Scary big idea 1: Affinity positioning for credit unions.

By Tim McAlpine

This is a new category: scary big ideas. I was going to call it "wild ideas that credit unions will never go for, but should, because these ideas, if executed with courage and commitment, would really fly" but it was too long and wouldn't fit in the category menu.

Think of this new category as a fringe third-year course taught by an eccentric that doesn't have very many students.

Some background on this scary big idea

There is a general consensus that credit unions need to be bigger and need to have an unlimited field of membership to compete. So the once tightly defined fields of membership have given way to the new looser, we-are-open-to-everyone fields of membership.

For many credit unions that have made this jump, there is a sense of surprise and wonder that this new openness has not yielded hoards of new members flocking in to open new accounts and move their mortgages.

So, the next conclusion drawn is to offer better rates, free chequing accounts and free George Foreman grills to compete in these highly competitive multi-credit union markets.

What if there was another answer?

What if the decision to become more open was flawed? What if when an original field of membership is deemed to be irrelevant and unsustainable, we redefined an equally tight, but more relevant field of membership?

What if we defined our fields of membership by affinity?

Here are some dictionary definitions for affinity:

1. A close connection marked by community of interests or similarity in nature or character.
2. A natural attraction or feeling of kinship.
3. A natural liking for or attraction to a person, thing or idea.
4. A person, thing or idea for which such a natural liking or attraction is felt.

When I think of large groups of employees or even neighbours, there is very little shared affinity. The relationships we have with our coworkers and neighbours are not based on shared passion, they are based on mere acquaintance: "Hey Bob, how was your weekend?" "Fine, Dave, how was your weekend?" "Fine."

Huh? What the heck am I talking about? 

Put all of the "it will never happen" thoughts that are racing through you mind aside and think like the CEO of a start-up for a second. If you opened a new credit union today with no members, how would you go about building your business from nothing? This new credit union would have be highly differentiated with a story so compelling that a select group of very passionate early adopters would promote it for you. Your new credit union would need to build around shared affinity.

Here are some ideas for narrow affinity based fields of membership

1. Ladies-Only Credit Union. Tony Mannor had a discussion going on his CU Hype blog about a credit union based entirely on pink targeting women. This is the type of idea that I am talking about here. However, Tony also suggested "to co-brand a secondary colour like chocolate brown or black to appeal to men." This is exactly what I am not talking about here. You have to deliberately limit your field of membership to appeal to an affinity group. To make our Ladies-Only Credit Union really fly, we could donate 20% of operating profits to fight breast cancer. Wouldn't you take a possible target of 50% of the population?
    
2. Golfers' Credit Union. Imagine a credit union only open to golfers? Golf vacation loans. A roaming PGA golf pro on staff available for free lessons. Branches with a club-fitting corner. A rewards program based entirely on golf including vacations, clubs, attire and green fees. ATMs located at golf and country clubs. Member tournaments. The ideas are endless. Golfers are affluent and the word of mouth promotion would be incredible.
    
3. Bloggers' Credit Union. Members would have to a have an active blog or podcast. With Technorati ranking more than 10 million active blogs, there are more than enough bloggers to float a credit union. Get a few on side and let the viral nature of the social web take care of new member acquisition. Add in members of MySpace, Facebook or YouTube if just bloggers is too limiting for you.
    
4. Emo Credit Union. OK, maybe this is a little narrow (or weird), but music fans have undeniable shared affinity. Rewards could include music memorabilia, concert tickets and back-stage passes. (I stole the emo idea from Brent Dixon and Charlie Trotter).
    
5. Vegetarians' Credit Union. Motorcyclists' Credit Union. Adventurists' Credit Union. Naturalists' Credit Union. Parents' Credit Union. Little Peoples' Credit Union. Dog Owners' Credit Union. Save the Earth Credit Union. Nudists' Credit Union.

I could go on and on. My point is that affinity has incredible power, more so than shared geography, shared demographics or a shared employer and affinity has nothing to do with the highest or lowest rates. You products and services would simply have to be competitive, not earth shattering.

Before you cast this crazy idea aside, consider the affinity and passion that Harley Davidson owners share. Or the affinity and passion that Apple computer owners share. Affinity could be the next killer app for credit unions.

Or, you can tell the eccentric teacher to put a sock in it! What do you think?

Comments

1) Brent @ Oct 30, 2007
http://www.trabian.com

Tim, this is such a great call.

I actually got excited just at reading about the prospect of a music lovers CU. The same for a nerdy social web CU.

Do you think because of globalization and increased connectivity, the idea of "common bond" might be evolving beyond the current SEG and geographic community groups? When CU tent revivals happened, communities were quite literally your local community. But now we have the infrastructure to grow communities around passions.

After reading this, I realized I'm kind of doing it now without thinking about it. I'm a member of FORUM CU, but I kind of think of it as "Trabian Credit Union," because we live with them. Whenever I bust out my FORUM card, it conjures up thoughts of good times in the Trabian office in Indiana (specifically, of Trey climbing on tables and flexing when we get new clients). When friends ask about FORUM, I tell them they're our bunkmates, and feel cooler for it.

