9 minutes
Over the past couple years I’ve had the privilege of speaking to credit union leaders across the United States. At the beginning of each session, I typically ask for a show of hands from credit unions that have too many young members. Predictably, this elicits laughter.
But there’s nothing funny about the future if we don’t do a better job attracting, serving, and retaining younger members. The statistics are staggering: The average age of Americans is less than 37, fully a decade younger than the average CU member. Millennials are the largest generation in history and they represent one in four Americans (80 million people!). They stand to inherit more than $30 trillion over the next couple of decades. More than half of American workers will be in this age group in only three years.
More important than statistics are the social implications. Millennials are the most skeptical of today’s consumers, and display little loyalty to companies. At the same time, they are the most optimistic generation regarding their own future. They’ve redefined “success” as holistic balance in their lives. They emphasize happiness over money, quality over quantity. They’ve delayed marriage and despise debt. They’ve delayed major purchases like homes and vehicles, but they are unfathomably burdened by student loans.
Still, they are consumers who require the ability to manage their finances, so what do they look for in a financial institution? Unsurprisingly, they look for the same things they do in other companies. They prefer local institutions over national institutions. They expect transparency–in pricing, terms and conditions. They demand to be treated as individuals. And of course they want unencumbered access to their money when and where they need it.
The good news for credit unions? Millennials severely distrust and dislike large banks. In fact, recent surveys have shown the four largest banks are all ranked in the top ten least favorite brands among millennials. They are disgusted by the perception of cronyism, and they feel the mega-banks are profit hungry and self-interested.
While millennials do value the large banks for their convenience and technology, it is really a love-hate relationship, and this group needs to be educated on how shared branching and ATM networks provide the same or better convenience.
The Millennial Disruption Index predicts that the financial services industry will experience the most seismic shifts of any industry as a result of millennials. The authors of that study proposed that community banks with local control and personalized service stand to gain the most with this shift. Why not CUs?
That’s the bad news: Millennials are generally unaware of CUs, and they are certainly uninformed about CUs’ corporate structure. When millennial consumers become familiar with CUs, they will gravitate to us. Our cooperative business model resonates with them. Millennials should be carrying the CU banner.
This is a seminal moment and CUs are poised to thrive. All we need to do as an industry is change everything we’ve always done.
Serving Millennials
When I work with CUs to develop a formal millennial strategy, I stress the following:
Technology is important, but it’s not the whole story. Sure, millennials expect instant access to their money, with tools and resources that help them manage it wisely. Millennials aren’t unique in that way–who doesn’t want that? The credit union must be aware of the features available in the marketplace, and how well their tools measure up. Fortunately, the cost of these technologies has come down to the point where even small credit unions can usually afford to have them available for their members. Be aware of what your millennial members expect and do your best to provide it.
A presence on social media will not solve your problem of reaching this group, and don’t fret over a return on investment for Facebook, Twitter and other social media outlets. They aren’t promotional tools; they’re communication tools. Think of them as a next-generation phone system.
Don’t ignore your branches. Believe it or not, millennials visit physical locations more often than older members, according to the 2012 Consumer Trends Survey from Fiserv, a CUES Supplier member based in Brookfield, Wis., and research from findabetterbank.com.
Millennials value personal connections and like consulting with professionals before making decisions. They consistently cite convenient branches as the most important factor in selecting an institution. They want to be able to visit your branch, but not be forced to do so.
Stress our cooperative nature. Millennials will never learn about our cooperative structure if we don’t tell them. I frequently tell the story of my airplane conversation with a millennial couple who asked me why we are called credit unions if they aren’t required to borrow (“credit”) and if they aren’t required to pay monthly dues to belong (“union”). When I told them CUs were not-for-profit financial cooperatives, their eyes lit up. They exclaimed, “Why don’t you call yourselves that?!”
Anytime you are promoting the CU in any way, stress the elements of the cooperative. We save together; we borrow together. We are the only financial institution headquartered in town. We are not-for-profit. We’re democratically controlled. Educate your members; remind your employees.
