Capture Member Attention

Credit unions are beefing up their marketing as they vie for consumer attention in a competitive marketplace.


Credit union marketing has traditionally revolved around straightforward testimonials from members, positive messages about the cooperative mission, and money-saving advertisements about fees and rewards. But to compete for new members and sell more products, many credit unions are now tailoring campaigns to target audiences.

Credit unions that increased their marketing budgets in the second quarter noted substantial increases in member growth and balance sheets, according to Callahan & Associates’ second quarter data. Cooperatives today are investing their marketing dollars in a variety of ways and for different purposes. For example, Greater Nevada Credit Union’s ($444M, Carson City, NV) second-quarter marketing campaign helped it book nearly $8.5 million in auto loans, up roughly 222% from the year prior. To promo its auto loans, the credit union combined a “Laughing Gas Photo Contest,” with a television commercial about embarrassing cars. For the contest, people submitted pictures of themselves wearing Groucho Marx glasses, and in the commercial, car owners wore Groucho Marx glasses.

Centris Federal Credit Union ($447M, Omaha, NE) attracted more than $1 million in loans in four weeks with its BOGO, or buy-one-get-one, campaign that encouraged members to take out two loans at a time. Centris offered the second loan on autos, boats, RVs, or motorcycles at half the going rate, down to 2.5% APR.

Marketing provides the opportunity for credit unions to increase their membership base and balance sheets by communicating with current and potential members. In the second quarter of 2011, marketing expenses at U.S. credit unions grew 3.8% to reach $483.0 million. This marks the fifth-straight quarter of annual increases in marketing expenses.

Such growth is a positive sign that credit unions are once again allocating resources toward discretionary budgets. Provision for loan loss increases, corporate credit union write-downs, and NCUSIF premium assessments following the recession of 2008 stressed bottom lines and forced credit unions to cut discretionary spending for expenses such as marketing. Over the past two years, however, asset quality has improved and provisions for loan loss expenses have declined, resulting in improvements in net income at many credit unions. Such improvements have allowed credit unions to begin relaxing discretionary budgets and step up their marketing efforts.

Generally, credit unions that allocate a larger percentage of their operating budgets to marketing are, according to second quarter data, more successful at growing loans and membership.

Credit unions with assets between $250 million and $500 million illustrate this trend particularly well. Overall, this peer group is slightly below the national average in many marketing and growth metrics. Second quarter marketing expenditures for this group grew at a rate of 2.5% compared with the national average of 3.8%. Furthermore, these credit unions reduced the percentage of the operating budget allocated to marketing expenses by 18 basis points; nationally, credit unions decreased the same metric by only one basis point. In the end, the credit unions with $250 million to $500 million in assets had membership growth in line with the national average, but have seen that rate slow from 1.4% at the end of 2010 to 0.9% in the second quarter of 2011.

Although many factors affect membership growth, credit unions with assets between $250 million to $500 million show how changes in marketing budgets can influence a credit union’s membership base and balance sheet. For example, in this peer group, credit unions that were in the top quarter of marketing expenditures as a percentage of total operating expenses were more successful at increasing membership than those in the bottom quarter. During 2Q 2011, credit unions in the top 25th percentile allocated an average of 6.2% of their operating budgets to marketing expenditures, while the bottom 25th percentile designated only 1.7%. Put another way, the credit unions in the higher percentile spent an average of $11 per member compared with only $6 per member at credit unions in the lower percentile. Consequently, credit unions in the top 25th percentile posted a 1.9% increase in membership while credit unions with smaller marketing budgets posted a decline of nine basis points.