Question for the more regulation-savvy credit union people out there:

Logistically, how would an affinity-based field of membership actually work?

2) shari storm @ Oct 30, 2007
http://blog.veritycu.com

Isn't this what Jesse is doing with Black Rock Federal Credit Union? A credit union for Burners?

I like the idea a lot. I think we are far less vested in our jobs these days. What you did for work used to be what defined you. Not so much anymore. I think as a society, we are much more passionate about our passions than our jobs (well, most of us). Good post, Tim. Thanks.

3) Gene Blishen @ Oct 30, 2007
http://www.tinfoiling.com

Just a quick answer from BC on the ability to start a credit union here. As we have shrunk in the last 15 years from a little over 100 to just shy of 50 (or soon to be) and during that time there have been no credit unions formed. Those that sanction credit union charters are not giving them out anymore. The question is why when size and scope should allow "affinity" credit unions to some degree. I could go on but the regulator might be reading this.

4) Robbie Wright @ Oct 30, 2007
http://blog.cuemployee.com/

Here comes the wet blanket.

All great ideas, but I don't think the NCUA will let those charters fly in the US. Last I heard from Jesse, the NCUA was making it semi-difficult to get something like a Burners CU started.

With the internet nowadays, community can have a whole different meaning and could bring common bond back, but I don't think the NCUA will be progressive enough to start allowing these new kinds of charters.

Think other potentially polarizing CU's: • NASCAR CU • NRA CU • iPod CU • the list goes on...

5) Jeff Hardin @ Oct 30, 2007
http://cucommunicator.wordpress.com/

Tim - I love it!

An issue that a lot of established credit unions seem to have is the lack of a cohesive community among the membership as you have eloquently stated.

But with so many opportunities to bring people together (and with the tools of the Internet making it easier and more affordable to do so), credit unions could really make a strong push by defining themselves through affinity.

For the established credit unions, I don't see this as a radical idea - it's our original social purpose re-marketed to fit a changed environment. While you've thrown out some fun ideas, affinity can also be about building a community around a shared idea or principle on a very local scale (for instance, coming together to revitalize a distressed neighborhood, or solving a community problem or concern using shared knowledge and resources).

As my friend Denise Wymore has said many times, financial services is a chore ... get in, get out ... nobody gets hurt. Making it fun or inspiring through something the member is already excited about animates the chore into an experience, and it builds passion.

Thanks for the fun, interesting post, and keep those BHAGs coming, Tim!

6) Pierre @ Oct 30, 2007
http://www.interprisesol.com

Hi Tim,

Actually there are some online banks already out there doing this. Jim @ Online Banking Report highlighted a couple of these is a past issue (I can't remember which one off hand), not CU mind you but 'affinity' none the less.

www.rvbank.com

They have also aligned with 'Camping World' a logical place to find like minded members.

http://www.campingworld.com/rvbank/

7) Jeffry Pilcher @ Oct 30, 2007
http://www.webermarketing.com

Your official charter is one thing. Marketing is another. Tim is simply suggesting you market a CU with the same kind of targeted focus that, say, contrasts Brooks Brothers from Old Navy, or Mini vs. Mercedes. Many good brands are crafted where the target audience feels totally at home while others don't really feel comfortable.

It's not illegal discrimination. It's 'segmented audience profiling.'

8) Tony Mannor @ Oct 30, 2007
http://www.cuhype.com

Tim - first, OUCH! I didn't mean to add in the black or brown as a way to water down the affinity group (since the pink/brown and pink/black combinations are quite fashionable with women) but to alleviate and concerns of married women who would have to give a pink debit card or credit card to their husbands to use ("You want me to carry what?"). It was still focused on women and catering to their ability to open a family account without having to deal with headache causing husbands without an appreciation for the color pink. Plus, black credit cards are just as cool as pink cards :)

That being said, I am all on-board with a musicians credit union (imagine the board meetings) or a Classic CU for classic car owners (imagine the car shows and decor - even the parking lot would be cool).

The nice thing about affinity credit unions vs SEG credit unions is that usually what brings people together has a consumerist base. This allows for revenue sharing programs and partnership programs with companies that want access to those members - and are willing to discount their products to get that access.

So, who wants to start a credit union for credit union marketers? I have a feeling that we would never agree on a logo design - but the parties would be fun!

9) Fred @ Oct 30, 2007

Great Stuff Tim Here in Oz there have been a few attempts at this sort of thing. It might be to do with our population size and/or wide geographic area, but few of them have made it off the ground (new one that is).

From what I understand the issues revolved around getting agreement from the stakeholders – and maybe that is part of the problem.

There is a CU (mecu) that has gone down the path of being a 'Green' CU where they carbon offset and give you better rates for buying a Prius, or Solar Hot Water System.

There is also an Indigenous Credit Union, which is going well called Traditional CU. But due to many factors are really just providing transaction service to remote areas.

Two that I know of that have failed are the Gay and Lesbian CU, and an Ethnic CU where you could only become a member if you were from somewhere in Europe (fuzzy of the details).