Use non-traditional business development to raise awareness. Chris Petersen, executive vice president of $145 million St. Paul Federal Credit Union, St. Paul, Minn., explains his CU’s non-traditional approach to business development as it pertains to millennials: “The city of St. Paul has a thriving fine arts community, which obviously includes many millennials. We’ve started to raise our visibility [with them] by partnering with organizations that promote local artists.”
The sponsorship is not overtly promotional. “We’re conscious of what appeals to millennials,” Petersen says. “Most of them don’t realize that credit unions are cooperatives, just like these arts organizations. They inherently understand the concept of coming together for mutual benefits.”
The campaign is very passive, with the cooperative nature of the CU presented in every advertisement created for that market. For instance, the CU’s ad for the semi-annual St. Paul Art Walk just says, “We’re a cooperative, too.” Even the CU’s membership and loan promotional pieces speak to these ideas.
Another example of successful non-traditional business development comes from Listerhill Credit Union.
“Our credit union is chartered to serve the University of North Alabama, which obviously has a large millennial population,” says Chris Anderson, marketing director for the $687 million CU in Muscle Shoals, Ala. “Each month we publish a lifestyle magazine called The Set that is targeted to the student population.” The roughly 32-page publication features articles and stories contributed by student volunteers on topics that cover all aspects of student life.
“We’ve hired an editor and we cover the costs associated with the publication,” he explains. “Our business development coordinators deliver stacks of the magazines to local businesses that distribute it for free.”
Listerhill FCU, which markets its on-campus branch and services to students under the private label “The Hill” is the only true advertiser in the publication, and Anderson underscores the importance of remaining a silent voice when it comes to editorials.
“Obviously, we review the content to ensure it’s appropriate, but we don’t influence content in any way. That would be a major turn-off for the students.”
Simplify your products and pricing. Do you really need five different types of checking accounts? Can you create a single checking account that has all the greatest features to appeal to the whole market? Do you require things like “auto-pay” to earn a quarter point discount on loan rates? Why create so many hoops to jump through just to get a good deal? Eliminate the asterisk from as much of your advertising as possible because fine print is an instant red flag for millennials. To them, the asterisk says “Here’s how we’re screwing you.”
It’s a misnomer that millennials won’t pay fees. However, they do have a problem being nickeled-and-dimed over every little thing. Review your schedule of fees for those you can reduce or eliminate, such as those you charge but frequently refund or those you rarely charge at all. Why not just eliminate and then promote that you have taken fees away? “We’ve lowered fees again!”
Use objective-based sales techniques. CUs need to build their sales with the objective of meeting the needs of millennial members—not the objective of selling their own products and services. Indeed, avoid traditional sales methods if you want to attract millennials. They are skeptical of companies pushing products and services, even if we call them “solutions.”
Instead, engage in conversation with millennials and educate them to empower wise financial choices. As these members realize your intention is to only share your deep knowledge about financial products and to educate them on potential outcomes based on their decisions, they will come to trust you as an objective advisor.
Objective-based sales programs have a further benefit in that credit union employees embrace them. Where most sales programs are built from the employee outward to the member, objective-based programs are built from the member inward to the credit union.
Even the most seasoned CU employee gets excited to share knowledge and help the member make good choices. Present sales goals to the employee around how much money you saved the member by refinancing their car loan, not by how much in loan balances the CU added to the books. Share stories across your team of how a member was saved thousands of dollars because he had purchased a gap insurance policy from the credit union. Embrace our nature as nurturers, and it all becomes more effective and more fun.
Write it down. CUES member John Janclaes, CEO of $1.4 billion Partners Federal Credit Union, Burbank, Calif., and author of the book Doing What Matters, stresses the importance of crafting and adhering to a formal written plan. “Organizations that take the time to prepare a written plan will find more success.
“Doing the work of creating the written plan engages a different level of thinking than sharing ideas verbally, and requires management to think more carefully about what actually needs to be done,” Janclaes says. “The written plan helps communicate their thinking more clearly, and the plan enables managers to productively create tactics to execute those strategies at all levels of the organization.”
CUs have an unprecedented opportunity to redefine themselves to younger consumers while embracing their incredible legacy as consumer advocates. We can’t miss the chance because the future is here.
Jim Kasch is founder of Canidae Consulting and Member Intelligence Group. Reach him at jkasch@canidaeconsulting.com.
