Credit Union Marketing by the Numbers

Presented byOffice of Small

Credit Union Initiatives

Getting Perspective …

Five “P”s of Marketing

• Philosophy• Product• Pricing• Placement• Promotion

Philosophy• Structure – Cooperative, Not-for-Profit, Volunteer Board

• Original Field of Membership vs. Current FOM

• Mission• Vision

Product

• Research Consumer Needs

• Features• Benefits

Pricing

• Research Competitor’s Pricing

• Cost Analysis• Breakeven

Placement/Delivery

• Face-to-face• Internet• Phone• Third-party providers/partnerships

Promotion

• Creative Concept• Collateral Materials

• Advertising Outlets

• Internal Training• External Training

Planning Process• Identify your uniqueness

• Develop your story• Define your audience• Develop your Marketing Plan

• Create materials• Train your employees & volunteers

• Implement plan

Identify your uniqueness

• Structure• Core values• Community involvement

• Products & Services• Mission

Define your Market• Age• Where they reside• Income Level• Gender

Where to find helpful information

• NCUA – www.ncua.gov • Local NCUA Examiner• In-house Data System• MCIF System• Survey • U. S. Census – www.2010census.gov

• Industry Publications• Local Chamber or Development Corporation

Create a Marketing Plan

• Be Specific• Clearly State Goals• Develop your marketing mix

• Include a reasonable budget

• Include Communication Schedule

Key Marketing Information• Average New Car Loan Amount• Average Used Car Loan Amount

• Average Savings per member• Contribution to gross income per member

Key Marketing Information

• Service/product Penetration

• Average Home Equity Loan

• Average Checking Deposit Amount

• Market penetration

Member Recruitment Costs• New Member - $75-$150

• Existing Member - $20

Another Effective Budgeting Formula

Illustration: Need to increase membership by 200 new accounts.

Develop budget: Recruitment Cost - $125 x 200 = $25,000

New Member Recruiting BudgetIllustration: Need to increase membership by 200 new accounts.

Develop budget: Average new member contribution to gross income - $269 x 200 = $53,800

Proposed budget: $53,800÷3 = $17,933

Developing a Loan Promotion BudgetIllustration: Need to increase new cars by $2 million

Size of target audience: Divide $2 million by Average New Car Loan Amount of $14,767 = 136 loans

Response Rate: 2%Number of Mail pieces: 6,800

Potential Impact to Net Income - Formula

Projected Loan Generation (Goal $) x Blended Loan Yield (Average Loan Yield – Average Investment Yield) = Increase to Net Income

Increase to Net Income ÷ Projected Campaign Costs = Contribution to Net Income per Marketing Dollar Spent

Potential Impact to Net Income – Example$2 million in new car loans x 4.37% net

spread (.0437) = $87,400 annualized income

$87,400 annualized income ÷ $29,100

total campaign expenses = Earn $3 for every marketing dollar spent

Create Materials• Uniformed/Similar look – Branding is very important

• Easy to read• Simple & concise message

Implement Plan• Create Advertising Schedule

• Staff Training• Watch deadlines• Monitor Progress

Evaluate Plan

• Use gross numbers, not net numbers

• Identify what worked & what didn’t

• Consider Buying Cycle

Sample Campaign• Newsletter• Website• Posters/Banners• Direct Mail – 3 versions

• Specialty Publications

• Radio• Cable

NewsletterMailed to all members

Direct Mail Mailed to 10,000 homes

within five miles of credit union

WebsiteUse a consistent message

Specialty Publications

• Weekly Newspapers

• Business Journal

Sample Campaign Mix $42,500 total budget• 28% in Direct Mail• 20% in Radio• 16% in Cable• 21% in Weekly Papers• 7% in Business Journal• 5% in Newsletters• 3% in Giveaways/Poster/Banners

Results from Sample Campaign

• 344 new members• 24% Increase in Car Loans

• 21% Increase in Home Equity

• 30% Increase in CDs Shares

• 5% Growth in Income

Marketing Myths

• Cute campaign them cannot mask a poorly designed or priced product

• Campaign must appeal to target demographic – Remember this Dr. Pepper Ad?

Marketing Truths

• Promotional component is least important of the 5 “Ps”

• Informed planning will yield the greatest return.

Understanding “Knowable” • Buying Cycles – watch large retailers for clues

• Ratios, data & general demographic information

Understanding “Unknowable” • Humans are controlled by emotion & life experience

• Unexpected Society Events

In Closing

• Opportunity abounds

• Consumers are looking for alternatives

• Be bold

Questions?