Revamp Your Products
Opportunity: Core products like home loans seem like the same old, same old.
Action: Change up the parameters on a familiar (read: steady-selling) product to increase stickiness and make a splash.
Mortgage rates have been a high-speed yo-yo for the past few years. Either they’ve nudged members into anxiety – “Am I getting a good rate? Should I re-fi?” – or plunged them into a sullen grumpiness, in fear they are overpaying (whether they are or not). And in some ways, that’s the good news. Trying to position a home loan as “new” or “exciting” can feel like selling your old shoes.
Enter the Harmony Mortgage, an innovative product available through credit unions from the Credit Union Mortgage Association (CUMA). What makes it different is that the member gets to adjust his or her own rate – without fees or penalties – in response to changing interest rate averages. That means no appraisal, no paper work, and no closing fees necessary in order to reset the loan’s APR.
“The big advantage for members is that they can control the rate on their ARM going forward. This gives them much more flexibility,” says Tony Miller, a business development officer at CUMA.
Members pay a 0.25 percent premium above the market rate for the Harmony Mortgage, and there is fine print about how often they can re-set their rates (basically, there is a 120-day waiting period after each re-set). But what the Harmony Loan delivers is the sweet sense of control. “This will help keep members inside the credit union,” says Miller. “This is a niche product, (it’s) not for everybody. But it also is a conversation starter with any prospective home buyer.”
There are some limitations – no loans on investment properties, for instance – and the individual issuing credit union sets it own lending criteria (deciding yea or nay on any borrower).
Right now, two credit unions offer the Harmony Loan – Fairfax County FCU in Virginia and Agriculture FCU in Washington, D.C. Yet CUMA believes it will be signing many more credit unions in the near future: “We believe this product has the potential to change how we issue mortgages in this country.”
In the meantime, the Harmony Loan is a great example of tweaking a tried-and-true product to make it more appealing – and stickier – to members. While it’s too soon to say that all the anxiety over mortgage lending has ended, either for credit unions or their members, offering a product that allays fears about fluctuating rates while encouraging members to stick with their credit unions for loans makes good news all around.
Roll Up Your Sleeves
Opportunity: Burying yourself in the day-to-day operation of a credit union can limit your perspective.
Action: Inspire yourself – and everyone else. Hosting a pull-out-all-the-stops day of service brings your organization together and gets everyone out in the community where connections happen.
Presidents’ Day may have been a holiday for many of us, but in and around Oregon Community Credit Union’s Eugene base, something special was happening. An impressive 220 OCCU employees showed up at nine designated sites and immediately got busy. Some painted purple children’s chairs at a pre-school. Some pulled batteries out of discarded cell phones for safe processing at the recycling center. Others composted or gardened or stuffed envelopes for underfunded community organizations. Bottom line: They did whatever the organizations asked them to do – and they did it on their own time.
Even more amazing: OCCU has just 235 employees, meaning just about everybody volunteered. Every member of top management rolled up his or her sleeves, including the CEO.
“Credit unions are about people helping people, and as we thought on that, the idea for a volunteer day came together,” says Cherie Kistner, marketing manager at OCCU.
The benefits of employee volunteer programs are many – and real. Individually speaking, volunteering has a positive impact on both physical and emotional wellbeing. Organizationally, volunteering presents a great opportunity for public relations, community relationship building, marketing and branding.
In a 2010 UnitedHealthcare/VolunteerMatch survey, 81 percent of respondents reported that volunteering with work colleagues helped strengthen those relationships; 76 percent said they felt better about their employers because of their involvement in an employee volunteer program.
Did OCCU enjoy these benefits? The local media took notice, and OCCU got the kind of high-praise coverage most financial institutions can only dream about. Kistner acknowledges that being a good corporate citizen may result in attracting new members, retaining current ones, recruiting and retaining employees.
But these are by-products, she says. The bigger purpose is to live out OCCU’s commitment to help the community where it can. “We do things like this because our board wants us to be a community leader,” says Kistner.
She adds: “We probably will do something like this again next year. Everybody agreed it was valuable. Employees were excited, and the organizations we helped were appreciative.”
Give Credit Where Credit is Due
Opportunity: Members want new options with their credit cards.
Action: Create your own credit card program to increase wallet share, serve members and boost revenue.
Six years ago, Community Financial Credit Union in Bloomfield, Colo., sold off its credit card business to a big bank – and then realized it had made a mistake. Because in turning over its credit card portfolio, Community Financial also turned over the right to contact its 3,000 card-holding members. Poof, there went a lot of relationship-building.
Along with it went the opportunity for Community Financial to expand its reach with members who wanted new credit card options. Here was a prime opportunity to connect with members who needed more service, and to increase revenue through transaction fees and interest, stake out additional wallet share and diversify operations. In the end, that potential proved too irresistible to ignore.
This past winter, Community Financial implementing its own credit card program in association with CO-OP Financial Services, which handles the processing. Community Financial is looking forward to running a successful program. But the key is that, suddenly, the credit union is again in control when it comes to member contact, says Jeremy M. Pinard, chief lending officer.
“We are in charge. It’s our card program. It’s a pass-through. We control everything through our core system,” says Pinard.
