In the cooperative financial services industry, few names are as synonymous with youth outreach as Listerhill Credit Union ($672.7M, Sheffield, AL).
Focusing primarily on students at the University of North Alabama, the credit union has made a name with clever guerilla marketing (leaving Listerhill-branded pens in lecture halls), giveaways (free car anyone?), and even a half-branch, half-hip-campus-hangout called The Hill.
But as the credit union’s second quarter 2015 annual membership growth — 4.8% — and annual loan growth — 7.1% — show, attention-grabbing campaigns work best when they are based on a marketing and product design philosophy that generates real business from members right where they are in life.
Here, Kristen Mashburn and Chris Anderson, Listerhill’s respective vice president of marketing and marketing director, share strategies they use to build wallet share among young adults.
Kristen Mashburn, VP Marketing, Listerhill Credit Union
What does Listerhill’s membership look like today? How is that different from the past?
Kristen Mashburn: We have more than 84,000 members with an average age of 47. But if you look at the members we’ve gained since January of 2014, approximately 50% of that group is 18 to 34, and our average age among them is 36.
What factors inside the credit union have influenced that shift?
KM:We have a forward-thinking board that understands how important these individuals are for our future. Our leadership has made some good, young hires as well, particularly in the marketing department, which helps us relate better. We also have a robust internship program. While the rest of us age, these interns don’t, so that helps us maintain a different perspective.
CU QUICK FACTS
Listerhill Credit Union
Data as of 03.31.15
HQ: Sheffield, AL
12-MO SHARE GROWTH: 4.8%
12-MO LOAN GROWTH: 7.1%
How do you segment this demographic?
KM:Our definition of young adult is 15 to 34, and we focus most on those 18 to 24. However, our segmentation isn’t focused on age ranges; it’s focused on life stages, with the most important factor being whether you are currently attending college. Most students have similar financial preferences and interests, so we almost view our college students as an additional SEG group.
Also, when you have many people contained within an environment, such as a college campus, there are influencers who lead the rest. The impact of our outreach is greater and carries farther when we identify and target these influencers first and foremost.
Chris Anderson: One example of that outreach is our annual Leader Bash, which is an exclusive party for student leaders on campus. We have things like a local band, a desert vendor, and high-end giveaways, and we typically get 75 people or more in attendance.
The average age of members we’ve gained since January of 2014 is 36.
How do you serve the younger end of the spectrum?
KM:We do some high school-level campaigns and contests, but overall, we prefer to target a little bit older. There are not a lot of 21-year-olds reading Seventeen Magazine, but there are a lot of 12-year-olds reading it because it’s kind of an aspirational thing.
At the same time, we do need to start thinking about what the next generations will want. For now, that’s being influenced by what their parents want, so we have created a robust kids account that revolves around rewards for things you can do as a family. In the long-term, we hope that solidifies the role of the credit union in making positive experiences happen.
Chris Anderson, Marketing Director, Listerhill Credit Union
Where do young adults currently contribute to the credit union? Do you anticipate that will change in the future?
KM:Looking at our membership historically, a large portion had savings accounts and nothing else. Of these newer, younger members coming in, we see about 46% checking account penetration.
Once we form those connections, they tend to think of us first for everything. Then, it’s a waiting game as these members mature into more sophisticated options. We’d rather do that than risk pushing too hard on credit, especially in our college-level marketing.
It’s a long-term investment, but that’s not to say there is no ROI in serving these members now. For example, we built our Hill checking accountdirectly for young people, and with those accounts specifically, seven out of 10 account holders also have a loan relationship with us.
Where have you been able to connect with young adults through product design?
KA: When we were building The Hill account, our various surveys and focus groups indicated overdraft forgiveness was something this group cared about. So now, we reimburse up to five NSF fees a year on these accounts because we don’t want to punish a younger member excessively for a few mistakes.
But to increase financial literacy in the long term, that behavior also has to be something the member grows out of. We built our Pick 5 account to give these members a place to go after they mature out of The Hill product.
CA:We started offering Hill accounts in 2009. And even though we constantly see people revolving through that product into one of our other accounts, we still have about 7,000 open right now versus a few hundred the first year it was offered.
Roughly 8% of our members currently have a Hill account, which shows there’s a big difference between just branding something as a young adult product and actually building it with them in mind in a way that generates more value.
But I don’t want to underemphasize the importance of our branding and creative. We purposefully avoid things like stock photos in favor of more meaningful local market imagery and language. It’s definitely fresh compared to what we see from our competitors.
How do you identify positive adaptations and new, desirable features for your young adult products?
KM: If you ask members what products and features they want, they might not always understand what’s possible or know what to ask for. So, it’s sometimes up to us to think about what they want and look for opportunities to deliver.
For example, one of our interns who also worked on campus found out the university was looking to change its supplier for student ID cards. We were then able to approach the university with the idea of combining that card with our Hill debit product.
CA:After that initial contact, there were a few years of back and forth discussions and even after the university decided to move forward with the idea, it still had to allow others — including a few national banks — to bid on the project. But because we had put in so much advance work in terms of finding out what the needs of its students were, we secured that business and by 2014, the One Card was born.
KM:We were also the only not-for-profit bidding, and when the university looked at where students and staff were already putting their money, we had the most patronage of all bidders, which certainly helped our case. Having a debit feature in the One Card is still entirely optional, but for those who want it, it makes their life easier.
The 5 Faces Of Checking At Listerhill Credit Union
This account has a $6 monthly charge the credit union waives for a loan or a $1,000 monthly balance. It also offers rewards.
This account offers rewards and a 5% APY on the first $1,000 deposited.
The Hill (Ages 15-29)
This account comes with either a standard debit or the One Card (a combo debit and University of North Alabama school ID). It provides 5% APY on the first $1,000, a refund for up to five overdraft fees per year, parent-to-student funds transfer, rewards, and access to the BALANCE Financial Fitness Program.
This account requires a $2,500 minimum monthly balance to avoid a service charge but offers increasingly higher tiers of APY based on balance. It also offers rewards and access to the BALANCE Financial Fitness Program.
Young At Heart
This account has a $6 monthly charge the credit union waives for a loan or a $1,000 monthly balance. It offers a higher APY on a minimum $100 balance, free photocopies and faxes (for personal use only), notary services, up to five free money orders per month, and access to various social outings and group travel opportunities.