7 Advantages to Using Credit Unions

Are you considering an alternative to traditional banking? Check out some advantages to using credit unions. They can offer you the personalized service and financial incentives you’re looking for.

A credit union will often offer better interest rates. Credit cards, mortgages, personal loans, and home equity loans typically come with lower interest. Some unions are even regulated so that the interest rates on loans and credit cannot exceed a certain figure. In the same way, interest returns from savings, checking accounts, and certificates of deposit from unions are generally much higher than those from traditional banks.

They also charge fewer fees. Most do not require a minimum balance and offer their accounts free. In addition, credit unions usually don’t charge ATM fees. If you use your credit card from a non-participating ATM that is out of your network, you’ll have to pay a fee for the ATM itself, but this type of financial institution will not charge you on top of that sum as a normal bank would.

Contrary to popular belief, credit unions often have plenty of branch and ATM locations. Many belong to larger networks, allowing you to access plenty of office and ATM locations in your area.

As a member, you are an owner or stake-holder rather than a customer. Banks are for-profit organizations, so their management often makes decisions that will benefit shareholders rather than customers. Credit unions, on the other hand, are non-profit organizations that function like financial cooperatives instead of financial institutions, and their objective is to share profits with members of the union. This allows them to offer lower fees and rates, and it also removes the pressure for them make money at the expense of their customers. Instead, they are free to make financial decisions that will directly benefit their members.

Your deposits are insured in the same way they would be at a bank. The National Credit Union Administration, a government entity, protects balances up to a certain amount, even if the institution fails. If the institution does fold, the NCUA claims that members will begin receiving payments for their deposits within three days.

They take pride in educating their members about making good financial choices. They will likely offer a wealth of information on a variety of finance-related topics, such as investing, managing credit cards, and preventing identity theft. Because these organizations care about doing good for the community, they often offer free classes and seminars.

They’re easily accessible. If you’ve ever spent hours on the phone with a bank’s automated system, you know how unreachable and impersonal big corporations can be. Small cooperative financial institutions generally offer friendlier, more responsive service.

Mining the Acres of Diamonds in Your Credit Union Membership

I have heard the old ‘acres of diamonds” story retold many times over the years. My favorite version is the one told by Earl Nightingale the late great radio pioneer and motivational speaker. The story goes like this, a farmer in South Africa hears about diamonds being found in different parts of the country so he sells his land and spends the rest of his life in futility looking for the elusive diamond fortune. Meanwhile, back at the ranch, or the farm in this case, the land the farmer sold in quest of fame and fortune turned out to be one of the most fertile diamond mines in the country. The original farmer went out in search of his fortune not realizing that if he had spent the time and energy on his own land it would have yielded acres of diamonds.

A recent edition of American Banker contained an article that told a similar story. While the article examined banks it could very well have described credit unions. It seems a survey conducted by Greenwich Associates revealed that cold calls take up 20% of bankers’ time but bring in only 9% of their new business. In contrast, they spent 42% of their time on referrals which yielded 21% of new business. These survey results reinforce what I am sure you already know which is “mining” our own membership base is more fruitful that outbound “cold call” type marketing. Of course, we have to do a certain amount of cold sourcing to supplement our referral efforts but the results tell us that a majority of our time should be spent mining our own “acres of diamonds.”

I recently spoke at a corporate credit union conference and related some of my personal experience with this concept. A former broker dealer that I worked for embraced the cross-sell concept within the broker dealer and financial institution. The end result was the financial institution reaped nearly 20% of its non-deposit revenue from its investment program and the average client who had a core checking account and was an investment client utilized an average of nine products with the financial institution compared to 3.73 products for the non-investment service customer. A core checking account was defined as the main checking account for the client i.e. they had direct deposit and wrote more than 10 checks per month.

Space does not permit me to elaborate on all of the strategies employed to get to these impressive results. The financial institution made the commitment to a sales culture throughout the company and also made the determination that investment sales were a key product within the overall product mix. Likewise, the broker dealer made a commitment to cross selling the financial institution products to complement the referral efforts made by the staff. There was an incentive compensation program for the tellers and new accounts staff and there was an incentive for the financial consultants to refer checking accounts, home equity loans, etc. The end result was an impressive 11.7% client penetration for the investment program and a contribution to the financial institution bottom line of approximately 17% of non deposit revenue.

What does this mean to all of us? At the risk of “preaching to the choir”, it tells us that members who are introduced to the credit union investment program are “stickier” members. They will stay with the credit union longer. They will also generate more fee income for the credit union as evidenced by their propensity to use more credit union products compared with a member who does not take advantage of the investment service. These “investment households” also tend to bring in new deposit dollars to the credit union. In this time of squeezed margins, the credit investment program can be a welcomed fee income contributor when it is integrated into the overall credit union product offering and backed by a cross-selling program.

The timing couldn’t be better for credit unions to examine their cross-sell and investment program referral systems. History shows us that successful integration leads to high revenue producing investment programs in the financial institution marketplace. I look forward to working with you to develop a plan to mine your own “acres of diamonds” as we work together to increase the investment program penetration success at your credit union. History can repeat itself when we work together to achieve the common goal of bringing optimum service to our members.

Credit Union Marketing Made Easy

If you work in credit union marketing – or any kind of marketing, for that matter – you’ve no doubt heard the argument that marketing is an art rather than a science. After all, there’s certainly no foolproof, straightforward formula one can follow to guarantee a campaign’s success. Nor is there any accurate predictor to truly gauge how an audience will respond to a marketing initiative or advertisement. And even when a marketing campaign does achieve success, oftentimes there’s no one who can really explain why – or what – made it work. Instead, people refer vaguely to “luck” or simply “being in the right place at the right time.”

Because of these kinds of attitudes, marketing has gradually taken on a somewhat magical, mystical quality. And so-called marketing experts (those who have experienced repeated success) are viewed as having almost supernatural powers. The good news, though, is that while it’s true marketing doesn’t come with a formula – there are some easy-to-follow guidelines that can at least point your credit union marketing campaign in the right direction. Just follow the tips below!

#1: Be consistent with your brand identity.
Obviously, your credit union’s logo should be on every piece you create, but keep in mind your brand identity extends far beyond just your logo. Work on creating a consistent set of design elements you can use on all your credit union marketing pieces to make them even more instantly recognizable. And don’t worry about becoming locked in to a certain look or feel, because portraying a consistent image is actually one of the best things you can do to make your credit union marketing pieces memorable for audiences.

#2: Provide an incentive.
Even the world’s most powerful, persuasive, well-written call-to-action can’t generate response rates as successfully as an enticing giveaway. Use this to your advantage when planning your next credit union marketing campaign. Whether you give out small gifts to each responding member – like a $5 Target® or Starbucks® gift card – or offer entry into a grand prize drawing for cash or an iPad®, you’ll find incentives can serve as a powerful motivator for your members.

#3: Joke around.
Don’t have a single funny bone in your body? Don’t worry. Your credit union marketing pieces don’t necessarily have to be laugh-out-loud funny to elicit the benefits of this trick. Instead, think of it as going for a lighthearted approach. Many people associate financial institutions with being uptight or even a little bit snooty, so chances are good that audiences will appreciate your efforts to instead market yourself as more of a helpful financial pal or partner. Plus, putting people in a positive mood when they view your marketing materials doesn’t hurt either!

So go ahead – use these top three tips on your next campaign and experience credit union marketing made easy!