A plus for Community Federal is that, with this program, “we can offer instant issue at the branch. A member can walk out with a credit card in one minute,” says Pinard. This is exactly what is happening with many of the credit union’s best members, who are attracted by the program’s rich rewards: presently, two points awarded for every dollar spent.
“We wanted to offer our members a card they will use, one that is better than other cards out there. We believe we created that card,” says Pinard.“It is helping us build stronger ties. When you are using our credit card every day, you are thinking about us.”
Get Comfortable with Social Media
Opportunity: We all know we should be using social media. But are your programs actually connecting with members?
Action: Make it your goal to develop social media programs that members actually can – and do – use.
“We have gotten very engaged in social media for two reasons – to connect with all our members and, in particular, to connect with younger members who are hard to reach through other ways,” says Sheryl Kirchmeier, senior vice president and chief marketing officer at Salal Credit Union in Washington State.
This was made vivid a couple of years ago, not long after Salal created its Twitter account. A young woman tweeted: “I can’t believe my credit union is on Twitter.”
That woman turned out to be working in China; how else could she have connected with her credit union than via the Internet?
Salal maintains a Twitter presence – @SalaCU – and also has a Facebook page (www.facebook.com/Salalcu), but the trick lies in using those accounts to make working connections. “Our biggest challenge,” says Kirchmeier, “is letting people know we are on social media.” Many credit unions are not – or they may have a place-holder account that lies dormant.
According to a 2010 study by custom market research firm Chadwick Martin Bailey, organizations that decline to maintain a social media presence may be viewed as out of touch by consumers. “Social media is an extremely important and relatively low cost touch point that has a direct impact on sales and positive word of mouth,” says Josh Mendelsohn, a vice president at Chadwick Martin Bailey. “Companies not actively engaging (their customers) are missing a huge opportunity and are saying something to consumers – intentionally or unintentionally – about how willing they are to engage on consumers’ terms.”
Salal understands the importance of maintaining a virtual relationship with its members. The credit union’s social media specialist, Shannon Perry, keeps up a stream of tweets and Facebook posts. Her goal, she says, is to provide information that is of interest to Salal’s members, such as links to articles about the wise use of credit cards or the how-to’s of home refinancing. Mixed in are newsy updates: “Our system upgrade is complete! Online Banking is back up and accessible, and try out our new 24-hour phone…”
What you won’t find are negative statements about competitors – “We wouldn’t post that,” says Perry – and neither will Salal get into online confrontations with unhappy customers. “A core value of social media is transparency, and we view social media as a tool that allows us to communicate what we are doing to solve a member’s issue,” says Kirchmeier.
Perry adds that perhaps her biggest surprise in implementing Salal’s social media campaign is “how much work this takes.” Communicating in brief bursts – a terse 140 characters is all Twitter allows – underscores the difficulty of being entertaining, yet succinct.
But Salal is betting on this program to reach members who fall outside of the more traditional lines of communication. According to Kirchmeier, “That’s what makes this worth our effort.”
Meet Your Constituency
Opportunity: You want to let people know who you are. But short of tackling them on the street as they pass your branch, making real connections on a budget is tough.
Action: Sometimes in marketing, it’s better to go deep. Complement traditional marketing efforts with campaigns that leverage your human side in real, compelling, newsworthy ways.
121 Financial Credit Union in Jacksonville, Fla., had two problems. Ironically, they helped solve them when they took on a third.
Problem one: 121 Financial changed its name from Florida Telco Credit Union to reflect its broadening membership base. However, many in the community were either unaware of the credit union’s updated brand, or they were of the belief that a new and unfamiliar credit union had set up shop in Florida Telco’s stead, according to William Braddock, 121 Financial’s CEO.
Problem two: 121 Financial didn’t have a lot of money to spend on marketing and re-branding efforts.
Meanwhile, 121 Financial became aware of a third problem – one that, technically, wasn’t its to solve. Local schools had been hit hard by budget cuts. 121 Financial wanted to play a part in helping to enrich education in the community. In an effort to tackle all three issues simultaneously, 121 Financial came up with a low cost but highly creative plan. Working with an art teacher at Robert E. Lee High School in Jacksonville, 121 Financial sponsored a contest – open to all students – where participants were invited to submit an original work of art reflecting a spirit of community dedication and diversity, two of 121 Financial’s core values. The credit union kick-started the promotion by donating the supplies necessary to help the kids capture their imaginations.
The contest attracted more than 100 entrants. After the five semi-finalists were selected, copies of their artwork were mounted at 121 Financial’s ATMs around town. All viewers, regardless of their membership status, were invited to visit 121 Financial’s website to vote for a favorite.
The winner of the contest received an iPad, the runner-up an iPod Nano. “This didn’t cost us much,” says Braddock, “but it did get our name out – and it also helped to promote interest in art in the community. It may bring us new members, it may help us recruit new employees, but it definitely is making everybody more aware of the importance of art.”
Creating problems – or any other artificial means for drawing attention to your credit union and its interest in helping the community – isn’t, in itself, a great action step. But when you address a real problem with real creativity, you can leave the world a bit better and create a name for yourself in the process. There’s art in that, too.