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I began my week with a bit of a scare. Some horrible rash attacked my entire face! It came on quite suddenly and with my history of allergies, asthma and related wheez-doggedness, it freaked me out. I went to the dermo who promptly punched me in the face and said we gotta send this to the lab.

Results came back – it’s official. I have atopic dermatitis. An allergy symptom of sorts that has robbed my skin of its youthful luster. Or put another way – I am now the girl with the ruddy complexion. We’re treating it with drugs and lotions and potions, but it’s with me for life. And guess what triggers it? Stress. Oh, that’s a relief.

Being a public speaker and consultant, this gave me pause. I mean, people shouldn’t judge you by the color of your skin (mine is a bright red and bumpy at the moment) but let’s face it, sometimes they do.

Luckily this week I was also fortunate enough to be a guest on not one, but two blog talk radio shows. The Liquid Lunch and Current Issues in Credit Unions. I have a face for radio now, so this made me quite happy. I also realize I have the face of a writer. I mean, let’s face it – get it – many writers never show their mug. I’m going to be the JD Salinger of the blog-o-sphere. Seriously. If you need a good writer for your blog – call me. I can write more than one.

And finally this week ended my long term, sometimes dysfunctional relationship with Saturn. As many of you know, I have been crazy in love with the Saturn brand since the beginning. I purchased five of them over the years. I named them Buttercup, Toonces, Goldie, Rosie and finally Sunkist. But GM killed the company and I’m left with a bitter feeling. So I called my local Saturn dealer upon hearing of their impending closure and basically said “Hey guys, why not do me a solid and buy this car from me so we can part as friends.”

They did just that. I drove to Vancouver Saturn, left my car and a copy of my first book, Tattoos: The Ultimate Proof of a Successful Brand. Saturn was Chapter 4 on my list of tattoo-worthy brands. On the inside cover I simply scribed:

“To my friends at Saturn. Thanks for a great ride.”

Cheers!

D.

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What if you had $0 dollars in your marketing budget this year? How would you spend it?

Chris Tissue, Industry Analyst for Callahan & Associates, Inc. published an article last week that showed the sharp decline in educational and promotional expenses among credit unions. The average decrease 11.4% from 4Q 2008 to 4Q 2009, with the largest credit unions cutting back the most.

Every credit union in the US started with a marketing budget of zero. Zilch. Nada. And for years they thrived by focusing those resources on building member loyalty. They built loyalty by listening to members’ needs, responding with relevant products, and recommending solutions. The members in turn bought more from the credit union and told their co-workers and family members about the co-op.

Several years ago, Diana Dykstra decided to return to those old school methods. She is the CEO of San Francisco Fire Credit Union. When she first became CEO the credit union had changed their name to SFFCU and expanded to a community based charter. This angered the loyal firefighters and their families. They felt somewhat betrayed. So, she decided to switch it back to San Francisco Fire and really crank up loyalty among them.

Her boldest, bravest decision was to refund all ATM surcharges. You see, they only own a couple of ATMs and even though they participate in the Co-Op and Shared Branch networks they knew that members hated being charged to get their money. So when it happened –  poof – charges reimbursed.

Did this cost them money? Absolutely. But guess what? It’s the number one reason cited on Yelp! that people feel love and loyalty towards the credit union.

She also does some “old school” things like giving little Snickers bars to members when they come in and she pays for their parking. I guess you could classify this as marketing dollars. And probably the most expensive thing she does – she personally responds to emails from her members. If you go to her website you’ll see the Ask Diana link on the main page. Several members on Yelp! reviews credited this unselfish act as the reason for their loyalty.

Diana won’t use her loyal members’ money to woo in complete strangers with membership bribes that promise free iPods. She doesn’t have to.

Instead, 64 members have voluntarily taken the time to review her credit union on Yelp!. She has earned the highest rating – 5 stars. The next closest credit union in her area is Patelco Credit Union with 24 reviews and 3.5 stars.

You simply can’t buy this kind of love.


Group Health Credit Union announced today that they are changing their name to Salal CU. Salal is a plant indigenous to the Northwest and has been used for medicinal purposes. It’s a hearty little shrub that can grow in almost any conditions. By definition I can see why they would choose this name – but it’s hard to say, even for a native Northwesterner. It’s not very melodic. And after a couple of martinis, fuhgettaboutit.

