As credit unions try growing from within their ranks, they’re discovering it’s not how many members they have; it’s what they do with them

Once upon a time, credit unions were exclusive. That is to say, they catered to the specific, sometimes idiosyncratic, needs of a well-defined group of people: their members. With the expansion of community charters, the growth of indirect lending and all kinds of successful marketing to the public at large, memberships grew. Credit unions rejoiced. Everything was fabulous, except for this one thing:

“We estimate that there are more than 100 million households in America with about 90 million credit union members, but we only capture about 10 percent of wallet share,” says Dave Dawson, founder and principal at Data Based Marketing in San Luis Obispo, Calif. What does this mean? “There’s room for growth, but it’s not necessarily in the form of new members.”

Here is a message whose time has come. Before credit unions go forth and multiply their memberships by courting ever-widening audiences – at ever-burgeoning marketing costs – perhaps it’s time to take a good, long look at our existing members and ask, “Who are these people and what do they want?”


This question sounds facetious but it’s not. As credit unions have expanded their fields of membership through community charter, expansion and acquisitions, real identity crises have emerged. John Dolan-Heitlinger, president and CEO of D-H and Associates Consulting in Key West, Fla., urges credit unions to remember: “You can’t be all things to all people. I’m acquainted with a credit union that has as its field of membership a group of hospitals, a large university (from which it serves both students and professors) and a large government agency. At some point you have to ask yourself whether you can serve a group this diverse effectively.”

By contrast, Dolan-Heitlinger recalls the history of a former employer, Eli Lilly Federal Credit Union, which was founded in the 1930s for the benefit of Eli Lilly employees. Back then, the credit union offered products based on specific needs. “They specialized in something called a ‘blood tub loan,’” Dolan-Heitlinger explains. “The average loan size was $20 and it basically helped employees get to the next paycheck. It was the kind of loan they might otherwise get from a loan shark.” Glamorous? No. But it helped keep the company’s employees on track and provided a much-appreciated service to members.

In more modern times, Eli Lilly FCU would gear its promotional calendar to the company’s bonus schedule. “Since the company was quite generous with its bonuses, we knew that bonus time was a good time to introduce auto loans or savings products,” says Dolan-Heitlinger. Along with their array of appropriate products, Eli Lilly FCU served up the message that they knew their membership and they lived to serve. Whatever variables existed (and they surely did), members knew that they belonged at their credit union.


Now, credit unions gather members from hither and yon. In this climate it’s not impossible to divine your members’ needs and desires. But it isn’t easy, either.

Also a challenge: Differentiating your credit union from every bank and financial institution on the block (to say nothing of the growing lot of banks gaining market share on the Internet). You can’t rally members around the banner of being ages 18 to 55; it’s not very unifying. For many credit unions, the selling point has been customer service. But Brady Whalen, director of marketing for Chicago-based consulting firm Market Insights, points out that even this differentiator has its limits.

“In the past few years, banks have really stepped up and improved their customer service,” he says. “Credit unions cannot, by default, assume they’re offering better service than their competitors anymore.”

The service edge is further eroded as members visit branches less frequently. The greatest customer service in the world loses its impact when you never get the chance to deliver it. As this measure declines, so does the notion that credit union executives – and even frontline personnel – can know their membership simply by walking through their branches.

“When you feel like you know your membership based on who comes into the branches, you neglect to look at your entire membership,” says Whalen. “Too often, this goes unchecked. Credit unions are going on a general sense of who their members are instead of taking a critical look at the current membership – who they are, what they’re doing and what their needs are.”


What Whalen suggests is critical. If credit unions hope to strengthen relationships with their members, they are going to have to go deep. Products, services and messages aimed at all members are likely to resonate with none. Credit unions hoping to grow through cross-selling efforts – which is to say, most credit unions – should pay attention here. Simply offering more products to your members isn’t the most effective use of your resources. Taking the time to understand what individual members actually want is the key.