There are a few very strong community based ones but they are predominately in some very parochial areas of the country.

I think you are right, that this is a superb way to differentiate from competitors, but I suspect that a big hurdle will be the buy in of the original stakeholders – that is of course if starting a CU up there is the same as Down Under.

10) Caleb Chang @ Oct 30, 2007
http://www.currencymarketing.ca/blog

Jeffry calls it for what it is - 'segmented audience profiling'. I love the idea of affinity groups and it would be compelling enough to make me switch FIs.

I'm not seeing any love for the Golfers' CU so that is where I am putting my vote and I am stitching the logo on my golf bag. You know I'm loving the idea if I am willing to brand my golf bag.

May I add another thought? If Macs are like credit unions (http://tinyurl.com/2m7npq) shouldn't we consider an Apple CU?

11) William Azaroff @ Oct 31, 2007
http://www.azaroff.com/blog

Hey Tim, thanks for the great post and discussion.

I think this gets to the heart of the divide between authenticity and opportunism. If a CU recognizes a group it actually has an affinity with, and can deliver relevant products and services to that group and really know them better than anyone else, then this is a great plan.

Much of the time, however, this could come across as an opportunistic play to get a share of people's wallets by pretending to be something they're not. That would backfire.

12) Tim McAlpine @ Oct 31, 2007
http://www.currencymarketing.ca/blog

Wow, what great feedback and dialogue!

@Gene, Robbie, Jeffry and Fred: I agree that to try to rewrite official charters or to start a credit union from scratch at this point is very difficult. But to Jeffry's point, this is really a marketing idea first that over time transforms what your credit union is all about and who your members are. If you have a province-wide or state-wide charter, why not do your own segmentation and target a special affinity group that has the potential to become the majority over time? This would be a marketers dream. Any takers?

The current members who don't even look at the sign anymore won't care or even notice. I know this because when we do post-merger brand awareness studies, a high percentage of members surveyed don't even know the name has changed. Seriously!

@Tony - sorry, I didn't mean to make such an example of your great Pink idea. I was just making a point that positioning should be permanent and exclusive. Not a magnetic sign that can be swapped out to appeal to different groups at different times.

I love this quote from a friend and mentor of mine, David Baker: "Branding is what you do when you look out across your field and can't tell the cows apart—when there's a danger of mixing your cows up with the neighbor farmer's cows. You reluctantly heat up the poker, wrestle the cow to the ground against their will, and burn a big chunk of the cow's ass, permanently. Branding is the smell of burning flesh and hair, and it's not something they sell at Neiman Marcus. It's the smell of (nearly) permanent, considered choices that are based on truth and reality."

@William and Jeff: No doubt. True affinity has to be authentic and aligned with the core of the organization. It proves the point and is very ironic that Vancity, the largest open-bond credit union in the world, has one of the most narrow, defined shared-affinity positions that I have ever seen. Just visit changeeverything.ca to see the power of shared passion. I believe William's point is not to jump on a bandwagon, but to discover and expose the shared affinity that already exists with your credit union.

Excellent participation class! I give you an A+.

13) Tony Mannor @ Nov 01, 2007
http://www.cuhype.com

Caleb, I'm with you - a Golfer's CU. The thning I like about the affinity angle is that you are catering to something that your members are passionate about. That emotion would carry over to the credit union because the credit union "Gets It".

Here are a few Golfer's CU marketing ideas...

Discount passes to destination golf courses Dicounts on travel. Dropoff Club Delivery Service (to ship your clubs so you dont have to take them on the plane - or lose them on the plane). Golf Cart financing Golf Cart as a prize giveaway Golf Tournaments with in branch score boards Branded tees, balls, bags, towels, hats, shirts, gloves etc In-Branch "Clubhouse" CU paid golf pro lessons Club sizing station In Branch Simulator

There are so many things that would bring members into the branch that this list could go on forever. The thing about affinity based credit unions is that you already know what speaks to your members. You are already speaking the same language. You can throw out all the things that you do to expand your offerrings. You can just focus and serve.

I think it would really make credit unions COOL to the younger markets as well. Kids personalize everything else they do. They would have their own personal credit union that reflects who they are...

Saying that, God help me if I see a Hot Topic Credit Union - YIKES!

Oh, For those who don't know.. Hot Topic is a franchise retail chain that sells all that punk rock and goth clothing you see some kids wearing.

14) Denise Wymore @ Nov 02, 2007
http://www.denisewymore.com

Oh man, I was painting my new office yesterday and missed this. I don't want to be one of those bloggers that says, "I agree with what everyone has already said."

But that's gotta be it.

Tim - I love your way of looking at the world. Target audience is THE toughest thing for boards of community chartered credit unions to wrap their head around. They have confused "territory" with "target."

And I cannot believe Jeffry and I agree - but he's so right. It's not "field of membership" it's affinity. Any credit union can do this. Keep the evil NCUA out of it.

In fact, that's what Jesse should do. Get the charter that says if you join the PCC co-op you can join Black Rock. Pay their membership to PCC and they're in. BUT, they are really in cuz they dig burning the man!!

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