Dividend Discourse

Today on twitter, Sarah Snell Cooke(@cookeoncus) posted a CU Times article about SC based Founders FCU giving out its largest dividend ever ($10 million). It got me thinking about the effectiveness of dividend payments as a way for credit unions to utilize excess funds.

Tradition? Yes. Effective? Maybe.

It is an admirable effort on the part of Founders FCU. $10,000,000 is a lot of zeros as a lump sum. However, let’s do just a touch of math, shall we?

Founders FCU has a total of 190,000 members between which that $10 million will be split. That nets the member/owners of FFCU ~$52 each. Not bad, that sure beats the return on most savings accounts (probably their own).

Which begs the question, why not use some of that money to offer a higher savings or CD rate; on the other side, a lower auto loan rate? I understand the concept of staying within market for rates, but seriously? Savings/CD rates are at a pitiful low and a bump could bring in some new business or move some of your more fringe members into a stronger PFI relationship.

A lower set of loan rates could grab some of that important business from the influx of new members that credit unions have been experiencing.

And that’s just the obvious stuff.

Dropping the largest dividend in your history is a wonderful achievement, but I wonder if there aren’t more creative ways to use the surplus.

Community programs, innovative tools, new products; hell, spend some of it on research so you actually know what your members want.

You might find that it’s $52 in their pocket at the end of the year…

I don’t think dividends should disappear, but I urge credit unions to focus on improving their lackluster efficiency, technological shortcomings, and the disconnect with their members before quietly dropping a dividend and claiming success.


Be Prepared

Yesterday I posted a question to the cu twitterverse and beyond, “If you were forced to charge your members $5/mo, how would you make it worth it to them”?

Morriss Partee over at everythingcu.com responded with the comment that I was, “looking through the wrong end of the telescope”.

I can’t argue with him. It is an entirely backwards way of thinking. However, let me explain myself.

Many of the credit union advocates in the world are claiming that BofA has done us all a huge favor. Isn’t this what we’ve always wanted? Free good-will press for credit unions and an exodus of ticked off consumers?

Its alright to be excited about all the positive attention that has been thrown credit unions’ way over the last few months. However, I think we all need to be very careful about how we approach these consumers in the coming months and years.

Unfortunately I have to echo the concerns of many; that BofA may have instituted the 5$ fee to force unprofitable customers to leave, or become profitable. Of course, with their retraction of the fee in the last week, I have no idea what they were (or are) thinking.

One of the primary selling points for free and rewards checking programs has been the attraction of PFI checking accounts. If you can grab that “sticky” checking account, you can grab that person’s future, revenue generating, business.

Most credit unions are not looking for deposit or transaction account growth. These account types are purely expenses on the balance sheet. With margins already thinned to the limit for many credit unions around the country, I have to question whether the credit union industry is prepared for an influx of members who are expenses (at least in the short term).

I also question the strength of the PFI relationship moving forward. Most consumers have a variety of products with numerous institutions. The average user of a PFM program in the US aggregates from a total of 7 financial institutions (an interesting stat I picked up from John Waupsh, of BancVue). There is no guarantee that a checking or savings account will garner you future business.

In fact, I’d hazard a guess that consumers will quickly forget about all of this bank transfer hullabaloo the next time they shop for an auto loan and find a lower rate at BofA (probably because they cut a huge expenditure from their balance sheet).

I fear that many credit unions will be forced to make hasty decisions to sustain the programs that brought the influx of members in the first place.

Was I asking a question from the wrong side? Yes, but only because I fear it is the side that many credit unions will be forced to look at it.

Listen Before Discipline

Your employees are a very diverse set of people. There will be days when personalities clash; as do interests and motivations.

You have very little control over how your employees interoperate beyond the hiring process.

No, I don’t think you should hire a bunch of clones!

It is just as important to the creative process within your credit union to have these juxtaposed personalities as it is for you to know how to deal with them.

Inevitably you will find yourself handling an unhappy/disgruntled employee who has a problem with the way your credit union runs.

