To attract Gen Y, your credit union is going to have to start working it.
You are a 60- to 100-year-old credit union that doesn’t look a day over ... 80. Your technology is out of date. Your staff is old. Your branches are old. What makes you think Gen Y are going to ask you out? You need to make your CU irresistible to the under-30 crowd or it won’t be around for another generation.
According to the Filene Research publication, Big, Small, or Online? Young Adults’ Evolving Financial Preferences by Rob Rubin, older consumers continue to be loyal to CUs, but by 2020, Gen Y will dominate the workforce, comprising 40 percent of all workers—all of them in an important borrowing phase of their lives.
The time to act is now. There are five areas to work on to nip, tuck and firm your credit union into dating shape.
1) Hire, Mentor and Empower Younger Employees
If we want to attract the next generation of credit union member, the first place to look is in the mirror. The average age of a credit union member is pushing 50 and so is the average age of a credit union employee. Age and experience are an asset, but they can become a liability if that is all your credit union has on its team. You need a mix of young and old employees to remain relevant. Your employee base should mirror the age of your desired member base and the age of the general population. It’s tough for a member of Gen Y (aged 17 to 31 in 2011) to relate to a person two decades older.
Credit union management should identify who on their team needs to stay and who needs to go. It may seem cruel to transition older employees out of member-facing positions, but in many CUs there is deep complacency that needs to be rooted out. It may come down to simply reorganizing. Hire some new young branch staff and move some of your experienced staff to management or to the head office. But if it is obvious that someone should no longer be working for the CU, it is your duty to remove them. To soften the blow, offer career counseling and a generous severance package to long-standing employees who are no longer a fit.
For Filene Research publication, Attracting and Retaining Young, High-Potential Employees by Ben Rogers, more than 200 credit union professionals younger than 30 were surveyed to gain insights into their relationships with their employers. These young professionals were impressed with their credit unions’ commitment to members and communities. On the other hand, many of the employees believe their pay is not competitive and that they work with outdated technology or processes.
The survey responses suggest areas of improvement for forward-looking credit unions that want to attract Gen Y professionals:
Support innovation and improvement
Young professionals deem “support from managers to innovate at work” their most important overall concern when considering a professional position. They want to feel their ideas are valued, and they want clear paths to improving the workplace.
Train superlative managers
Young employees crave immediate supervisors with whom they can learn and develop a good relationship. This is particularly important because less experienced employees may not have as much access to inspiring leaders elsewhere in the credit union. If their own managers don’t impress them, others may never get a chance. These results support the adage that employees join good companies and leave bad managers.
Improve pay and benefits
Young credit union employees’ biggest gripe is compensation. Nearly half perceive their compensation as lower than their similarly aged peers in other industries. When asked to identify one negative thing about working for a credit union, more respondents complained about compensation than any other factor. With high turnover expected in credit union management positions in coming years, it is more important than ever for employers to retain young professionals by showing long-term earning potential. Fortunately, respondents rated noncash compensation and other perks like paid time off highly, which indicates employees’ willingness to consider more than just salary.
CUES member Bill Clancy, director of retail strategy with $2 billion/170,000-member Lake Michigan Credit Union, Grand Rapids, Mich., offers this advice for credit unions looking to young up their staff: “Credit unions need to provide better training and empowerment of front-line staff. People expect mediocre customer service these days because that is all they experience. If we want to compete and win, we need to equip employees with the knowledge and authority to provide exceptional service.”
“Concentrate on creating a positive culture and energy throughout your credit union,” says Katie Grindeland, marketing manager with $37 million/6,000-member Star Choice Credit Union, Minneapolis. “Empower employees to make decisions. This will help build a trustworthy and credible staff who want to be there.”
2) Bundle Products Around Life Stages
Between the ages of 15 and 30, young adults go through major life stages. High school to college. Living at home to living on their own. College to the workforce. Single to married. First baby. First car. First home. Each of these transitions offers an opportunity to disrupt an entrenched banking relationship and attract new members. Think hard about each of these transitions and craft products and services that fill these needs.
A great example of an appealing young adult bundle is the Not Your Mama’s Account from $630 million/110,000-member Vantage Credit Union, St. Louis, which is coupled with the CU’s Young & Free St. Louis young adult marketing program. The basis of the new service offering is a free checking account that allows members to choose to save automatically per debit transaction with the Swipe2Save feature. In addition, there is a custom-built online banking and account management tool. In addition to standard banking and bill-pay capabilities, the system includes a personal finance tool that uses keyword “tagging” and feeds spending and saving forecasts to help with budgeting. The system also offers relevant merchant ads and coupon offers based on merchants and services used according to members’ actual transaction history. Social media integration incorporates real-time feeds from members’ own Twitter and Facebook accounts. Vantage CU has custom-built a package that really appeals to young people on the go.
Christopher Morris, communications director at the National Credit Union Foundation, shares this advice: “Since you and your staff are older, get a young adult advisory board together! This can be a mix of employees and members. Why hypothesize what the under-30 crowd want when you can just ask them?”
Clancy adds: “We need to provide real value with products and services like rewards checking accounts and ATM surcharge refunds. Members of older generations (Gen X and Boomers) don’t expect anything more than free checking from their financial institution because they’ve never gotten more. Members of Gen Y aren’t that myopic. They expect more. If your only value proposition is free checking and great service, don’t expect to attract new members.”
