In March 2015, the Baldrige National Quality Program awarded Listerhill Credit Union ($674.5M, Sheffield, AL) a Malcolm Baldrige Level 2-Progress Toward Excellence Award, which recognizes performance in the areas of improvement, innovation, and efficiency.
To complete this application, we had to tear down silos and barriers, says Listerhill CEO Brad Green.
As part of the application process, which the credit union started in 2014, Listerhill had to ask itself more than 250 questions that focused primarily on categories such as leadership, strategic planning; customer focus, measurement, analysis, knowledge management, workforce, and operations, says Joyce Bates, chief administration officer.
You answer these questions to see who you are as an organization, Bates says. Then you start work on process mapping who you are, what you do, and how you do it.
Taking a cue from the Baldrige model, Green wanted to find ways to be more open and proactive with idea generation. For Listerhill, this means making sure everyone in the organization, regardless of role and responsibility, understands the impact they make.
Now in the midst of its second application, Listerhill attributes the monumental change in how it approaches the future to six best practices.
1. Find Inspiration
Although Green wanted to foster open dialogue between employees and departments, he also wanted to think long-term. In the 1989 time-travel film Back to the Future II, the hero travels into the year 2015. A major plot device in the film is a sports almanac that lists the results of major sporting events from 1950 to 2000 immensely valuable if taken back in time.
Drawing inspiration from this, Green wanted to create a Listerhill version of the almanac. So, during the first full-day session of strategic planning in 2015, he asked his senior team to predict the future, using current industry trends as a baseline.
What opportunities or challenges do we foresee in the next 10 years? he asked. In the market, regulatory, legislatively, nationally, locally?
The credit union went broad, including anything it thought could come into play over the next decade.
2. Identify The Right Moves
The credit union’s entire strategic planning process took two days. But it was only after the first day of educated predicting that senior team members were allowed to think about the credit union’s corresponding countermoves if these predictions proved right.
Topics discussed ranged from mobile strategies for the next decade to what the next generation of Listerhill branch will look like, from how to get more young adults in the door to what emerging markets the credit union could expand into.
The session prompted Jerry Sprinkle, vice president of consumer lending, to ask key questions like: Is Listerhill offering the right products? Are some products stale? Does the credit union need new products? Are rates where they need to be?
On the technology side, a core conversion in mid-2015 now allows disparate systems to better talk to one another, giving employees like Johnathan Gray and Rob Michael, Listerhill’s vice president of IT and regional manager, more data to make informed decisions.
It’s a pretty comprehensive book of work that hopefully is relevant to us in the short-term and long-term. It could just be for the next six months. But it could also be for the next six years.
Regarding new branch plans, Gray says, If business intelligence tells us 80% of the people in a branch are older than 55, putting in automation is probably not a good idea. It’s probably not going to be used.
3. Create Ownership
For a strategic plan this large to succeed, Listerhill needed buy-in from all levels. So after identifying its objectives, it created 18 planning teams to draw up specific plans, or process maps, that fulfill the assigned objectives.
Teams of employees from across the organization, ranging in seniority from tellers to managers, are mapping current processes before reimaging what the processes should be. The teams will then test new designs with focus groups before presenting a final product.
As part of this process, Green also asked his board and senior management to each write a letter to the Listerhill of the future about what would be most essential between 2015 and 2025. Green synthesized these into a single letter and included it with the rest of the materials that went into the credit union’s strategic planning almanac.
4. Ask The Hard Questions
For Listerhill, process mapping is starting to allow employees to see the individual steps necessary to create a mobile phone application, branch design, or millennial marketing plan. And when these steps are clearly outlined, employees can more easily make additions or subtractions. It gives them a reason to think critically and ask questions such as why the credit union does something, is it necessary, and can it be eliminated, Green says.