What you should hear as feedback is something like, “there are redundancies that exist in our loan origination process”.

Of course, I can guarantee that the information will not cross your desk in such an *a-hem* eloquently composed sentence.

Often times, the person who is experiencing this “unrest” has gone along for weeks or months; collecting a mass of small upsets each day. They may not even know what, exactly, about their job they have become so unhappy with.

On the other hand, many of those staff members that have defined what is bothering them, and have brought up the issues with immediate superiors, often receive a response along the lines of, “this is how we do it, so you will do it this way”.

That is typically the end of the story, and leads to frustration and unhappiness.

The other things it leads to are rumors, hushed break-room rants, and eventually some version of the complaint hitting your desk; often 3rd or 4th hand.

At this point, an unfortunate instinct kicks in. The very same instinct that causes children to react in such harsh ways to rumor spread during middle school.

As leaders, humans tend to take personally any perceived threat or insult to the things under our charge. We feel the need to protect the systems and structures we have built, or maintained, in order to protect our (or our organization’s) reputation.

Companies have been knee-jerk terminating employees for speaking ill as long as school children have been cutting off friends.

This reaction, however natural, carries the potential to be much more damaging to your credit union than the initial complaint or dissent. It is at this point that you have the choice to instantly create a disgruntled ex-employee, or come out the other side with a newly minted advocate.

Think of it like this. If you are hearing about it, then this person has already shared this opinion (if not worse) with friends, family, coworkers, and associates.

At this point, terminating the employee may simply solidify the angst/anger/frustration that this person is already feeling, and you risk galvanizing that perception in the minds of those with which the employee has already conversed.

Wouldn’t it be so much better to define the problem face to face and attempt to reach a solution or compromise?

Approach the situation with an open mind, without pre-judgement, and without the politics of seniority. If you can’t do this, find a non-biased third party to assist in moderating the discussion.

Listen before discipline!

This is no kumbaya get-together. I’m not telling you that you should completely disregard the actions of this employee. It is important to realize that discipline does not necessarily mean that the employee’s opinion is incorrect, simply that the method or venue in which it was shared was inappropriate.

It is OK for you to be a little miffed that you became aware of an upset employee via the grapevine (probably Facebook…be warned that action taken based on reported comments from Facebook opens up a whole new can of worms, and is a topic for another day).

The rumor mill is not an ideal channel to enact change or to receive effective feedback on current policies and operations.

However, it is important to look at the issues brought up via that channel with an unbiased eye. You need to find the core problem that the employee has and look for a solution. The ideal outcome being a happy employee and a more efficient process or policy.

It won’t always turn out that way. You will find those employees who are simply irrationally upset with another person or department. There are a million different scenarios, the important steps are to round up the concerned parties, create an environment of openness and trust, discuss the issue without bias, define potential solutions, and enact change based on your findings.

That change may come down to letting an employee go. It happens, not every employee is right for your credit union; just as every consumer doesn’t necessarily fit either.

However, more often than not, this will open doors to more efficient ways of serving your membership, build a more motivated staff, and create an environment that encourages the sharing, and refining, of ideas and concerns.

CU in the Community (Part 3 of 3)

So, we’ve discussed how to collect the info needed to create a great involvement plan, and tossed around a few ideas on how to put that info into action. Today, we discuss the effects that a robust involvement program should have on your overall brand.

Now, keep this in mind as we begin, your brand is made up of many aspects of your credit union, and all of these things have to add up to a coherent picture. However, your community involvement can go a long way to solidify the image of your brand.

By giving your employees an element of ownership in your involvement program, and by getting those people out to connect with the community on a personal level, you can build a very authentic and meaningful presence.

By placing your credit union in the position of “community provider” (isn’t that what credit unions have always been?) you can really drive home the philosophy that credit unions are founded upon.

“People helping people”!

“Not for profit, not for charity, but for service”!