3) Invest Heavily In Self-service Technologies
Brent Dixon, young adult advisor for the Filene Research Institute, Madison, Wis., suggests that credit unions would do well to upgrade online banking, mobile banking, remote capture and online
account opening. He advises credit unions to not stop there: “Do usability testing on all of those tools. Make changes based on what you’ve learned. Rinse, repeat.”
Clancy adds, “Credit unions need to be mobile: Apps, text and Web. Yes, all three. Go big or go home. Credit unions need to invest in better IT infrastructures. If you can’t open accounts on line or don’t have integrated
personal financial management tools or if your credit union has weak online banking functionality, you have no chance with Gen Y.”
The mobile Web is becoming more important and growing exponentially. In 2009, mobile Web usage grew 110 percent in the U.S. and 148 percent worldwide as measured by growth in pageviews, according to a Quantcast Mobile Trends report. The 2011 report is due soon and is predicted to show even greater growth in 2010. To be relevant to Gen Y, you need to be looking at app development and building an online banking site that works with the Apple iPhone and Google’s Android-based phones. These two platforms are definitely the platforms of choice for Gen Y.
Define and Articulate Your Brand
Why is your credit union irreplaceable? Everyone at your credit union needs to be able to communicate what you do that absolutely no one else can do in one sentence.
“Your credit union has to be different. Your staff and members need to know who you are as a credit union and why that matters,” says Grindeland.
Bill Clancy adds: “In defining your brand, talk in terms of benefits like convenience and savings rather than features. Gen Y doesn't know, or care, what 'one member, one vote' or being a 'cooperative' means.”
Creating a truly unique brand position is an extremely difficult task in the commoditized financial services industry. In an article on The Financial Brand, Editor Jeffry Pilcher points out: “Ask consumers to describe your typical financial institution and you’ll often hear things like ‘greedy,’ ‘dull’ and ‘boring.’ Then ask financial institutions to describe themselves and you’ll likely hear things like ‘friendly,’ ‘honest’ and ‘reliable.’ This is usually feel-good fluff substituting for the real answer: ‘We don’t really know.’”
Instead, he suggests: “Branding experts use a number of tools, tricks and techniques to tease out an organization’s personality. There is no singular right way to tackle the question, so you’ll probably need to use a combination of approaches. These include the car analogy, the celebrity analogy, the animal analogy, the ideal spokesperson, archetypes, personification exercise and exploring adjectives. For more information, read the entire article.
Once you have defined your unique brand position, you need to test it, tweak it, extend it to every touch point and, finally, live it.
Make Over Your Branches
How do your branches look? Fresh, modern and innovative? Or old, boring and dull? Your branch network is your most expensive asset and says a lot about your credit union. However, you should only consider investing more in your branches after you have looked after areas one through four above.
You may think your branches are your most important asset and that planning to invest heavily in remodeling and updating your tired branches will reap new young members. But, if your strategy is to attract new Gen Y members, these are the people least likely to do their day-to-day banking through your branches. Great products, modern technology and remote accessibility carry a lot more weight than a pretty branch.
Rob Rubin, who wrote the Filene Research Publication, Big, Small, or Online? Young Adults’ Evolving Financial Preferences, cited above, asks: “How much does it cost to add a branch? Most likely over $1 million. Vaults are expensive—so is all the other equipment, furniture and build-out costs. Then there are the ongoing costs: Leases on Main Street are big commitments and so are the carrying costs for branch support staff and management—that probably adds up to more than $500,000 per year. Let’s not forget giveaways like T-shirts, pens and buttons.
“But Gen Y consumers will be more likely to join your credit union on the basis of the features of your accounts and the electronic services you provide. What if you thought about your online presence as a virtual branch and invested accordingly? A product development team wouldn’t cost close to $500,000 a year. Rebating $100,000 in ATM fees would probably cover 8,000-10,000 members. Now consider that roughly 90 percent of teller transactions are check deposits. If you offered remote deposit capture, you could reduce traffic to teller windows, enabling you to reduce branch overhead and reinvest those dollars on line.”
Bonus Area: Band Together to Market
The topic of a national credit union brand is always a subject of conversation and debate and is very much out of the control of individual credit unions. On one hand, the power of credit unions is the unique individual local brands, but on the other hand, the power of credit unions is the national presence and connection of more than 8,000 individual credit union brands that share the “people before profits” philosophy.
Should a national cooperative campaign ever happen, Brent Dixon has this sage advice: “For a cooperative advertising campaign to be effective, credit unions need to band together and market collectively to show that they are national and ubiquitous in accessibility and local in personality.”
To Gen Y, the touchy feeling cooperative message doesn’t necessarily resonate. They want to know what’s in it for them.
What Are Going to Do About it?
It’s 2011 and your credit union isn’t getting any younger. It’s time to take action. To quote Justin Timberlake 2006 hit SexyBack, “I'm bringin' sexy back. Them other boys don't know how to act.”
Tim McAlpine lives in Chilliwack, British Columbia, Canada. He is the President and Creative Director of Currency Marketing, an integrated marketing agency specializing in helping credit unions attract the next generation of members. Tim is best known as the creator of Young & Free and CUES Next Top Credit Union Exec, and co-creator of the CU Water Cooler.