During the recession, credit union managers were conscientious about adjusting expense levels while preserving member value. Nationally, credit unions’ operating expense ratio fell from 3.34% in the first quarter of 2007 to 3.05% as of March 31, 2011. This unprecedented drop was driven by increased efficiencies. Some credit unions lowered costs by closing branch offices and only minimally increasing employee compensation, moves that reflected tighter budgets for promotion of the credit union.
That said, marketing expenses at credit unions in the first quarter grew 4% from the same quarter in 2010. After severe drop-offs in 2009, marketing expenses rose gradually in 2010 and through the first three months of 2011 as credit unions looked for lending opportunities in their marketplaces.
Generally speaking, marketing budgets are not tied to a credit union’s size but to the individual institution’s priorities. A credit union with a limited field of membership may have fewer “marketing expenses” but it may choose to invest in additional personnel to visit select employee groups on-site for additional business development. Credit unions that serve more members may have higher costs associated with mass media marketing. Additionally, some institutions such as State Employees Credit Union ($22.5B, Raleigh, NC) rely solely on word-of-mouth or public relations.
The chart below shows that the budgets vary widely. Please note that marketing expenses are typically lowest in the first quarter. Because of this, the table below uses year-end 2010 data to reflect a more accurate marketing budget. Key points in this chart include:
- Credit unions with assets between $250 million and $500 million posted some of the higher spend rates (per member, highest low dollar value, and as a percentage of expenses), but their year-over-year growth was flat.
- The largest credit unions posted the fastest growth rate in marketing expenses and, as expected, had the highest average budget. This group, though, didn’t have the highest spend per-member nor as a percentage of total expenses. Are larger credit unions more effective in using their marketing dollars?
- The $50 million to $100 million group was the only sub-$250 million group to post positive growth in their marketing budgets. Have credit unions in this group had a more significant change in mentality toward spending on marketing to continue gathering new business?