by Ron Daly
I'm sure you've heard the old adage "never bring a knife to a gun fight". Good advice - even though I've never been in a gun fight, I know I'll never be bringing a knife. Why? Because you're not only under-prepared, you're going up against someone with a huge advantage.
I bring this up because of an article in the CU Journal by Paul Lucas, a branding consultant who's worked with a number of CUs and companies (including my own) on their branding. Based on a recent Bankrate article about what consumers shop for in a financial institution, Paul came up with some pretty interesting conclusions about the role branding and marketing play.
From Paul's article:
...17% of shoppers start looking for a new bank because of dissatisfaction with rates and fees, but only 4% of them choose their new bank because of rates and fees.
Why does that happen?
Because shoppers are swayed by brand image, advertising and bank branches in convenient locations. Perhaps this disconnect helps explain why more people are changing banks more often.
How did they choose which institutions to shop? The selection drivers lead me to believe that brand awareness is the key, and of course that's heavily driven by brand image. The big banks get strong awareness by buying it.
Paul also mentioned that BofA spent $2 Billion dollars on marketing in 2010. Two. Billion. Dollars. Spent by one bank. In one year.
What percentage of your budget goes into marketing? Paul makes a good point:
The banking industry spends around 5% of income on marketing. If the credit union industry spent 5% using smart, targeted creative we could increase awareness, making us more competitive against banks.
Instead of spending more, however, many credit unions have cut the very things that sustain brand image: advertising, branch maintenance and member services staff. It's a downward spiral that left spinning long enough can take a credit union out of the game.
While CUs might have it where it counts (low fees, better rates, more specialized service), every inch of ground they gain gets thrown out the window when they don't pay to make it known.
Now for my two cents -- You really want the business? Time to start asking for it. Maybe the "gun" you bring to the fight isn't $2 Billion, but as any shooter will tell you, firepower's not the only important factor - having a better aim means a LOT. Time to really focus in on the member/potential member. What do they need? What do they want? What do they fear?
One other important fact from Paul's article says the main reason people start shopping for a new FI is because of a shift in their life's circumstances. Maybe it's time you started wondering what those circumstances are...and how you can be there to help.
I welcome your feedback in our comment section.