When It Comes To Growing Membership, It’s All About The Fees

September 6, 2013 at 7:27 am Leave a comment

When you’re done reading my blog this morning, you should check out this blog from the Financial Brand reporting the results of a comprehensive survey on consumer attitudes toward banking services.  In one sense, it confirms the obvious:  consumers don’t like fees.  But it also underscores what I think is a fundamental failing of credit union branding.

First, according to the survey, 36% of people are “on the verge” of switching financial institutions because they don’t like the fees.  In contrast, only 10% of consumers said they would switch financial institutions because of customer service.  One final note that I think is worth considering is that, on average, people estimate that they spend five hours a month on banking activities.  Incidentally, 8% of respondents said they spent at least 11 hours a month on these activities.  I have no idea what they’re doing in all that time, but suffice it to say they have more time and money than I do or don’t have a computer.

Which brings me to the credit union side of the story.  If you talk to any credit union person and ask them why credit unions attract members, we always say low fees and great customer service in a cooperative environment.  This is an important message to get out to law makers since our tax exempt status is what ensures that all that can be true.  But to really grow an individual credit union, I’m not at all convinced that emphasizing the cooperative credit union structure is the best way to draw in John Q. Public.  For one thing, when he or she is floating around the Internet late at night, the first thing they’re going to look at is the fees.

Second, while our existing members love us, emphasizing the “union” part of our institutions actually has a huge downside.  Whereas  everyone knows they can walk into any bank and get a loan if they qualify, many people, if they know anything about credit unions at all, believe that they somehow don’t qualify for membership.  I’ve said it before, I guarantee you I am not the only person in the credit union industry who has been asked at a dinner party if you have to belong to a union to belong to a credit union.

Don’t get me wrong, customer service is vitally important, but all you have to do is walk in to your local warehouse retailer to realize that people are willing to give up service — and I mean any service — for better prices.  Plus, I like my dentist a lot, she knows I hate going there and she gives me all the Novocaine I ask for, but her service doesn’t make up for the fact that there’s a million things I’d rather be doing than having someone poking at my gums with a sharp metal instrument and then criticizing me when they start to bleed.  For most people, banking is never going to be fun, no matter how great the service.

So, what does all this mean?  For my money, the best credit union advertising campaigns are the ones that don’t use the word credit union or dwell on our cooperative structure and if they do, they emphasize that credit union equals lower costs and yes, better service.

On that note, have a nice weekend.

Entry filed under: Advocacy, General. Tags: , , , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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