Marketing: Awards or Rewards?

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By Tony rizzo

Now more than ever, credit unions will look to the marketing department as a profit driver. OK, I said it.  Yes, Credit Union’s are concerned about profit.  With declining fee income, plus an aging population whose majority has moved beyond its prime borrowing years, credit unions – and their marketing teams, will have to get smarter regarding growth. This means relying on data analytics to create personal, relevant and specific offers whose outcome can be tracked. It’s time to move your marketing team from the backroom to the boardroom, and in this article we’ll show you what to look for and how to manage expectations of performance.

Gone are the days of the mass-market and broad extravagant campaigns that do little to add monetary value and that fail to link the credit union’s brand promise to tangible results. Today’s smart marketer relies on data-based marketing in the same way a single sponsor in-plant credit union operated 20 years ago – by knowing the member, giving them personal service and relying on word-of-mouth advertising.

Three key words that should be on the wall of every marketing department are: Personal, Relevant and Specific. Only through the delivery of your brand promise and the strategic use of these three words can you truly maximize the marketing investments.

Here are five steps to make marketing a more actionable part of the overall business strategy.

Step 1: The Departmental Breakeven.

The first step is to provide an understanding to your team of the revenue required to break even on its own marketing expense. Use this simple calculation. Divide the total marketing budget ($200,000 for example) divided by your spread (3%)…the result is $6.6 million.  This amount is what is required to cover the department. Is this an easy number to convey? I think knowing this puts everyone on the same page and focuses everyone’s efforts. In this example, $6+ million required to cover expenses should be enough to toss aside meaningless efforts and projects (or at least reduce time and expense involved in these kind of non-performing projects). This includes the pursuit of social media for profit, executing creative that’s focused on earning industry awards, attending/holding meetings that occupy more than 10% of the day and endless revisions of brand standards.

Once this is simple number is understood, it will set a starting point expectation for performance.

Step 2: The Revenue Imperative

The next step is to set an expectation of growth. A quick and easy way to impart this knowledge to your team (so anyone can continually judge their over/under progress) is to follow this quick chart. Insert your numbers in A, B and C.

Yes, I realize this number does not take into account return on existing assets, so cut it in half and move on. The point is, you can say, “We have to net $1 million dollars this year through the prudent management of time, treasure and talent. And by serving the member to best of our ability and delivering superior service, we will get there.” Or you could say, “We must generate 15 sales per day to hit our goal.”  Which will be remembered tomorrow?

Using this quick analysis, the marketing department needs to drive and be accountable for a portion of the 15 unit sales required daily, by providing leads that are easy to track and meaningful. There’s also no way to hide from this number. By simplifying your corporate goals to this level, your department can visualize its responsibilities and keep focused on what’s important (and it ain’t Facebook).

Step 3: Get Relevant.

Relevant is defined as having a bearing on or connection with the subject at issue. Remember when (if you’ve been around credit unions for more than 15 years) your main office was in a facility and members just walked down the hall to discuss their financial needs? Now that was a connection! Today, the single sponsor, facility located credit union is rare and our members now come in all shapes and sizes. So how can you become (and stay) relevant? With data analysis. For those of you reading this that do not have an MCIF, get one for your marketing department. There is no better way to build member knowledge than with a centralized marketing and profit focused database.

The MCIF will combine data from your core and other data silos (credit card, mortgage, investments) along with appended information from credit bureaus, demographic and psychographic firms. Through the analysis of this data your department can determine what products, offers and delivery channels will create a lasting connection with your members.

This tool (the MCIF) does not generate revenue; however, it gives the marketer the means to build, execute and track marketing efforts. It also allows the marketer to look at micro segments of the membership and make relevant offers based on individual needs. From the member’s perspective, communications that come from you are more tailored. This translates into better response, which in turn means – more leads!

Step 4: Get Personal.

If your marketing department is about getting AWARDS, it’s time to evaluate their purpose. Marketing should be about the REWARDS of a healthy bottom line. Sure, it’s fun to be recognized by your peers, but I’ve been around long enough to see how the lure of hardware (and the visual aesthetics) gets in the way of making simple, clear offers and measuring their outcome.

Getting personal is about leveraging the data to create a one-to-one marketing experience across multiple channels. Often this includes a general business objective, i.e. growing mortgage loans and deploying that objective across multiple member segments and deliver channels. That’s a fancy way of saying make the right offer to the right person. This can come in many forms including, but not limited to, the use of variable content printing to display images and offers that are tailored to an individual’s life stage. In the images below, a mortgage loan was presented to four segments using lifestage codes and credit bureau data. The offer featured variable photos, copy and payment information. Compare this to a one size fits all offer. Which would you rather receive?

Another way to get personal is by providing content that’s meaningful. Look for ways to leverage data sources to give the member something to remember. One example of this is using NADA data and appending it to the member’s VIN. The result is the ability to provide a statement of vehicle value along with an equity position. The letter below shows an example of how this looks. Along with the value statement, this CU made an offer for financing on their next vehicle. What’s more appealing? A general offer (no matter how creative) or one that gives you real, usable information?  PS – This one generated $3 million in new loans and a response rate of 10%.

Step 5: Be Specific.

What is it that you are asking the member to do? Your offer and call to action must be simply worded and specific. It not, send it back to the drawing board. The more clear the offer, the better the response. A side benefit of the clarity-of-offer is the internal training advantage. If the offer is simple, your staff (outside of marketing) will have a greater understanding of it and will be in a better position to communicate its value.

An example of this is the self mailer below. On every piece, the current member or prospect was told that if their monthly payment was $X, they were paying too much for their current vehicle loan. By moving that loan, the member/prospect could save money. Specific data points used were:

1. Current monthly payment on the existing vehicle loan.
2. New calculated loan payment.
3. Rate based on risk level.
4. Member lifestage photo (four lifestages represented).
5. Member preferred branch location and contact details.
6. Prospective members received a driveway to branch map with turn by turn instructions.

Think about it. Doesn’t this offer make more sense than a generic one? While this approach requires more work, we seen it proven over and over that this approach yields more long term growth.

By first delineating the marketing goals into easy-to-understand metrics and employing the business rule of personal, relevant and specific, your credit union can and will enjoy higher response rates and greater profit. And that’s the REWARD we are all looking for.

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