Ultimately, Green hopes mapping can help the credit union gain meaningful efficiencies. For example, the credit union’s lending operation is almost completely centralized; however, the mortgage origination process is decentralized. But as Listerhill grows larger, the mortgage origination process is likely to become centralized, Sprinkle says.
Based on the speed at which we’re growing, we’re interested in exploring the lending process for all types of loans, he adds.
5. Define The Measurables
When implementing new strategies and processes, an organization must be able to measure and quantify success, regardless of objective.
There has to be a way to measure whether we’re successful, Green says.
Listerhill will continue to calculate metrics it has used in the past such as mobile adoption rates, employee engagement, and Net Promoter Score but at this point no official benchmarks have been set. Of course, tracking performance is just the first step.
Once you set those measurables and attain them, it’s about making them better, Green says.
6. Keep The Process Moving
The nature of predictions is that some will be wrong. But that’s why Listerhill’s 10-year plan is a living document. The credit union can update it, and probably will given crucial factors such as when and by how much the Federal Reserve will move interest rates.
It’s a pretty comprehensive book of work that hopefully is relevant to us in the short term and long term, Green says. It could just be for the next six months. But it could also be for the next six years. In either case, my vision for the future is that we represent the absolute, most-trusted source for financial services in our market.
Interstate 65 nearly bisects the state of Alabama, running straight from Decatur to Birmingham before curving down east into Montgomery and then taking a hard southwest route into Mobile.
The road also serves as the de facto marker that separates Listerhill Credit Union’s ($674.5M, Sheffield, AL) primarily northwestern field of membership from the rest of the state. It’s a line preserved not only by highway but also by a culture that prioritizes cooperation over competition.
We shy away from anything east of the interstate because there are already credit unions that serve that market well, says Brad Green, Listerhill’s CEO. Why would we want to go over there and try to take market share? That doesn’t make sense to me.
But that doesn’t mean the credit union is opposed to expanding its geographic footprint. In fact, the credit union has a single branch outpost in nearby Tennessee but sees near unlimited opportunity on the horizon.
A Willing Volunteer
In the first quarter of 2012, Listerhill was adding loans faster than many Alabama credit unions, but it was lagging in share and member growth. Leadership at the credit union wanted to improve this performance while also setting up the organization for future growth.
So when First Community Credit Union headquartered in Columbia, TN, and with less than $25 million in assets asked Listerhill to merge in the summer of 2012, it was an opportunity the Alabama-based cooperative was ready to pursue.
They were coming off some troubled times and we told them we’d be glad to give them whatever assistance they wanted to help them back on their feet, says Listerhill CFO Clay Morgan. But they said, no, they wanted to merge.
At the time, Kristen Mashburn, vice president of marketing, had completed research that showed Listerhill’s Alabama market possibly was saturated and growth prospects were limited unless the credit union expanded its geographic boundaries. And due diligence of the area showed that Maury County was home to just two credit unions and nine banks exactly what Green had in mind.
We were looking for places where the concentrations of credit unions weren’t so high, he says. For us, that’s rural areas and smaller towns or communities that don’t have the access of larger areas.
The completed merger on Nov. 1, 2012, yielded the first Listerhill branch beyond the Alabama border.
The Tennessee Market
Maury County in Tennessee is not contiguous with any of Listerhill’s 13 Alabama counties. However, it’s only slightly more than 80 miles north of the credit union’s headquarters.
U.S. Census estimates from 2014 puts the population of Maury County at approximately 85,000. Along with the other counties it’s targeting, this expansion would almost double the credit union’s potential market size, Morgan says.
Maury County’s homeownership rate of 70.3% is greater than the Tennessee average, as is its median household income of $45,300. The percentage of residents below the poverty level, 15.4%, is also below the state average. In short, it’s a market Listerhill is looking forward to tapping.
On the mortgage side, their market is going crazy right now, says Jerry Scarborough, vice president of mortgage lending. Without counting its main office, the Columbia branch ranked third in 2015 for both number and dollar amount of mortgage loans made.
