The (Nearly) $0 External Marketing Budget

Like other industries, credit unions pulled back marketing expenses in 2009. As competition returns, your marketing budget might not have to.


Magazine publishers posted an 18% decline in advertising revenues last year, more than twice as steep as a year before, according to the Publishers Information Bureau. Strategic advertising consulting firm TNS Media Intelligence reports advertising revenues in 3Q 2009 dropped 3.1%, their largest year-over-year decrease since the last recession in 2001.

Likewise, credit unions pulled back annualized marketing expenses  to levels last seen in late 2006 and early 2007. Average educational and promotional expenses decreased 11.4% from 4Q 2008 to 4Q 2009, with the largest credit unions cutting back the most.

Asset Class Average Educational & Promotional Expense ($) Growth
$2,025,756 -14.80%
$500M - $1B
$815,936 -13.25%
$250M - $500M
$479,353 -11.77%
$100M - $250M
$207,558 -10.88%
$50M - $100M
$88,154 -8.18%
$20M - $50M
$34,566 -9.95%
$10M - $20M
$11,324 -10.72%
All in US
$120,036 -11.40%

$0 In External Marketing

The change in marketing budgets may be more than just a sign of tougher times.

“We allot zero dollars to outside marketing – no direct mail, no benefit fairs, no TV, no billboard, no nothing,” says Diana Dykstra, CEO of San Francisco Fire Credit Union ($646M, San Francisco, CA). Instead, for the past four years San Francisco Fire has relied solely on word of mouth promotion and appealing to current members.

In 2004, San Francisco Fire started tracking its Net Promoter Score, which gauges the loyalty of customer relationships. Now, the credit union bases all staff incentives on the score. “It is this focus on the member that creates word of mouth,” says Dykstra. And she’s right. As San Francisco Fire’s Net Promoter Score rises, so too does its gross new member growth.

  Gross New Members Net Promoter Score
2006 8.00%

But member growth isn’t the most important statistic as far as Dykstra is concerned.

“Our retention improved in 2009 to 98% of existing members,” she says. “A lot of credit unions open a lot of new memberships but lose as much on the back end.” 

Wallet-share is an important aspect of growth from within. Only 20% of San Francisco Fire’s members have less than two services. That’s impressive wallet-share, especially considering the credit union does not count members with less than $500 in deposits as a service.

Well, Not Quite $0…

The credit union opts out of direct mail, benefit fairs, and TV, but it does spend $250 monthly on one form of external marketing: Yelp!. Dykstra believes approximately 80% of new member sign-ups are a result of the consumer review site. On Yelp! the credit union has 61 (mostly) glowing reviews and a perfect five star rating. The impact of Yelp! referrals is likely driven by the culture of the community.

“In San Francisco, when people are disenfranchised, they do something about it,” Dykstra says.

It’s this “do” aspect of the community that dictates Dykstra’s approach to marketing. “People don’t care what you say, they care what you do,” she says. “If your organization isn’t aligned with that, you lose”.

In the current environment, where competition is stiffening and advertising spending is likely to rise from its 2009 slump, how will your credit union differentiate itself to current members? To a potential field of membership? Regardless of your marketing mix, employing strategies that foster loyal member relationships is an effective way to grow organically and reduce attrition.




April 19, 2010


  • Why does Yelp! cost them $250 a month? It's a free listing and posting a review is free for the reviewers. I'm assuming the $250 is for Yelp! advertising, which is not "zero dollars" and does in fact acknowledge the importance of external marketing and external marketing spending, even if it is a nominal cost.
  • Interesting article. While I don't question the value of word of mouth marketing I believe credit unions have been able to trim promotional expenses in these tough times and get away with it in the short term since the entire industry has enjoyed a strong influx of membership due to anti-bank sentiment and a flight to quality. I would hesitate to point to some sort of causality between the recent reduction in marketing outlays and the increase in membership growth as the basis for the conclusion that external marketing budgets are a thing of the past. When the economy does recover you can bet that CU competitors will be spending the dollars necessary to recapture customers from the CU industry.
  • Strong SEG based CU...bad example!!
  • To comment 3:

    "Well" before the financial meltdown? The official recession was called at the end of 2007 with the period of easing of the fed funds rate beginning several months before. It would be interesting to see a credit union's results during 2002-2005 and instead look at market penetration numbers ( a much better guage of effectiveness) compared to industry rather than absolute growth rates
  • Interesting approach but one I would respectively disagree with. While Ms. Dystra is seeing membership growth she is missing loan growth which has been on sharp decline since 1Q of 2005 along with a flat growth in credit card penetration for her CU. Direct mail and marketing helps reinforce the point of contact meeting with new members to keep the credit union “Top of Mind.” Additionally-- with so many different ways of accessing financial needs many net generation members will not revisit branching outlets as frequently as their parents, preferring to conduct their business online or via more convenient channels. The credit union is missing opportunities and relaying too much on frontline staff to generate business. A more balanced approach would result in huge gains for the credit union and hopefully pull up that loan growth to reflect the share draft percentage to members.
  • True, the credit unions have benefitted from recent sentiment. I don’t mean anything ‘snarky’ though as this growth started well before the meltdown and I think there will always be people that doubt any causality while others succeed… I wrote about this at

    (Full disclosure, I'm part of a team that helps companies implement voice-of-the-customer programs and measure the ROI. This is more great validation!)
    Steve Bernstein,
  • Wow.

    I am surprised at how many of the comments so far are negating Diana's results. Not surprised that they are all anonymous.

    To Comment #1: You should read The Ultimate Question by Fred Reichheld, the author of the Net Promoter Score. There is a direct correlation between high NPS and high growth. The key drivers of this growth is not related to traditional marketing methods. They may not be entirely ineffective today - but this article is meant to show a trend.

    Comment #5 - Look at her comments on Yelp! To date she has 63 reviews with an average rating of 5 stars. Patelco comes in second with 24 reviews and a 3.5 rating. The majority of these folks are not branch groupies - these are your "net generation" and they are fiercely loyal because of reimbursed ATM surcharges, no fees, and great rates.

    Comment #6: This credit union has a community charter. They choose to build it through word-of-mouth among their fire fighters. This is brilliant - not a bad example.

    Denise Wymore