Truly live up to these philosophies, combine them with a well defined and unique brand (a topic for another day), and a robust account acquisition/on-boarding program and you will see an increase in community recognition,  an increase in the type of members and accounts that you desire, and an influx of loyal members who care about who you are and what you do as an organization. Just make sure you continue to care back.

CU in the Community (Part 2 of 3)

Alright! So, where did we leave off?

Last week I talked a bit about how your credit union could go about utilizing your entire staff to get a window into the causes that are important to your membership. This week, I’d like to throw a few ideas around on what to do once you’ve defined the causes and organizations that resonate with your members.

This is where the majority of companies take the easy way out (and where credit unions have a real advantage).

Credit unions have a philosophy and structure that allows them to create more authentic and meaningful partnerships than most.

Unfortunately, many credit unions are taking the easy way out as well.

It is so easy to set aside a budget, talk to your community contacts a few times a year, and drop money on an event that gets your logo on a poster or banner. It makes you feel good, it can be quantified in dollars/impression, and it used to mean something to the community, too.

I believe those days are gone.

Especially those in the latest generations have seen years of hypocritical corporate involvement in the community. In a world where faceless corporations donate money so often out of obligation, or while participating in ethically grey (and even straight out illegal) business practices, a logo on a banner means almost nothing without living it.

Much too often the thought process at a credit union is, “money is what we have, so it is the resource we can give”.

It is time for credit unions to start looking beyond a yearly budget entry to show their involvement.

With capital ratios shrinking and margins crunching, perhaps your members’ money is not the best resource for getting involved? In fact, I would argue that it is one of the least engaging ways of connecting with community organizations.

People helping people, people!

Its time for credit unions to start creating constant and consistent dialogue with the organizations that their membership support. Heck, if you can’t find an organization to go with a cause, start creating the dialogue with people in the community yourself. Jump in and become a community resource.

You have a gold mine of talented and knowledgeable staff, skills, and resources worth far more than any dollar figure you could budget.

Sure, this will mean sacrificing some employee hours (and in turn the wages and other expenses incurred while they perform work in the community), but the amount is trivial when you take into account the good will, publicity, and true community engagement that can come from a creative and integrated involvement program.

Give your employees a venue to be creative and discuss their ideas. Help organize “Teams” around specific causes that grow organically as employees express their interests. Get the faces of your organization out in the community and maybe you can put a genuine, caring face behind that logo at your next community event.

CU in the Community (part 1 of 3)

Are you partnering with community organizations to enact good and improve your image in the community?

Wait…what am I thinking? What a ridiculous question (and, frankly, a weak opening)!

Nearly every credit union is involved in some way with a non-profit organization or cause. However, very few have developed a full plan for this involvement. More unfortunate that from the outside, many companies appear to donate money out of a sense of obligation more than anything else; entries on the corporate balance sheet with little action beyond the signature on a check.

Over the next three weeks, I’ll be discussing my views on credit union community involvement, how your employees can (and should) fit into your plan, how to look beyond dollar figures, and how these efforts can affect your brand as a whole.

So, lets start this shindig where I’d recommend starting any revamp of a community involvement program; the bottom.

The bottom of the employee hierarchy, that is.

It is the responsibility of a credit union to serve the best interests of its members when it comes to financial matters. Why should the money being donated or placed into expense for community involvement be any different?

Your front line staff is a primary resource for this kind of information. Combined with other data collection techniques, tapping your front line staff can give you a pretty clear window into the attitudes and concerns of your membership.

Not every teller or MSR (or CEO, for that matter) is going to be the greatest resource. Everybody has a different capacity for information retention, or even to care about the subject. However, there are employees that do care; the ones that really get to know the set of members they see on a regular basis. These employees are your gold mine for information on one of your most loyal set of members.

You may even find with more frequent conversations on the topic, and a little coaching, that those employees who’s memories are a bit lax begin to retain more as things continue.

