Wednesday, October 15, 2008

Are You Advertising Your Security, or Proving it?

Its no secret that credit unions aren't often in the media spotlight. So, like most other credit union folks out there, I've been really excited to see so much positive press coming out about credit unions.


I recently attended the 2008 Partnership Symposium in Fishers, Indiana. During the Idea eXchange section of the conference we discussed pretty heavily what credit unions should be doing during this financial crisis.


What should credit unions be saying to take advantage of the situation, and take advantage of all the positive press that has been given to credit unions.


My suggestion? Say nothing.


I know that sounds counter-intuitive, but hear me out.


You can say whatever you want. That doesn't mean its true.

Even the giant banks that are seeing most of this financial mess are saying "hey we're cool, everything's cool, we're safe and sound! Seriously, trust us."

Every single bank out there, including those that have recently failed, have touted the security and financial soundness of their institution. Many of those claims have been proven false.


Add this to an existing lack of trust in financial institutions...

and you get a large population of America who just had their skepticism proven. People are tuning out the feel-good, "don't worry, we're safe, trust us!" messages more than ever.

It doesn't matter what you say as a financial institution right now, it will be met with a large dose of skepticism.

It doesn't matter that you are a credit union putting out reassurances and not a bank because...


People don't see a difference between banks and credit unions.

As a certain CUSkeptic pointed out at the Partnership Symposium a couple weeks ago, to most people there is no difference.

I see the difference, and the fact that you are even reading this blog probably means you see the difference, but to your average Joe Sixpack its all the same thing.


So we're just supposed to sit here and wait?

In a way, yes. There isn't much we, as credit unions, can do by pumping out advertising to emphasize our security. Between consumer unease, distrust, and fear it probably isn't going to be heard or trusted if its coming from your marketing department.


Say nothing, but do everything.

The real opportunity here is not the chance to spout marketing that touts your security, but the opportunity to prove it.

Pay attention to all this positive press.

This may be the closest thing we get to a national brand. We have nationally trusted press selling the virtues of the credit union movement for us. They are telling the people that read their papers, blogs, and articles what they see as the unifying benefits of belonging to a credit union.

I don't think anyone would argue that this press is reaching, and being trusted by, far more people than an ad on local cable or a page on your credit union's website.

What we need to do now is...


Make sure we live up to the hype.

Take this positive press for credit unions and use it as a litmus test for how you are meeting expectations. Are you living up to the credit union "brand" that is being presented in these articles?

The best thing we can do to take advantage of the current financial situation and the positive press it's brought credit unions is to live up to what the people who people trust are praising about the credit union movement.

10 comments:

Christian Mullins said...

Great article Andy.

While you may have a hard time convincing credit unions to refrain from touting themselves over any of a number of financial disasters, I do hope that they all take your last point to heart:

Make sure we live up to the hype.

Every credit union, in their own way, talks a great game (or allows credit union perception to talk for them) yet too many don't act accordingly with what the majority of members really want: Easy banking, minimal mistakes (and a thorough, quick correction for those minimals), competent (and relatively friendly) staff, and, of course, solvency.

everythingcu said...

@Christian - Don't forget that only the depositors care about solvency. The borrowers are rooting for insolvency. ;)

james w said...

Isn't this a great time to be a credit union and communicate with our members openly and honestly?

I would have thought it would be.

Something like:

"As a credit union, we are doing fine. Our loans aren't defaulting, because we have employed responsible lending practices.

The only downside is that credit is a little bit harder to come by. So if we decline your loan, it isn't a reflection on you personally. We are just having a harder time acquiring funds to lend out"

I guess what I'm getting at is that there has to be some point of balance. Sure, going out on the offensive and saying how safe your credit union is is bad strategy. But I think you still need to tell your members that everything is safe... providing that everything is safe.

(Say nothing, they'll assume the worst.)

Andy said...

@christian

Thanks, glad you enjoyed it.