Instead of viewing members (and, in external marketing efforts, potential members) in a single conglomerated block, try breaking things down. If your MCIF (Marketing Customer Information File) isn’t producing the level of detail you need, consider using additional resources. In fact, use as many resources as you can muster, including demographic/psychographic data from local media companies (radio stations have notoriously great market data to share with potential advertisers) or usage data from sources like CO-OP Revelation, which provides a wealth of information about where and how your members are using their cards.

If you can identify groups of members that share interests or characteristics, you can pick a segment and speak to them directly with relevant products and customized messages. A few ideas:

  • Shore up your SEGs. Just because your charter has expanded beyond its original SEGs (Select Employee Group) doesn’t mean you should not tailor products or promotions to these core members. If your SEGs champion any particular charity or community groups, contribute visibly.
  • Check your branch footprint. “We know that our members in Lompoc are different from members in Santa Maria,” says Scott Coe, senior vice president of marketing for CoastHills Federal Credit Union in Lompoc, Calif. “Members at different branches have different interests and are inclined toward different products.”
  • Segment by life stage. College students and retirees don’t have the same needs – some would say they barely speak the same language. Let your efforts reflect that understanding.
  • Know their behavior. Find out which products your members are using and how; learn where they’re shopping and spending. Free tickets to the movie theater next to your branch might be a perfect incentive to encourage more debit transactions – assuming you target the right group. You’ll also show members that you know and identify with them.
  • Lock in new members. Merged with another credit union? Acquired new members via indirect lending? Engage with these people actively. “We reach out to new (indirect lending) members while they still have new car euphoria,” says Coe. “Once that fades, so does their interest in learning more about the credit union.”

Customizing the products and messages you promote to members isn’t simply a matter of efficiency. By zeroing in on what members actually want, you recognize them. This is key in the digital age, when face-to-face recognition isn’t as common as it used to be.


If deconstructing your membership is one key to organic growth, another is integrating your efforts organization-wide. What does this mean? Getting 10,000 members to sign up for online banking won’t have much impact if your online banking platform falls flat.

Freedom Credit Union in Warminster, Pa., has been looking for ways to engage with Generation Y. Here, marketing alone doesn’t cut it. To show Gen Y members that they’re ready to work with them, Freedom recently added CO-OP Mobile banking to its slate of services.

“In our first month, we had 1,529 members sign up, 6,300 logins and more than 24,000 transactions,” says Victor Derrick, Freedom’s vice president of member services. “For Gen Y-ers, instant access is really necessary.” Without it, they don’t view you as a serious banking alternative.

“We try to find a solution whenever technology is being requested,” says Kirby Wood, vice president of marketing and branches at Freedom. “We also maintain a philosophy of providing as much convenience as possible through technology, rather than putting a branch on every street corner.” That’s not just good for Freedom; it’s also great for e-commerce-savvy members.

If your products aren’t pro-actively teaching your members to be productive, maybe you should rethink your products. At CoastHills, members pay a $5 monthly service fee on checking accounts unless they meet a list of requirements. These include signing up for e-statements only, having at least one $100 direct deposit per month, having a minimum of 10 debit transactions monthly and providing a current e-mail address.

For most checking account holders, these requirements aren’t onerous. But they do discourage members from opening low-balance accounts they never intend to use. “I’m strange enough to think of a checking account fee as a relationship builder,” says Coe. “We’re encouraging members to contribute to the cooperative.”


If one word emerged most frequently in our discussions on organic growth, that word was “focus.” Credit unions weren’t looking simply to open accounts, but to gain insight and develop strategy. Who are these people? What do they want? And just as important: How do we work with our members to create a meaningful, productive partnership?

Getting there will take partnership within credit unions too. “Marketing is going to be critical to organic growth, but marketing is going to need more than a budget to be as effective as they need to be,” says Whalen. “Marketers need real information in order to make great decisions. In turn, that information can help credit unions create great products, new services, or new ways of doing business that will inspire growth internally and – down the road – externally as well.”