Fred Lindsey, Listerhill’s vice president of business service operations and manager of the institution’s $85 million member business loan portfolio, views the area as a tremendous growth opportunity. Listerhill’s MBL portfolio is mainly composed of commercial real estate, the same loan types Lindsey hopes to make in Tennessee.
We do smaller commercial loans, he says. We don’t chase other types of loans we aren’t comfortable with.
At its sole Maury County branch, the credit union is looking for an outside loan officer to work specifically in real estate and develop relationships with local realtors and builders.
Growing deposit market share, however, has been more challenging. Today, Listerhill’s Maury County branch ranks ninth out of 12 in overall deposit market share after increasing this portfolio by just 4.8% year-over-year.
And overall, Listerhill has budgeted for lower annual deposit growth across the institution than it has in years past, to 6-7% from 8-10%, Morgan says.
We’ll go to local community events in Tennessee, jump on the microphone and say, We’re a credit union. If you’re helping the community you’re doing something we want to support, so come talk to us.’
New Marketing For A New Market
Before it first entered Tennessee, Listerhill surveyed its marketplace awareness in Maury County and found it totaled approximately 4%, according to Mashburn.
We’ve since grown tremendously from a brand recognition standpoint, she says.
But it wasn’t time that got Listerhill there, it was strategy. Listerhill knew it needed to better understand both the population and the competition. Mashburn, in particular, had a strong grasp on both, as she commutes to Alabama from Tennessee.
Much like the Alabama city of Florence, home of the University of North Alabama, Columbia, TN, is undergoing a community resurgence focused on supporting local farmers, artists, and businesses. Recognizing the similarities between these two markets, Listerhill refurbished the Pick Five campaign it had used several years ago.
Pick Five checking allows new account holders to donate $50 to a local school of their choosing. Mashburn says the campaign is most effective when her team can attend school events like football games and parent-teacher conferences.
It’s also more cost-effective than other forms of advertising, helping Listerhill open more than 1,100 new accounts and process more than 7.4 million new loans year-to-date. Maury County is one of 13 counties included in the Nashville metropolitan statistical area, which means the credit union would pay full price for 1/13th of the total audience.
Instead, Listerhill focuses on event-based marketing that ties into its mission or a specific goal, including increasing awareness of how Pick Five raises money for the local school system.
We try to be at every local event, Mashburn says. We’ll go to local community events in Tennessee, jump on the microphone and say, We’re a credit union. If you’re helping the community you’re doing something we want to support, so come talk to us.’
As of November, approximately one-fourth of all the requests Listerhill received for financial support came from Maury County.
Challenges To Expansion
Listerhill wants to expand further into Tennessee, but according to Green, Tennessee regulators are more critical about expansion. Although the credit union entered the Volunteer State in 2012, regulators have not yet granted permission to expand that footprint.
Currently, lack of precedent is the main stumbling block. The Southeastern Regional Cooperative Interstate Agreement meant to promote interstate commerce and cooperation among credit unions in Alabama, Florida, Georgia, Mississippi, Missouri, North Carolina, and Tennessee is less than 10 years old. Green believes Listerhill is the first Alabama state-chartered credit union to expand into Tennessee.
I want everything yesterday, jokes CFO Morgan. And if I can’t have it yesterday, I want it tomorrow. The regulator’s timeline is more elongated, I think.
In the meantime, Listerhill is committed to growing the communities it does serve as it waits to move its front line forward in Tennessee.
To remain viable, credit unions must attract young adults as both members and employees. Listerhill Credit Union ($674.5M, Sheffield, AL) is succeeding on this front. In fact, more than 50% of Listerhill’s new members in third quarter 2015 were millennials, according to vice president of marketing Kristen Mashburn.
That’s a number we’ve tracked for some time and one we’ve seen rise tremendously in the past few years, she says.