I heard somewhere that when you name a child or a pet you should test it by yelling it from your front porch. “Here Muffin Head!” “Cleatus, time for dinner!” Are you okay with yelling that out loud? Does it feel silly? Is it too long? Is it hard to spit out?  I think CU namers should adopt this practice.

“I’m going to Salal to deposit my paycheck!” Hmmmm……

Salal CU logo  (on left)

Real Salal (below)

I just woke up. Last night I partied like it was the 20th anniversary of 1999. Oh wait, it was. Welcome to the year 2020.

Time to make my new year’s resolutions. I’ll be 58 this year. That weird age when you’re not quite “old” but certainly showing many signs of knocking on that door. Let’s see what’s going on in the world. Grab my iPhone off the night stand and because of my blurry old vision I point it at the ceiling to reveal my 3-D iKnow panel. The menu displays the categories I’ve set up.

Forecasts:

My Financial – Mark signed us up for this one. It not only shows us the broad view of the US economy – national debt, strength of the dollar, etc. But it also shows – and I hate this – our own personal worth on that given day based on previous years’ expenditures, my spending habits, seasonal changes in utility usage, etc. Yuk. It’s a subtle reminder that I need to turn off lights when I leave the room. Sure, he put in those motion detector halogen lights, but you can’t dim them without clapping your hands – so they had to go.

My Hood– This channel shows me everything that you can do, see, eat, attempt in the Columbia River Gorge this week-end. Festivals, wine events, hiking conditions. My favorite channel. It’s good to have goals.

So enough about me.

Now I need to see how my people are doing. So I click on….

My Community – When I first signed up for this, it was like Google Alert on steroids. But like Pandora, this program logged my preferences and started to refine the searches – I’m clearly only interested in things that pertain to loyalty economics and overall reputation of the credit union industry. I’ve created my own funny little symbol for the overall health of the movement. It’s a wine glass – red of course – and today it’s half full!

My Diversion – I’ve heard that there are still a handful of people living in the country that have giant satellite dishes that bring them classic old television from countries like Germany and Canada. That Coca Cola and GM still pay agencies to develop commercials that interrupt the shows. These are the same people that still had rotary dial phones in the 90s.  American network television completely shut down last year.

Everything now is literally “pay per view.” I am in control. In fact, I’m going to submit my script for Modern Family tonight and see if I can get on the iPhone voting for next week. There’s a group of writers that formed on InYourFace-Book recently that has stayed on top for a month! That’s okay – cuz the show is still fantastic. The best thing yet on my iWatch pad.

The first time I heard the phrase “product propensity” was when a vendor was trying to sell me a matrix mailing system. That’s when you send new members a series of letters informing them of the next product they should have – based on their product propensity study.

On the surface it sounds like a great idea.  I guess where I have a problem with it is this. At some time in everyone’s life, you need what we sell.  Our products are commodities. It would be like my dry cleaner sending me a nice letter saying: “We noticed you brought in a jacket to have it cleaned, did you know that we clean pants too? Bring us your pants. We’ll clean them.”

Amazon.com knows what propensity means – an inclination to behave in a particular way. Amazon doesn’t sell things we need. They sell things we want. And they make money when they help consumers make purchase decisions.

Case in point. I went to Amazon this morning to pre-order Awkward Family Photos. According to their data base, people like me also buy Sh*t My Dad Says and Cake Wrecks: When Professional Cakes Go Hilariously Wrong.

Do I need any of these books? No. Do I want them? Maybe. Did they help me buy more – cross sell – absolutely. They are on to my propensities. They also don’t stalk me (call me or send me unwanted mail). They simply place it out there for me to find – I have to opt in.

“Marketing is not a campaign, it’s a commitment.”

Joseph Jaffe

We don’t sell funny books. We move people’s money. That’s a lot more serious. It’s a real commitment. And like any relationship, it requires time and trust before I’m going to give over everything.  So stop sending me your letters adorned with shiny happy people pushing me-too-products and start paying attention to my needs.

You may need to sell more credit cards, but seriously, I don’t need or want another one. I have a propensity to buy too many books. You should know that by now.

This is why I love the blog-o-sphere. It gets my heart pumping in the morning so I don’t have to drink as much coffee. Thank you Jeffry Pilcher and Sarah Cooke. Seems they both followed Ron Shevlin’s advice on How to Generate Blog Comments – PPO (piss people off!)

