As credit unions have expanded and merged over the last decade, this question has developed into a critical strategic discussion item. An increasing number of executive teams and marketing professionals are looking for the best ways to capitalize on brand equity. This is especially true during mergers, significant field of membership (FOM) changes, or the desire to connect with younger members.
So what is the value of a brand in general – and what might you be giving up by changing a well-established one?
Interbrand, a well-respected brand consultancy, ranks the top 100 Global Brands each year. In 2009, the value of the top five ranged from over $68 billion (Coca-Cola) down to $34 billion (Nokia). While credit union’s individual brands would not have anywhere near this value, it is easy to see that brand equity can be a very large business asset. Some experts say up to 80% of a company’s intangible assets are the value of its brand.
There are different ways to calculate (or estimate) the value of a brand. Gallup Management Journal summarized the two dominant methodologies employed for large, global companies today: “Interbrand values brands by looking at the revenue stream associated with a brand's current and projected business performance, subtracting the role of certain intangibles (such as patents) and the costs of business operations. What's left over is, essentially, what the brand contributes to the company's earnings. Millward Brown, in contrast, looks at a brand's reported earnings and intangibles, but combines this with the results of surveys that assess consumers' images of the brands versus their competition.”
For credit unions, the Millward Brown concept of assessing consumers’ images is probably more relevant than subtracting patents or other intangible assets. Especially in light of a key differentiator which many credit unions emphasize--being local not global. But any way you slice it, brands matter and can contribute to or detract from a company’s bottom line.
Why is recognizing the importance of brand value something credit unions should be doing right now? Merger activity heated up in 2009. While consolidation in credit unions is less than it is in banks or thrifts, the activity is - and will continue to be - an important trend. As more diverse pools of existing and potential members are combined to achieve greater economies of scale and deliver financial services more effectively, the need to identify a clear brand strategy is growing.
Being able to personally identify with a credit union brand as uniquely “yours” has traditionally been a key strength and led to deep member loyalty for credit unions in general – especially single sponsor credit unions. But as the companies credit unions were founded by decreased their workforce or merged and community fields of membership became more commonplace, the challenge of finding a single brand that everyone could identify with became much more difficult. Another scenario where multiple brands can make sense is when trying to connect with younger members. From high school to college campuses, credit unions are creating brands that connect deeply with Gen Y at the place where they spend most of their time – the classroom.
For some credit unions, two (or more!) brands have proven to be stronger than one. For example, 66 Federal Credit Union maintains three different brands in four states to appeal to each of its diverse audiences. Originally serving Phillips 66, the credit union learned early on that their brand would not be appropriate for the newly merged Conoco Phillips company and its employees in Houston, Texas. However, their core membership still related strongly to the 66 FCU brand in Oklahoma. Similarly, as they merged with a credit union serving the University of Kansas to diversify their field of membership it was clear that neither of the current brands would work for the school’s students or faculty. A new brand was developed and has resonated with that audience – all three still tying back to the same, single financial institution.
You can hear more about 66 FCU’s brand strategy and learn how other industries address multiple audiences and brands during the upcoming CUtv Event: When Two Brands are Better than One – The Strategy Behind Multiple Identities on July 15th at 2pm EST.