To better appeal to this generation, the credit union has beefed up its presence in its two main communities The Shoals area of northwestern Alabama and Maury County, TN. It has leaned on young employees to co-create a culture, and, in some cases, turned over the keys to its biggest outreach efforts to millennials themselves.
In this QA with Mashburn and Ann Davis, Listerhill’s vice president of human resources, the two discuss the steps and strategies that have attracted members in this key demographic.
What marketing channels have yielded the most success in reaching young adults?
Kristen Mashburn: Because we want to be where these members are, we often take a guerilla approach. We do broadcast advertising, television, radio, all those sorts of things, but they just help to round out those in-person efforts.
We focus on ways we can cut through the clutter, including campaigns that encourage word-of-mouth advertising. For example, we set up a flash mob on the campus of the University of North Alabama to make people aware that we were opening a branch. We have a connection to fraternities and sororities there that do Step Sing a step dance competition for charity every year and they were happy to be part of it. In return, we gave money to their charities. The students choreographed the entire thing themselves and we gave them a free T-shirt to wear. We set it up pseudo secretly so no one else on campus knew what was going on and afterward passed out flyers to explain who did it and why.
How do you publicize the credit union’s brand as well as its core mission?
KM: We run ads and other things that talk about how, by doing business with us, they’re investing in part of the community that’s specifically geared toward young people.
For example, UNA’s Student Government Association asked if we could do something to help students think critically about the financial decisions they’re making and where their money is going. So we put together a budgeting fair where students made certain choices in the beginning of the event, and then we gave them incomes and expenses that simulated their future financial life in those scenarios.
Does that preference for in-person outreach extend to the general community as well? Can you reach young people and other groups at the same time?
KM: We try to be involved in our community and find ways to donate to events and causes that make sense for us. We tend to be involved with events that are grass roots and interesting, like art festivals and music festivals, because that’s us and that’s also where a lot of younger people and families tend to be, too.
This past year there were some people who had an idea to put together a music festival called the Muletown Musicfest, Muletown being the nickname of the city. We thought it was cool because we’re really tied to music here in Muscle Shoals. They’re in Columbia, TN, which is near Nashville, so they have that connection, too. That partnership brought in around 100 different bands and drew people in to local businesses.
We are also a big sponsor of First Fridays. It’s an event held in downtown Florence, AL, that brings art to the streets. It draws thousands of people downtown.
How does your monthly magazine target millennials?
KM: For the past four years, we’ve produced a publication called Set Magazine that’s written by young people in our community for young people in our community. One of the reasons we started supporting it was because we simply didn’t have enough traditional ways to advertise to young people that actually appealed to them.
It’s definitely got that independent newspaper style. The articles are all hyper-local and focus on our community and events happening in town. For example, if it’s exam time, we’ll do a write up of the best places to cram before an exam and include a list of all the best coffee shops. It gives young people an opportunity to write about things they care about as well as build their portfolios.
How do you handle production?
KM: We employ an editor to put it all together, and we produce both a print and online version. We use a digital publishing platform called ISSUU for online because of the magazine’s illustrated and graphical components. We also print 8,000 copies and distribute them all over to the area. And we’re the sole advertiser.
Why is a print version important to this strategy?
KM: When I talk to people in the industry the first thing they ask is, Why would you put together a print publication for young people?’ Well, that reaction is exactly why. We’re putting together a print publication for young people because it’s weird. It’s different. It’s interesting to walk in somewhere and see this publication sitting there. That’s exactly the kind of thing that appeals to them.
Why didn’t we build an app? Why didn’t we build a website? If we’re competing with a mobile app, I’ll go ahead and tell you there will be a bunch of cooler mobile apps than Listerhill Credit Union can put together. But if we’re competing against local magazines for young people, we’re the best one. And the cost to print 8,000 copies is roughly the cost of one newspaper ad.
Beyond building awareness of the credit union’s products, services, and mission, how are you getting the next generation interested in a career with Listerhill?