The discussion is around whether or not the moniker “credit union” hurts us or helps us. It’s a great discussion to be sure.

So, what’s in a name? According to Alyce Cornyn Selby, author of the book that asks that question, pretty damn much everything. When you name a child – it’s probably one of the most important moments of your life. Luckily you have 9 months to think about it. So, let’s say the child disappoints you – change their name! To Buster. That’ll show him.

I’ve been pretty outspoken around the subject of name changes. Especially when a credit union takes a venerable class of professionals like teachers or healthcare and turns them into Generico CU.

But now it’s gone too far. The debate that is currently raging on attacks the “credit union” brand. I’ll admit it – I’ve never liked those two words. Credit. Union. But hey, it wasn’t my baby to name and now that he’s turned 100 years old, I say we show him some respect.

Our category. Our legal entity. Our history, heritage, reputation, and dare I say DIFFERENTIATOR is the fact that we are a member owned financial cooperative that is called a credit union.

If anyone should be clamoring to change their category name it should be banks. Banks are synonymous with failure, greed, taxpayer bailouts, corruption – pretty much bringing our economy to its knees!

I just think we need to nip this conversation in the bud, as it were.

Years ago I had the pleasure of working with Financial Resources Federal Credit Union. Their original sponsor (and still primary SEG) is Johnson & Johnson. They were never allowed to use the J&J brand, so they chose a rather benign name. In fact, very few members even used the name in conversation. Instead they referred to it as “their credit union” or, and this was my favorite “J&J’s credit union.”  There was great love for their club. And so these members marketed FOR the credit union. They would tell their family members they had to join their credit union.

Two key words in there – “join” and “their.” You don’t join a bank.

The argument on the CU Times and Financial Brand blogs is centered around public confusion. My favorite comment (and I mean this felt like a mainlined double espresso when I read it): “I agree with banishing the term “join a credit union” – it is misleading to the public.” Yikes. Just typing that made my hands shake again.

In his groundbreaking new book “Flip the Funnel” Joseph Jaffe asks this question: “What if we got it all wrong? On average 80%-90% of most marketing budgets are aimed at attracting a complete stranger. Offering iPods, cash, and better rates than they will give their loyal existing members

If you think about it, shouldn’t we be spending more money against qualified prospective buyers versus shots in the dark at bagging a random stranger? Of course we should. It’s a complete no-brainer.”

Fight the real enemy people. Give your field of membership a reason to care. And if you want to be a bank – go covert.

I’m not sure how long ago that sliced bread became the benchmark for greatness but let’s just say “Debt in Focus” is all that.

My buddy the Credit Union Warrior, aka Matt Davis, and some smart folks at Filene Research Institute have created an amazing new application. It’s called Debt In Focus and is basically an anonymous financial management tool. You see, the Warrior is passionate about promoting thrift. And one thing he found got in the way of people managing their money – embarrassment.  That and spending too much at Chico’s. But I digress. This is a totally anonymous, personal finance management tool.

It’s crazy affordable, and ready to go. Check it out!

Spirit Airlines announced yesterday that they will begin charging passengers as much as $45 for each piece of carry-on luggage.

There is no charge to carry-on a purse or small bag that can fit underneath the seat. But if you use that space above, cha-ching!  I see a future with giant purses!

If you check a bag it’s $25.00. You try to gate check it, $45.00. You carry it on and pay for it online, inadvance, $30.00.

The logic of this fascinates me to no end. Being a frequent flyer, I’ve seen it all. After 9/11, it was easier to just check a bag, rather than drag it through security and have your underwear held up for display. After the 4 oz. liquid ban was put into place, any high maintenance woman (me) was SOL for carry-on.

But then airlines started charging to check bags. We lowered our standards. Bought the damn quart size ziplocs and regrouped.

Spirit says, you’re gonna pay either way, so how much? You decide.

Today most travelers expect to pay for bags. Just like most consumers expect to pay a surcharge at an ATM. No one wants to – or thinks it’s a fair fee – but, like lemmings, when one bastard in a category is brazen enough to charge, the others will follow.

“Banks often move like a school of fish on punitive charges such as ATM surcharges and credit card late fees, so it’s just a matter of time before others follow suit,” said Greg McBride, a senior analyst at Bankrate.com. This in response to B of A quietly increasing their surcharge fee from $2 to $3.