Talk to your entire staff about what they observe as they interact with your membership. Start with your front line, and move your way up. I’m sure many of your higher level employees started as front line, and every employee deals with members on occasion (every employee, from teller to CEO, should speak with members on a regular basis, but that’s a conversation for a different day). Each of those member interactions has the potential to reveal information that is relevant to the development of your community involvement.

After all this data collection, what to do with it?

In theory, it sounds wonderful just to survey your employees and membership, let them tell you what they want, and provide it. But, in practice, this stage is the most difficult.

You must take all of this information, define the important pieces of data, and find the most common threads across that data set.

Having a strong brand in place already makes this stage much easier to stomach, and the re-focusing of community involvement can, in my opinion, most effectively (not to be mistaken for “easily”) undertaken in tandem with re-branding. But, the sequence really depends on each credit union’s unique situation.

Remember, you can’t please every employee any more than you can please every member of the public. Refining down the information and options for involvement that you receive will take a lot of focus, and a bit of thick skin.

So, I’ll leave you this little rhyme to help you through.

The more frequent you speak
the more you’ll say yes
so the blow of the no
might just be less

Friday Post: A Loose Net

I’ve had a very busy, but exciting last few weeks. Along with getting this blog ready for launch, an old friend (the “we’ve hung out since near infancy” kind of old friend) from Maine moved here recently as well. It has been great to be back around one of the guys I spent years playing music, exploring the woods, and generally getting into trouble with as an adolescent.

A few days after his arrival, we inevitably had to take care of some banking. It was then that I had a miniature epiphany about just how different people can be when it comes to dealing with their money.

I don’t remember how it began, but I inevitably turned a mundane conversation into a research opportunity (not even the closest friends are safe from a marketer).

When I think of what I desire in a financial institution, the things that come to mind are a robust online banking system, PFM if I can get it, easy online transfers and bill payments, and a minimal number of reasons to visit a branch. I never carry cash, and I honestly prefer to deal with a computer than a person when it comes to my money.

When I asked him what he would want in an ideal banking experience, his responses were surprising. The ever-sharp, Ron Shevlin, would call this belly button research, but hey, I’m trying to make a point here!

It doesn’t really matter that he and I have lived a nearly identical lifestyle, are born months apart, enjoy similar music and activities, and are both social network users; we require radically different approaches to make us happy with the service at a financial institution. In fact, aside from a common predisposition to keep our accounts with credit unions, we are nearly complete opposites.

What he desires in a banking experience is to have a person available to talk to; somebody who can tell how he is feeling about the day and either make small talk or get him out fast. He wants things simple. He likes to deal with cash and with a person who can make that transaction fast and efficient.

What’s the point?

My point is this, why are so many organizations so focused on an age-based target market? It just doesn’t make any sense. Within the 18-25 age demographic (or any age demographic, for that matter), there is an incredibly diverse set of attitudes and desires. Stop trying to cast a loose net at an infinitely variable set of people; figure out exactly what kind of service you want to provide, and provide it well.

If you aim at them all, you end up getting none.

It Lives!

After an extended, but much needed, hiatus from the financial industry The CU Loop is back and better than ever. I’ve decided to continue where I left off in 2009, giving my honest and unadulterated opinion on current products, regulatory issues, and ideas in the financial industry. Heck I’ll even throw a few ideas into the pot here and there too. I promise nothing less, or more, than my raw ideas and opinions.

I have, however, decided to try and take a different focus as I resuscitate this blog. A huge amount of attention is payed, in all relevant media, to the connections that credit unions have with their members. As I move forward with writing I will be trying to keep a lot of my focus on the connections that exist within credit unions themselves; specifically between low level employees and management.

I like to think of organizations as a collection of neurons, a brain. Each individual person within that brain is a synapse. It is my belief that many organizations (this ideal of mine is not limited to credit unions alone) have effectively become brain dead. There are missing connections in once healthy, growing, living organizations. My goal is to help reconnect them. I’m sure I’ll revisit this metaphor often.

No organization can ever truly reach its potential, regardless of the marketing campaign or re-branding, without the input and enthusiasm of those that will be selling it, supporting it, and living it.