Ann Davis: There are probably three of us on the senior team that will look at retirement within the next three to four years. We’re starting to wrestle with the issue of succession planning, and our millennial strategy will be a big a part of that process.
For example, we get some of our best talent out of our UNA branch. We’ve had quite a few come through and move up the ranks. There’s an employee in our training department as well as one of our branch managers who came to us through that program.
The problem is, there’s not enough vacancy for huge upward mobility. Let’s say I have five employees out there and they all turn out to be spectacular, I don’t have five openings to move those people into.
When you do move employees over, how do you make sure you are choosing the right young people?
AD: We’ve begun testing employees before they start in a role, which gives us a good baseline to see whether they’re a good fit for the credit union. This includes the Wonderlic, which is a cognitive ability test, as well as more practical, role-specific assessments, such as cash handling tests for tellers.
Last year, we also implemented a customer service test. Now that everyone here has had the test, I can run a profile of any department to see exactly how to best match personalities and strengths.
Have you changed any internal policies to attract or better satisfy younger employees?
AD: We made some changes to our dress code, but I don’t think that was millennial driven. An employee who worked at a drive-thru branch asked me, Why won’t you let us wear jeans? I had to admit I didn’t know. From the outside, you couldn’t tell what they had on. So now, they can wear jeans.
The only day of the week that I’m incredibly popular is Thursday. That’s payday and the day I send an email that says what the dress code is for Friday and Saturday. Usually it’s going to be jeans, tennis shoes, and the shirt of your choice, as long as it’s still appropriate for the workplace. There’s a great deal of interest in football here, so we make sure people can wear their Alabama, Auburn, Tennessee, or in my case Memphis shirts.
In the summertime we also let people wear flip-flops. We don’t allow shorts yet, but I wouldn’t be opposed if there was a groundswell of support. Overall, these small changes have helped employee morale and we’ve had no issues.
The term trending rose to prominence with the advent of Twitter, where users could check out popular topics of the day or week. Soon, the general public and the press turned a noun that applied to keyword analytics in a social app company into an adjective to describe people, places, and events that were top of mind.
Luckily, today’s trending events offer a way for credit unions to identify critical business lessons in a changing world.
Run For The Border: When an altercation between an apparently drunken senior marketing manager for Taco Bell and his Uber driver was captured on the car’s dashboard camera, the video, along with the marketing manager’s name, hit the news cycle. Taco Bell immediately responded by terminating the offending employee and offering this public comment: We have also offered and encouraged him to seek professional help. (1)
Just Say No(thing): When Turing Pharmaceuticals bought the rights to an infection-fighting drug and raised the price from $13.50 to $750 per pill, it made some headlines. CEO Martin Shkreli’s Twitter account showing sarcastic and unsympathetic retorts to photos of his lavish lifestyle made more. In response, a Turing competitor announced the release of a compatible drug at $1 per pill. Shkreli has since stepped down as CEO of Turing and is currently facing fraud charges related to his time at another company. (2)
Show And Tell: When Texas high school student Ahmed Mohamed brought a homemade clock to school to show his engineering teacher, another teacher thought it looked like a bomb and notified authorities. Students shared pictures of Ahmed in handcuffs (and a NASA T-shirt), and everyone weighed in with an opinion. Some supported the school system’s decision to investigate. Others issued angry claims about racism and profiling. Mohamed and his family subsequently moved to Qatar, but there is a lawsuit pending against the school district and the city, and the Department of Justice has opened an investigation into the incident. (3)
The Credit Union Lesson: Almost every customer has a phone and almost every phone has a video camera. That means every encounter, exchange, conversation, or confrontation can be recorded and shared. Make sure the credit union has a social media policy that outlines consequences for improper personal behavior, and train employees to behave in a manner appropriate for the evening news. At the same time, provide employee and members with a way to easily view and share the positive things they see happening at your credit union because those actions and stories can go viral, too.