Initially credit unions were adamant that they would never tarnish their image by charging such a fee. They argued against the rationale that ATMs are a convenience people should pay for. Just like the convenience of taking clothes and toiletries on an overnight trip. It’s more convenient, so you should pay.

But when banks started publishing their fee income, well, I mean, what would it hurt? Credit unions could charge a bit less and look like a hero. Right?

And then there’s Southwest Airlines to remind us of the beauty of a strong business model and the value of having the guts to stick with it.

Yesterday they announced that their stock is up 18% this year, and at the beginning of the year could boast it’s 37th straight year of profitability.

They will not charge for bags, and in fact, spent advertising dollars to show that they “love bags.”

So how do they do it?

1. They resist trying to be all things to all people. They fly one kind of plane. They fly point to point (versus hub and spoke). There is no first class – or as they like to say “everyone sits in first class.”

2. When sh*t happens (as it is wont to do in the airline business) their goal is to contact customers affected by a delay before they contact the airline. Builds loyalty and positive word-of-mouth.

3. They have the fewest customers complaints and cancelled flights. If your bag doesn’t make it, you get a $50.00 LUV voucher to use on a future flight.

They have been able to do the impossible. Good, cheap and fast.

Yesterday I got an email from Monique Washington. She’s the Marriott Rewards Specialist/Rooms Controller for the New Orleans Renaissance Pere Marquette Hotel. I’ll be staying there tonight. I’m a Gold Member with Marriott which means I stay at least 50 nights a year at one of their hotels. I love Marriott.

She noticed on my personal profile that I had no special requests. She is there to make my stay more comfortable. Wow. So I replied. I told her my travel plans. I’m speaking in Baton Rouge today (also at a Marriott). I’ll be done at 5pm, will drive the 80 miles south – hopefully not hitting too much traffic. My plan is to check-in, have a nice New Orleans dinner, and get to bed early because I have a ass-crack-o-dawn flight on Thursday.

My question to her was “Could she recommend a restaurant within a safe walking distance?”

I haven’t heard back from Monique, yet. But I’m very hopeful. This is the first time I’ve ever received an email from my hotel chain of choice. I really dig this kind of effort – especially in this economy – because it shows they are trying to differentiate.

According to my new favorite book, Flip the Funnel by Joseph Jaffe, Marriott is taking a risk.

Risk is the ability to do things that have never been done before, to boldly go where no brand has gone before. In marketing speak, to differentiate; in business speak, to lead.

I sincerely hope this risk pays off. I’ll keep you posted.

UPDATE: Sadly there was no reply from Monique. But, the front desk acknowledged my Gold status, I did get access to the Concierge lounge, and to be fair, when I signed up for my free internet, it took me to a welcome page with a link to local restaurants.

Still…..wouldn’t it have been amazing if that information was waiting for me when I checked in. I’m just sayin’…..

[This appeared in the March 31st issue of CU Times under a slightly different title]

I am not an economist, nor do I play one on TV.  My only exposure to economics theory was at Western CUNA Management School with the great Dr. Jim Likens. I still remember the bathtub with the faucets and drains image. So I kind of understand how the economy works.

The job of an economist is very similar to a meteorologist or astrologer. It’s a guessing game and you’re allowed to be wrong – frequently. Why is this? Because it’s the study of human behavior, the atmosphere and the celestial bodies. All of which are random, ever changing, mysterious and fickle.

I offer this opinion on our current economic condition: The economy sucks because our society’s values suck. There, I said it.

Everyone is looking for some one or some entity to blame. We are all somewhat complicit, in my opinion. I recall a certain Corporate CEO addressing an angry mob implying that the investment risk that was taken was in direct response to their demand for higher rates from their Corporate!? He was implying that the angry mob created the problem and therefore should suck it up. I kind of get that.

If economics is the study of human behavior, there’s no better illustration of that than the cost benefit principle and courtesy pay. Our original mission of promoting thrift, and making loans for provident and productive purposes only, vanished with courtesy pay. It was widely adopted on the premise that the benefit of not being humiliated by a bounced check was outweighed by the cost of a 300% loan. Whatever happened to the overdraft line of credit? Too costly, for us. The typical failure of a cost benefit analysis is not including all costs. In the case of courtesy pay, the cost of eroding reputation.