That said, a lot has changed in my life since I last posted. I am no longer under the employment of any credit union. I have struck out on my own and stepped into the cold freedom of self employment. If you are interested in a more specific and detailed analysis of your own organization, or simply wish to discuss an idea, I encourage you to contact me.

So, hello again to those of you who know me, and welcome to those of you that do not. It’s good to be back. Please subscribe, leave comments, join the discussion, keep it clean, and have a good time.

Newton’s Third Law of Marketing

Marketing is not immune to the rule that for every action there is an equal and opposite reaction.

It doesn’t matter what you do, some people will be drawn to it and others will be pushed away. It is a fact of nature, physics, and yes…marketing.

Any marketing campaign should inspire passion, positive and negative. You can’t have one without the other. Without passion, any marketing campaign is destined to flounder in its own mediocrity and will fall, unnoticed, into the blank pages of a book titled “Unremarkable”.

Our fear of a negative reaction, no matter how small, paralyses us and forces us into apathy. We fear that somebody might take it the wrong way so we ignore those that would embrace it. We water ourselves, our creativity, and our brand down to avoid a reaction. In doing so, we create our own self-fulfilling prophecy of failure.

We, as credit unions, can no longer afford to coast along; hoping the rate on our ad will bring in new members. We must inspire passion, create advocates (inherently creating “opponents” in the process), and embrace brave new approaches in order to stand out and be noticed.

You can’t please everyone, so stop trying and please the ones that matter to you and your brand.

Jeff Stephens on Branding – Maine Credit Union League Marketing Council Workshop

On Tuesday, April 21st I had the pleasure of attending a marketing workshop hosted by the Maine Credit Union League and hearing the ever insightful Jeff Stephens of Creative Brand Communications. If you’re looking for a fresh (may I go so far as to say “off the wall”) approach to branding, Jeff is the guy you want to talk to. I have met Jeff before and heard him speak at the 2008 Forum/Trabian Partnership Symposium. Both presentations were thought provoking to say the least. Though there were common points between the two presentations there are some notes and a few new concepts that I’d like to share from this session.

Differentiating yourself isn’t about breaking the rules, but it isn’t about following the rules either.

The changes required for differentiation should be comforting to the entire team. It should be what makes sense, not “being outside the box”, that is important.

Who cares about the box, where it is, or being outside of it? Being “outside the box” has become…well…in the box!

The good news is that finding your story, telling it, and proving it:
1) Isn’t hard
2) Is something you can start now
3) Isn’t expensive

Building your brand must go beyond marketing.

“Marketing is far too important to be left to the marketing department” – David Packard

Your brand is a collection of experiences that somebody has. Not just members, and not just in your branch during business hours, but every interaction that anybody has at any time with your credit union.

These experiences, or touch points, involve all 5 senses. What does your brand smell like, taste like, sound like, and feel like?

Macro touch points are things like:

  • A branch visit
  • An account statement
  • A website visit
  • A follow-up call

True touch points, however, are the tiny things that make up each of those interactions.

Branding is an inside-out process. You have to find out who you are (your brand), identify all the touch points (taking into account that people have 5 senses), and align those touch points to that central personality, story, or “brand” that makes your credit union what it is.

People experience your brand with more than just their eyes. If somebody was led into your branch blindfolded, would they still know where they are?

The more senses you can associate with your brand, the deeper that association is burned and the harder it is for somebody else to replicate the “recipe” that makes you up.

By being laser focused with your brand by identifying who you are right for and who you are wrong for you will be able to articulate your story with more clarity than ever before.

You can’t bore people into like you.

Your brand should be your measuring stick. You should get that measuring stick out all the time and use it to calculate how well aligned every aspect of your credit union is with your brand. By doing this you will be able to turn arbitrary decisions like the fabric on your chairs, or the paper you use in a direct mail piece, into brand-centric decisions and create a true multi-sensory personality for your credit union.