Proud Of Pork: Chipotle takes its Food With Integrity slogan seriously. In 2013, it began to disclose genetically modified organisms (GMOs) in its ingredients, the first phase toward switching to food made only with non-GMO ingredients. In 2015, restaurant auditors discovered pork suppliers were violating Chipotle’s animal welfare standards and suspended the product at almost one-third of its stores while it found a new supplier. The move cost the company sales growth, but the decision resonated with its target audience of concerned millennials. (4)
A Code For Color: In response to changing consumer perspectives, General Mills is giving Trix cereal a substantial health overhaul. Gone are the neon yellows and vibrant greens provided by ingredients named Red 40, Yellow 6, and Blue 1. Now, annatto and turmeric extracts will provide the cereal with gold and orange colors while various fruit and vegetable juices yield red and purple bites. (5)
Clean Eating: In 2015, Panera Bread published a list of artificial preservatives, sweeteners, colors, and flavors it pledged to remove from its food by the end of 2016. This is just one part of a larger Clean Eating effort that has included posting calorie information on all products, reducing antibiotics in meats, and donating unsold baked goods to hunger relief agencies. (6)
The Credit Union Lesson: There is no good way to offer a trans fat-free share account but these examples underscore how companies have gained market support by responding to evolving social values. Chipotle, General Mills, and Panera have positioned themselves as being in line with the values of a growing segment of the marketplace. The ingredients label of cooperatives includes a history of serving the underserved, living cooperative values, and operating for people, not profits. Credit unions that aren’t actively developing campaigns based on those differentiators are letting business slip by.
The ingredients label of cooperatives includes a history of serving the underserved, living cooperative values, and operating for people, not profits. Credit unions that aren’t actively developing campaigns based on those differentiators are letting business slip by.
Not Lovin’ It: On Sept. 2, 2015, McDonald’s gave customers something they’d been requesting for years all-day breakfast. Although the news was met with substantial fanfare, the reality has not met expectations. That’s because all-day breakfast menus vary drastically by region and franchisee, so major products like McMuffins still might not be available outside breakfast hours. Franchise owners have also criticized the decision, citing everything from a decrease in product quality to an unnecessary increase in capital costs. (7)
It’s Not TV: After offering a free add-on service that allows cable subscribers to watch on-demand content on their computer or handheld devices, HBO leapt into the direct-to-consumer approach in March 2015 with a standalone streaming service that now has an estimated 1 to 2 million subscribers. In response, cable companies are reevaluating their offerings and to some extent, their identities. Many companies now offer skinny packages of broadband and basic cable as a way to retain customers. Other companies are positioning themselves as primarily broadband providers, a switch in perception many of their customers made long ago. (8, 9)
Spice It Up: Starbucks introduced the Pumpkin Spice Latte in 2003 and other purveyors of hot liquids like McDonald’s, Peet’s, Tim Horton’s, and Dunkin Donuts followed with their own versions. But it doesn’t stop there. Sales of pumpkin-flavored yogurt are up 320% year-over-year. And seasonal craft beers including pumpkin flavors make up almost 25% of the craft beer market. On the whole, total sales of pumpkin-flavored food and household goods in American supermarkets and convenience stores have totaled $360 million in sales in 2015. (9)
The Credit Union Lesson: You can’t always get what you want is a great song lyric, but it doesn’t reflect the American market’s sense of entitlement. Consumers, including members, are not shy about telling businesses what they want and backing it up with their wallets. As a result, many credit unions now test their important campaigns, products, and channels with members in the early stages of development to make sure they get things right from the get go.
Sources:
(1) adweek.com, (2) techcrunch.com and bloomberg.com,
(3) washingtonpost.com, (4) fool.com, (5) businessinsider.com,
(6) panerabread.com, (7) today.com, (8) wsj.com, (9) forbes.com
