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Are You Leaving Your CU's Market Position to Chance?

Complacency has no part in a sustainable strategy September 30, 2010 While the term ‘sustainable' has been popularized and adopted into the modern business lexicon of buzz-words, its meaning hopefully has not lost significance in planning. Being able to "maintain at a certain level or rate" has many practical lessons for credit unions.

Coming off what has been coined the "Great Recession" leaves many financial institutions in wildly different places. Though credit unions and banks have both been affected by the economic challenges, most credit unions have fared far better. Credit unions have, for the most part, been viewed as the white knight while many banks suffered public relations black eyes.

Now, with the economy slowly regaining strength and banks rebounding with advertising efforts touting their cleaned-up image, the question is what's next for credit unions?

If your credit union believes that the "movement" has triumphed over the for-profit bankers and that new members will keep strolling through your doors, you might want to ask yourself if this advantage is sustainable or merely a temporary benefit from the public's negative perception of banks.

Many credit union executives naively believe if they can get new members in the door through favorable circumstances, they can keep them by providing great service. Unfortunately, there are some flaws in this logic. Consider that: History has a way of forgetting. No matter what a person's motive for choosing your credit union over another financial institution in the past year, its significance will erode with time. Just because you provided an auto loan to members when their primary financial institution wasn't lending, it doesn't mean they have pledged their financial future to your credit union.

You might be the hero today, but in this day and age of mass information consumption and ephemeral loyalty, you might be forgotten tomorrow. Of the new members you have acquired over the last year, how many have used additional savings or loan products from your credit union?

Convenience is king. As the economy slowly improves and the financial impact on consumers' lives lessens, convenience will again trump other short-term advantages that your credit union may have held during the recession.

One thing that doesn't change from a boom to bust economy is people's demand for convenience.

If your credit union has a hard time matching the conveniences of competing local banks and credit unions alike, good luck turning those new-deposit members into more profitable members.

So, as credit unions look to the post-recession future, they're faced with a couple of options:

1. Business as usual. If your credit union has weathered the economic storm and managed modest growth without doing anything substantially different internally to fuel growth, then you may have an unsustainable strategy for maintaining growth. Successful credit unions have recognized the enormity of last year's marketing opportunity to better position themselves for future growth.

If your credit union is still hinging its differentiation on "being a credit union" and having money to lend, you may seriously want to rethink the longevity of this strategy.

2. Be bold. Be different. In today's fast-paced society and hyper-competitive banking industry, is your credit union willing to truly understand and embrace its unique difference in its market and continually invest in communicating, demonstrating, and evaluating that difference on a daily basis? If so, you can at least rest assured that your marketing strategy is sound and sustainable.

The bottom line A sustainable advantage doesn't rely solely on the poor decisions or performance of the competitors within your marketplace. While you may benefit from short-term gains, you will not be immune from the consequences when new or reinvented competitors raise the bar and rise to the challenge.

Brian McCormick is business development director for Gazillion & One, a brand consultant to credit unions.