According to famous economist Milton Friedman, market economies are inherently stable if left to themselves and depressions result only from government intervention. The government recently intervened on certain courtesy pay practices. This benefit apparently was having an impact on our economy.

And so, credit unions have become fast followers, very seldom pioneers.

It reminds me of one of my favorite economist jokes:

Two economists are walking down a busy street and come upon a 100 dollar bill lying on the sidewalk. One bends down to pick it up and the other says “Wait, if that were a real 100 dollar bill, someone would’ve picked it up already.”

When credit unions consider a new product, rather than relying on the relevancy of the product to their target, they tend to give more weight to the idea if enough big credit unions are already doing it with some success. And therein lies the problem.  We are following, rather than differentiating from, our competitors.

30 years ago very few credit unions memberships overlapped. In fact, if there ever was an overlap it was addressed, protected and the offender was often beaten into submission.

HR 1151 changed all that. It scared many credit unions into abandoning a single sponsor – a very defined target audience- for the unknown community that was already being served by the banks.

The lemming was born. Name changes were rampant, ad agencies were raking in huge dollars to rebrand a 50 year old moniker to something as generic as possible. Credit unions began to compete with each other.  The club was killed. Membership flatlines for the first time in history.

The supply was great, the demand was not there. Once people have had a chance to react in the marketplace the easy opportunities are used up. We entered a saturated banking market with me too products and fewer branches. We seldom offered a compelling reason to switch and often resorted to an embarrassing cry of “Now anyone in the city can join!”

The majority of our marketing dollars were spent on luring in complete strangers rather than rewarding long term, loyal, profitable owners, who will market for us. The cost to switch banks today is too great – even with membership bribes that promise iPods and cash.

Differentiation is critical to your individual credit union. Not to the general public. We’ve been focusing too much on trying to explain the difference between banks and credit unions. No one cares. What should keep us up at night is how do I differentiate myself from the half dozen community chartered credit unions in my marketplace.

We have found the real enemy – and it lies within.

Last night I received an email response from David Mooney, President/CEO of Alliant Credit Union. He has given me permission to post his reply.

Denise,

I enjoyed your article in the March 31 CU Times, and thought it was right on the mark.

When I came to Alliant in 2003 after 25 years in banking with Chase and predecessors, I was surprised that so many credit unions had adopted community charters.  I wondered why they would be so eager to give up their substantial advantage as “the company store” to compete in the red ocean of traditional retail banking, on the same basis (location) as 7,000 banks and a lot of credit unions.  As you point out, there is very little differentiation, plus it is a higher cost model.  Some seem to have believed that the “grass was greener”.  Others, I’m sure, felt they had no choice in light of sponsor issues.  Allliant, the former United Airlines Employees Credit Union faced this challenge when the Airline was in bankruptcy.  We concluded that we needed to diversify membership to sustain our mission (which is not to stay in business or grow, but to provide consistently superior financial value to members) but knew and liked the SEG model, so we went the multi-sponsor route.  That allowed us to retain our substantial cost and price advantage (operating expense/assets under 1%, top 1% of CU’s in total member giveback); offer a compelling and sustainable value proposition to sponsors and members (high value employee benefit at no cost to the employer); use the sponsors’ media and channels to acquire new business in wholesale chunks; and stay out of the branch arms race (which, like all arms races, no one wins but costs everyone a lot.)  Yes, we are somewhat constrained by a limited branch network (10 locations across the country, no cash handling), but that’s a big source of our cost advantage and our members are here for the reliably great rates and low fees, not locational convenience.  Many have checking accounts at local institutions for branch access… but we have their balances.

The strategy has worked pretty well: we have had consistent growth in membership, loans and deposits well above the industry average, we have a strong balance sheet, and most importantly have continued to provide market leading returns to members.  Our growth does not depend on rate promotions or giveaways – which tend to create temporary relevance, promote mercenary behavior and undermine loyalty – or on adding expensive branches.  In fact, we have reduced our branch footprint by 44% in the past 5 years.  For branch-based institutions, market share is largely a function of branch share, which means that they must expand their footprints to grow.

You are right – no one really cares about the difference between a bank and a credit union.  What consumers care about is a good answer to the question “why should I do business with you?”.

Regards,

David Mooney

President/CEO

Alliant Credit Union

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