted photos of its newest members on billboards, and developed a big social media campaign, all behind the invitation to “join 200,000 of your closest friends.”

“We were bringing in 150 new members a day,” says CUES member Mandy Zurbrick, VP/marketing for the Tampa, Fla., credit union with $1.7 billion in assets and 216,000 members. “We awarded a big prize to the 200,000th member, who came in on an auto loan—her choice of concert and a suite for her and 20 friends.”

That momentum continues, as GTE Financial CU was adding an average 125 members per day this spring. The indirect auto loan program is a regular source of new members, as is a member referral bonus, which brought in 3,500 new members in the first four months of 2014. If a new member opens a checking account and takes out a loan, both the new member and his or her referring friend get $25 in their checking accounts.

Branches, Re-Imagined

GTE Financial CU launched its 21st branch in January, using smart office technology and video tellers for the first time and with great success. The branch made its home loan goals for the year by May 13, and its staff referred more members for new loans than all the other centers combined in the first few months after the branch opened, Zurbrick reports.

Members have embraced the opportunity to step up to the interactive teller machines (branded as “GTE on Screen”) rather than waiting in a teller queue and to step into a private “smart office” conference room to consult with an investment or insurance specialist on screen. The new center posts “member experience officers” in the lobby to guide members who have questions about the new technology and to ask what they think about the service delivery.

“This will be the new model when we open new branches—we’ve proven it with the numbers—and over the next two to three years, we’ll be retrofitting our other centers,” Zurbrick says.

An added bonus of this new service approach and of adding mobile banking and remote deposit capture has been the appeal to younger members. Over the last two years, the average age of new members joining GTE Financial CU is 32, compared to its overall average 45.

Expanding Loan Volume

Two years ago, $59 million/4,600-member VA Desert Pacific Federal Credit Union began consulting with Brett Christensen of CU Lending Advice on how to grow loans instead of “waiting for members to show up so we could take their loan applications,” says CEO Cindy Glessner, a CUES member.

To sharpen its focus on lending, the Long Beach, Calif., credit union shifted operationally to centralized lending and in staffing from three loan interviewers/processors to one experienced salesperson/interviewer, hired from outside, and one processor. In the wake of that restructuring, loan volume has tripled from $400,000 to $1 million to $1.2 million per month.

The credit union also developed a more cohesive team approach, “painting a vision so that each employee understands their role in bringing in loan business,” says Operations Supervisor Vladimir Rosales, a CUES member. “Front-line staff are trained to conduct a quick analysis to see if members are taking advantage of the products we have to offer. If not, they shift as many members as possible over to the loan salesperson/interviewer to have that conversation.”

Most of those conversations happen by phone at members’ convenience. All the credit union’s loan staff are now based in one room, so the processor can provide phone support if the interviewer is already engaged, and the underwriter and mortgage specialist can provide back-up as well, says Lending Supervisor Juan Gamez, a CUES member.

Business development staff are also tasked with helping to keep loan applications coming in. The CU takes advantage of having branches based in two VA hospitals to make access convenient. “If you can’t make it to us, we’ll make it to you,” Rosales says. “For nurses working a double-shift, for example, our business development officer will show up with an iPad—we call it ‘credit union on foot’—to get members connected to the loan interviewer on the spot so they can get an immediate response.”

Hand in hand with that sales approach is the credit union’s underwriting philosophy. “We want everybody’s car loan. If you have a car loan anywhere, I want it,” Glessner says. “We look at FICO, debt ratio, and capacity to repay, but the main question we ask is: Will they pay? Even if their credit is not great, as long as they make their car payments, we’ll take the loan.

“If we have someone who has struggled with credit in the past and they have a good job, they’re going to continue to make their car payments so they can get to work,” she adds.  

Connect Through Credit Cards

Especially in the current low rate environment, credit card promotions make all kinds of sense—to connect with members who don’t yet carry your card and build affinity with those who do, to showcase favorable rates and low fees that can set your credit union apart in a crowded marketplace, and to add a high-yielding asset to the books.

“Credit cards are definitely a sticky product if you can give members a reason to use your card and keep it top of wallet,” says Tom Maiellaro, VP/marketing for $1.3 billion/150,000-member Associated Credit Union, Norcross, Ga.

Associated CU posted big gains with two recent balance-transfer campaigns promoting its Visa credit cards with rates as low as 9.9 percent for qualifying members and the option for Scorecard Rewards redeemable for travel and merchandise. The offer (fee-free balance transfers at 3.9 percent), the channels (low-cost online and branch promotions), and the timing all contributed to the campaigns’ success, Maiellaro suggests.

The first campaign in July through September 2013, coinciding with Georgia’s annual sales tax holiday, added $1.7 million in new balances to the credit card portfolio, and a post-holiday follow-up in January through March added another $1.69 million.

An added bonus was new cardholders signing on to take advantage of the balance transfers, more than half of them from email offers alone. Of the 824 new accounts opened last summer and fall, 462 clicked through email to enroll, bringing in a combined $886,000 in new balances.

