Do You Leap Before You Look?

Here’s a five-step sniff test for evaluating any vendor partners for your credit union.


Come on now, be honest. If you are being honest, more of us probably do leap before we look than rather than the other, more thoughtful, way around. Some people call it the “Ready, Fire, Aim” syndrome. Sound familiar? It doesn’t make you a bad person. Actually, it’s quite understandable, given the limited resources most of us have to evaluate the numerous products and services available to keep your credit union competitive in today’s extremely combative financial marketplace.

So, what do you do when tasked with evaluating a product/service that has long lasting financial and service impacts to your credit union and your membership? Take mortgages, for example. No shortage of vendors here. And when you consider that a member who has a mortgage with your credit union typically uses five of your other services as well, you know that financing homes for members should be front and center on your product offerings.

Here’s a five-step approach to evaluating your options. Using the following “Top 5 Sniff Test” to help you identify strategic points and key identifiers should make your decision obvious in the end. Why “Top 5” and not “Top 10”? David Letterman has a “Top 10” list. Remember, we are on a budget and don’t have that much time.

1. Follow the Leader?
What is the company’s track record when it comes product innovation? Are they a leader or do they circle around, simply copying the innovators and selling at a lower price? That’s easy to do when the latest and greatest product has been rolled out. But how about when you need a company to really prove their worth and create a product/service that will allow your credit union to do more with less? Sooner or later, the copycat business model crumbles, because who wants to do business with a follower?

2. Been Around the Block a Time or Two?
Admit it, the credit union community is unique. Not for profit, but for service. Ever see the new vendor make their entrée into the credit union industry only to see them not “get it” and exit shortly after they got in? It happens all the time. It will happen again and again and again. Being successful with credit unions demands that the company’s product/service put the member experience as priority one. Without this focus, a company is only interested in the dollars that your credit union will generate on their behalf. The management and the staff of the company not only needs to understand the difference between a “member” and a “customer,” they must also be able to clearly demonstrate this critical difference.

3. Choices! I Want Choices!
Let’s face it – the supermarket cereal aisle would be pretty boring if all you could buy was corn flakes. People, and credit unions, want choices. Your credit union wants to do business with a partner that will provide flexibility and work with the credit union on its terms. We have entered a business world where the market segment is one. Make sure that if your “one” member wants Cheerios, Fruit Loops, Honey Bunches of Oats, Rice Krispies, Captain Crunch, or Count Chockula, you can provide the right cereal because your business partner works with you on your terms.

4. If It Sounds Too Good To Be True…
…It is. Do some research. Case in point: a 2GB iPod costs $149, whether you buy it at an Apple store, Best Buy, Circuit City, Wal-Mart, or Target. If you ran across a 2GB iPod at XYZ store for $50, would you buy it? I hope your answer is an emphatic “no way!” Look a little deeper. Is it really a 2GB iPod? Why so cheap? What’s wrong with it? What’s the catch? Remember, there’s no such thing as a free lunch. Dig deeper into how the company makes their money and who benefits from the sale. Any company that leads with price doesn’t understand your credit union or your member’s true needs. These are sure signs of a short-term player.

5. The Million-Dollar Question – Member Value
At the end of the day, does the company answer this question the same way your credit union does: “Is this best for the member?” Or, does a bank own them, and their question is instead, “Is this best for the stockholder?” Or, worse yet, are they currently being financed by venture capitalists who are only interested in making a big return for their investors in a very short period of time and positioning the company for a sale? A very simple – but critical question - with very different and long term ramifications, depending on the answer.

So, pay attention and put this “Top 5” Sniff Test to any vendor and see how they respond. The answer will become very obvious and you will have all the information you need to make the best decision for your credit union and your members.



This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.

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May 14, 2007


  • This article is timely as we see more and more vendors get into the credit union world, take large up front fees and leave the credit union after just a short period. Make sure your vendor is a "real" partner and cares more about your credit union and your members than they do about themselves.
    Frank Mercer
  • I agree that each of us should do comprehensive due diligence on a vendor, including their financials, to ensure that vendor will be around for the foreseeable future. We also must make sure we our spending our members money wisely and receiving fair value in return.
  • Excellent article and very true. Especially #4. The old adage "You get what you pay for." is still very true. Not that there aren''t deals out there to be had. In my experience, you usually don''t go with the highest bidder or the lowest. Find a company that is willing to work with you, hold your hand a little bit and use their experience to supplement your own experience. If they are a little more than average - consider all the "extras" that you get for "free" when you work with them.
    Tony Mannor