I doubt any credit union will actually refrain from doing at least some form of "security" advertising. And there's nothing wrong with that.

You caught on to the point that I really wanted to make, and that is that the only way people are going to truly trust us is if we prove it by action.

@Morriss

Haha, too true.

That makes me think though. What impact does the ratio of borrowers to depositors have on this whole situation.

The borrowers who are probably quietly rooting for insolvency are basically rooting for the depositors to take all their money out.

I think the best possible scenario for a credit union is to have your borrowers and depositors be the same people.

But really, that's just me rambling.

@James W
I see your point about balance, but I think many of us, me included, have a hard time figuring out where that is.

Also, when it comes down to it, the majority of a credit unions deposits are held by a small percentage of large depositors. Would it be more effective to give them that message face to face when they are in the branch/on the phone, or through some kind of advertising?

Anonymous said...

I can't believe you used "Joe Six Pack"

We haven't been marketing security persay. We have been marketing what a credit union is in general. Letting them know that we are our own entity, members can see the financials every month, they can see that we invest safely, and that our lending practices have not faltered through all of this.

Andy said...

@anonymous

Haha, I couldn't resist the Joe Sixpack.

I like the way you're going about it. You are basing your claims on tangible things you can prove and back up with your credit union's actions.

Its not that you shouldn't advertise the things that make you safe and secure, but you shouldn't be using an empty claim of solvency.

Nice work.

Anonymous said...

You as well.

james w said...

@Andy:

I had a huge reply, but Internet Explorer died in the butt and I lost it. Isn't that how it always happens? Grr.

I'll probably forget some stuff along the way... but I'll soldier on.

How hard is it to find a balance? Just tell the truth! If I was to write an open letter to my CU, I'd start somewhere along the lines of:

- Our loan balance sheet is still looking pretty good. As a CU, we're a responsible lender - we look out for both our deposit holders and borrowers. Why? Simply put, profit isn't our only motivation.

- We have really low default rates, because we lend responsibly.

- We weren't involved in the securitising or bundling up of loans. That's what is bogging the banks down.

- We're solvent. And the future is looking good.

- Credit is drying up. Deposit funds and wholesale money are increasingly hard to come by. That means that we have less money to lend. Expect loans to be harder to come by in the foreseeable future.

I usually agree with your posts, Andy. But I just don't get what you have to lose by keeping everyone informed, in a honest and matter of fact manner.

Don't embellish, keep everything simple, try and explain the crisis to your members in laymans terms.

Matt, the Credit Union Warrior said...

Open communication is key right now. You should have been proving your safety, soundness, and member-centricism all along. That audience, however, is limited to your membership and their immediate contacts. By not advertising the unique credit union difference in this environment, we would truly be missing out on a golden opportunity to attract new members to the movement.

THAT is helping people. Being quiet and perpetually waiting for folks to spontaneously "get it" is not.

Andy said...

@James W

I think its hard to find a balance when advertising between filling the ad with information that people don't understand or take the time to read and sounding like an empty claim of solvency.

I totally agree with you that to not communicate your financial position to membership is a lost opportunity. I was really just trying to make an exaggerated point with this post, and that is that you have to (and have the opportunity to) live up to the hype that is in the press for credit unions at the moment.

@CUWarrior
You are absolutely right that the credit union difference is something we want to tell people about.

But, I would argue that other sources talking about the credit union difference will do much more for awareness than us talking about the credit union difference.

My opinion is that you have to put forward a noticeable brand, make sure people know you are a credit union ("hey I heard they are awesome from an article in the Wall Street Journal") and make sure you live up to that press.

I do agree with you that saying nothing is a missed opportunity to build membership during the current financial climate, maybe the best way to do that is to try and draw attention to the existing positive press about credit unions somehow.

If word of mouth really is as powerful a marketing tool as we like to think it is, your members should be the ones passing on the "good word" about credit unions rather than your advertising.