Marketing can kill your credit union

How could marketing kill your credit union? It seems like an odd question. Especially coming from the head of the marketing firm that serves over two-dozen credit unions inside our movement, right? However, I do believe it’s sometimes possible for marketing to do more damage than good.

I often see marketing ideas presented to credit union without any thought or regard to how they modify the bottom line, the front line staff, or even the overall image of the loan union. Without considering these risks, the outcome of these ideas might cause on the organization are instant ways to kill growth- or worse-hammer nails within the coffin of the bank.

It’s not only lending institutions coping with this problem though. For instance, would you believe certainly one of America’s most iconic brands recently committed this deadly foul? Yes, I am talking about McDonald’s as well as their decision to begin offering breakfast all day.

Steve Easterbrook, former Chief Brand Officer had become the current CEO of McDonald’s in March 2019, after former CEO Don Thompson stepped down amidst lackluster sales and poor performance. In an effort to win back business in addition to grow profits, Easterbrook resurrected an idea floated by McDonald’s executives throughout their last downturn in early 2000s. Intending to turn the negative trends around, McDonald’s instituted the idea of offering the breakfast menu all day. “Some people say it’s desperation, but they’re a bit desperate,” said Edward Jones analyst Jack Russo inside a recent interview with Fortune Magazine.

It would be a great marketing idea. However this frantic move made by Easterbrook to reverse slumping sales had little input from others within the McDonald’s team, including franchisees. The franchisees say the launch from the all-day breakfast menu is a complete disaster. Their main complaints are the expanded menu has slowed down service, lowered average bills, and sparked chaos within the kitchens. “In small stores, the issues are vast with people falling over each other and equipment jammed in everywhere,” one franchisee said. “Customers are abandoning us in droves because we are either too slow or serve sub-par quality,” another said. Another franchisee said, “All-day breakfast is a non-starter. We are trading customers down from regular menu to lower-priced breakfast items. We’re not generating new traffic.”

There are risks of letting marketing go rogue in any organization. As the problems could be different for the credit union, they are able to make the same issues.

  • Front line staff: Once, in my youth, I pulled off things i considered an effective one-day loan promotion. “Look at all of those loans we placed on the books,” I declared. Marketing meet reality. I didn’t consider the problems this promotion caused. It was so successful the branch was clogged with members; phone lines were tangled up all day long, and the one loan officer couldn’t handle the amount. In planning this promotion, I went rogue rather than considered the outcome it would have on the other team members at the bank. While it looked great in writing (and on the total amount sheet), it resulted in a frustrated front line staff and surly members who were waiting way too long to do business in their bank.
  • Balance sheet: “What if we match our competitions rate at 1.75% APR?” We could, but have you run the numbers to determine exactly what the impact of that would have around the balance sheet? It’s awfully hard to write a lot of loans at such a low rate and break even. What percentage of your overall members are simply fine with your rates because they are? You’d be trading down some higher rate loans simply to obtain a few new loans from consumers who’ve zero relationship with your credit union, except for being drawn to your promotional rate. This is where the key (and usually non-existent) relationship between marketing and finance come in.
  • Over-promising better service: One word that lots of credit unions prefer to hang their hat on is service. “We have better service than-” I call rubbish about this to begin with. However, if you’re walk out your way to brag in your awesome service, simply to have a member meet the loan officer who’d prefer to be clipping her nails than working at her desk, you just wasted a lot of money to bring that person directly into your bank. Worse, since studies show that 9 our of 10 consumers make major financial decisions based on word of mouth recommendations from family and friends, your very best advertising (happy members) is really shot.

Be authentic inside your marketing message. Consider the impact of every campaign in your staff, your main point here, as well as your brand. If you are counting on the loan union form of the “breakfast all day” promotion to be a long-term strategy to grow your credit union, you’re focused in the wrong direction.