In preparing for this article, I must have read at least three dozen articles and blogs written by marketing agencies and solution providers offering Credit Unions advice on how to craft the perfect marketing strategy. And unfortunately, after reading all of these, I have to say that most of what I read was basically… worthless.
By that, I don’t mean that the advice is necessarily bad, but just that it either seemed to be ill-suited to the realities (financial, technical and operational) that most Credit Unions face, or was so basic and generic that it would be unlikely, of itself, to change the game for any Credit Union. I put that down to the fact that a lot of the advice was written by interested parties, you know the score: ‘you need a localized SEO strategy’ says the local search agency, or ‘you need an app’ says the app development agency, or ‘you need this super expensive thing’ says the seller of the super expensive thing, etc.
I’ll explain myself in more detail below, but before that, let me get two things off my chest first:
- Firstly, I (as I assume is the case with most of the authors of these articles 🙂 ) have never actually worked in a Credit Union. I did, however, run digital marketing for a leading bad debt credit card business for a couple of years. So perhaps you’ll forgive me if I make some assumptions here.
- And secondly, as the Marketing Director of Buyapowa, the leading global provider of referral marketing platforms to regulated industries across telecoms, utilities, banks, insurers, and… you guessed it, Credit Unions. I too have an agenda. But I hope that won’t detract from what I write below.
One thing that surprised me in reading these articles was that some tactics that can work so well for a Credit Union, and which I saw working incredibly well first-hand at the credit card business, are absent from all of these articles. One of these, if you’re targeting a demographic within a specific geographical area, is a well-organized direct mail or door drop strategy. And another, when you’re targeting employees of an organization or a type of employee, like firemen or the police, is to partner with other organizations that have a relationship with them, like Unions etc. But the most perhaps the most surprising to me, was just how few mentioned the most effective tactic for a Credit Union: a referral program.
But first, let’s look at why I think much of the advice I read in over three dozen articles adds so little value. In short, the advice can be broken into three categories:
Basic and generic
By this, we mean advice like:
- Content marketing i.e. have a blog;
- Localized SEO i.e. if you’re targeting Wichita Kansas, write content about Wichita, Kansas;
- Long-tail paid search i.e. bid on ‘loans Wichita Kansas’ and have a landing paid dedicated to loans for people in Wichita;
- Improve your customer experience.
While there’s nothing wrong with this advice per se, let’s just say, assuming you have a few years under your belt in marketing at a leading Credit Union and didn’t know this already, then I wonder how you got so far in your career. Let’s just hope, for your sake, that no-one catches you out 🙂 .
A common problem identified in many of these articles is that many Credit Unions are failing to connect with younger audiences, who are seduced by the allure of fintechs and online banking apps like Ally and Betterment. In order to gain market share among younger generations, the standard recipe advocated seems to be to have:
- An app
- A chatbot
- An entirely digital user journey from A-Z
While the strategy of digitizing everything makes sense, particularly when you want to increase your penetration among younger demographics, it’s not in itself going to change the game for your Credit Union. At best, you’re going to catch up with national or regional banks and fintechs, and it’s going to require quite some investment. But it seems to me to be completely unrealistic to think Credit Unions, with all their resource constraints, are ever going to out-innovate the big banks in digitization, who have billions of dollars to invest every year, never mind the fintechs who are typically out-innovating the big banks!
Data…or another buzzword with a big price ticket
Here we see buzzwords thrown into the mix like:
- Big data
This seems to be without regard to the fact that many of these strategies come with seven-figure price tickets and require large organizational changes. Advocating these strategies seems to simply evidence an ignorance of the reality that many Credit Unions face, in having limited marketing budgets and limited technical resources. The basic reality of being ‘not for profit’ and investing any ‘technical profit’ back into reducing fees for members, paying higher interest rates or paying out bonuses for members, means that there are no profits to invest in these expensive strategies.
Unlike national banks with billion-dollar marketing and technology budgets and fintechs backed by venture capital, private equity and sovereign wealth funds and able to blitzscale while losing hundreds of dollars on each new customer, Credit Unions have to live within their means.
So why’s referral marketing the answer?
The reason that referral marketing can work so well is that it plays to all the strengths of a Credit Union and doesn’t come with a crippling price tag.
As a refresher, here’s what a referral program is:
- A means to identify people who like or love your brand;
- and reach out to them and ask them to tell friends, family and colleagues about you;
- providing them with an easy and safe means by which to do so (e.g. send emails or messages directly from a mobile phone in one click);
- where the success of the referral is accurately tracked using tracking links, codes or memorable words; and
- where you typically offer a thank you reward to the referrer and a welcome incentive to the new customer for each verified transaction.
Firstly, as Credit Unions have always focused on customer satisfaction, and typically have among the highest NPS scores in the financial services industry, this means that there are a lot of people who like or love their Credit Union who could become effective brand ambassadors.
And secondly, because the members of most Credit Unions have a common link or bond, such as being employees of the same company or government body, or living in the same geographical area, it’s highly likely that your customers do know people who could become members of your Credit Union. Add to that, that there’s a plethora of research showing that people trust recommendations from friends and family above all other forms of marketing messages, and you have a fantastic combination of trust and proximity to help spread the word about your business.
Additionally, a Credit Union, like a bank or any other financial institution, has the ability to offer attractive rewards that will stimulate and encourage the use of the Credit Union’s own offerings, such as paying a referral reward into the referring customer’s account and crediting the new account of the referred-in friend.
And finally, referral marketing can work with and magnify the effectiveness of all the other marketing you’re already doing (like the door drops and partnerships I mentioned above). This is because to get your referral program to excel we advise that you promote it in emails, newsletters, mail drops, by advertising in branches, having call center and branch staff mention it, and by having permanent and prominent navigation across your website, apps, customer areas and FAQs. We pulled together a summary of how to promote your referral program in this guide.
How do we know this works?
Did I mention that Buyapowa is the leading global provider of referral marketing to regulated industries? Ah yes. I got that off my chest early in this article! But because we power referral programs for over 150 leading brands and retailers across the World in financial services, utilities, telecommunications, gaming and large retail, we get to see how and where referral marketing can work so well. And, for the reasons listed above, Credit Unions is an industry made for referral.
And by working with great brands like Delta Credit Union, BCU, California Coast, First West Credit Union, Envision, Valley First and Island Savings, we get to see that first hand. You can see some great testimonials on our Capterra reviews page, including from Delta Community Credit Union:
And from the First West Credit Unions:
Of course, we can’t share confidential performance data in a blog article, but we have seen cases among our client base, where a referral program is properly implemented and promoted, where clients can achieve CPAs of up to 80% less than those from other channels and often drive up to 30% of all customer acquisition from referrals. Of course, those are best-in-class figures, but then you should always aim high.
If you would like to know more about how Buyapowa can work for your Credit Union, please get in touch and we’ll talk you through what we can do.