Maiellaro also compared the number of new accounts in July 2013 to the previous month, before the campaign began: The 120 percent gain was another signal of its effectiveness.

In addition to email, Associated CU promoted its credit cards on the homepage of its website, in its quarterly member newsletter, within monthly statements, on ATM screens, at teller lines, and in rotating video banners in branches. However, Maiellaro says, “branch merchandising isn’t for members. It’s a reminder to employees to talk to members about the offers and to drive education from staff to members about these products.”

The marketing department also created a “talk starter” that front-line employees could use to guide the conversation with members about the benefits of the balance-transfer offer and then hand to members to take home. “Members don’t know until you tell them about everything you have,” he says. “We still have work to do to convey the message that CUs are full-service financial institutions.”

Credit cards are among a credit union’s top-yielding assets, with net earnings in the 2.5 to 4 percent range, “well in excess of other loans over the last several years,” says Barney Moore, manager/portfolio consulting services at CUES Supplier member Card Services for Credit Unions, Tampa, Fla.

Front-Line Referrals

Over the last three years, North Peace Savings & Credit Union has reorganized its member service staffing model and introduced new technology to connect more conveniently with members across northeast British Columbia. Both initiatives seem to have paid off in supporting increased membership (up 3.8 percent in 2013, almost twice the provincial average) and assets (up 10.2 percent).

The first step was to move from more narrowly defined positions of tellers, investment specialists, lenders and special services staff to retail teams of financial consultants (cross-trained to new accounts, loans and investments) and service specialists (handling transactions), says CUES member Paul McAfee, CCE, VP/service for the $360 million CU serving 12,000 members. Business lenders also broadened their scope to become business account managers.

Then in May 2013, North Peace Savings & CU rolled out its “service delivery culture” supported with CUES’ ServiStar® sales and service training, which further supported loan and deposit growth, McAfee reports. “Our front-line staff have a lot more conversations about identifying products and making referrals. They don’t just take one request but look for other opportunities for immediate products or follow-up. We have a more effective list for our calling staff, which results in a higher return on call rates and in identifying the next-best product for members.”

Members looking for quick transactions have migrated to personal teller machines at all four branches, which are also equipped with “smart offices” so members can video-link with investment, mortgage, and business specialists.

North Peace Savings & CU serves a growing region active in oil and gas exploration and drilling, forestry and support business and industrial sectors. The CU is honing its brand as a business partner with a series of videos featuring members talking about how they’ve grown their businesses from one truck to an entire fleet, for example, or to the most popular coffee shop in town.

On the residential loan front, North Peace Savings & CU promotes its CreditMaster Mortgage, a product offered in partnership with other Canadian credit unions, which permits members to easily attach a new loan or line of credit without additional fees to access equity as they pay down their first mortgage.

“We try to stay away from marketing rates when we can,” McAfee notes. “We continue to look for ways to bundle our products and to focus on innovation, so that we can be more effective in service delivery across our branches.”

Managing Growth

There is a danger of growing in ways that detract from your mission of putting members’ financial needs first, Arnold cautions. For example, an indirect auto lending program can grow the loan portfolio without bringing in members who are interested in a full range of services. Over the long term, that can have the effect of “unraveling a sweater one little piece at a time” before the CU recognizes either that it is hitting pressure points in staffing or that its brand may be shifting away from the ideal.

When marketing works closely with other departments, including operations, HR, and IT, the resulting collaboration and organizational focus on strategy and brand alleviates the risk of growing in the wrong directions, he says. Toward that end, marketing execs need to be able to “speak” technology and understand the possibilities in new digital products and channels and to be involved in HR functions that influence the front-line “face” of the credit union. “Who you hire impacts who lives your brand,” Arnold notes.

Another potential downside of growth is the challenge of stretching the marketing budget to reach out to new markets. At the same time Texas Trust CU is building affinity with the former members of a merging credit union and the students, faculty, and alumni of its new university partner, it is also opening new branches and looking for ways to establish its presence in those communities, Danford notes.

“As we expand into new areas, there are so many opportunities and so many options, with digital channels, social media and local radio,” she says. “We have to pick and choose and then go back and analyze to make sure we stay true to our mission. Because of our growth, we have to be very cautious about where we put our efforts when we have so much going on.”

At FirstOntario CU, a continuing challenge has been finding the best offer to get prospective and new members to switch their checking account and rely on the credit union for their day-to-day banking. “We keep trying different things to incent and entice people to make the switch, but so far we haven’t found the silver bullet,” De Sousa says.

Sustainability is another challenge, she adds. “How do you continue on this road of double-digit growth and sustain it over time? We’re always looking for the next big thing, the opportunities in the market that will help us keep rolling.”

A long-time contributor to Credit Union Management, Karen Bankston writes about credit unions, membership growth, marketing, operations and technology. She is the proprietor of Precision Prose, Stoughton, Wis.