Education as Marketing

There is what some will call financial illiteracy in this country. It is broad, deep and very widespread. It works much to the disadvantage of credit unions and to the advantage of banks and lending corporations. What can credit unions do to turn this around, help members and increase advertising success?

 
 

We here at GTE Federal Credit Union are putting education of members at the heart of our development strategy. We believe four things:

  1. Credit unions are better for people;
  2. Most people don’t understand #1;
  3. The reason for #2 is that people do not understand how credit unions work;
  4. If they did understand how credit unions work, credit unions would have no trouble attracting business in the marketplace.

There is what I will call financial illiteracy in this country. It is broad and deep, very widespread. It works very much to the disadvantage of credit unions and very much to the advantage of banks and lending corporations.

People often simply do not know when they are losing money, or when they do sense losing it, they do not make the effort to discover how badly the loss is hurting them or change their course.

Oddly people know enough to call for a second opinion if they face a large repair job on their automobiles. But they do not investigate banking fees and hidden charges. Moreover, marketing for banks and lending corporations have achieved a level of sophistication by which their true charges are fairly well disguised from customers. If a person were to call for a rate at our credit union and hear no more than the rate, he or she would hear, say, “6.9 percent.” If that same person were to ask the same question at a car dealer he or she would hear “2.9 percent or $1,500 back.”

If that person were to take our loan at 6.9% and pocket the $1,500 he or she would be paying less over the life of the loan than would the person paying 2.9% and foregoing the $1,500 back. But generally they do not follow through enough to effectively comparison-shop.

Credit Unions are Fundamentally Different

This is only a sampling of what we have to deal with day in and day out. And we are losing good people because of it; it’s heart-breaking.
You and I both know the following: If a credit union is run as efficiently as a bank or like institution, it always can give a better deal to members by means of lower loan rates and higher savings rates.

Somehow this is not getting through to enough people. We need to do a far better job of informing the public and our members that credit unions are not just slightly different from banks, they are vastly different from banks.

We need to publicize that the difference is absolutely fundamental, that banks are organized to reward the owners, that is, stockholders, but that credit unions are organized to benefit only the people who belong. The credit union is owned by them, is run by and for them and the proceeds are passed back, in the form of low loan rates and high savings rates, only to them. Under such a structure, the benefit to members has to be better than the benefit to a bank customer.

Member Education through Employee Education

How can the above get through to the members? Stories in newsletters is only part of the answer.

A fundamental ingredient is an employee force that understands the above principles, embraces those principles, and can communicate those principles to members and potential members. Only in this way is the word going to sink in to members that the more business they do with the credit union, the more they are going to benefit from it personally.

Accordingly, we are hiring people who will concentrate on educating our workforce, traveling from branch to branch and assuring that persons working for our credit union understand a cooperative’s fundamental structure, why it is so helpful to members and how these same employees can best communicate these ideas to members and the public.

We also run a contest for employees, with a trip to Europe as a prize, based on the above themes. To be eligible, employees must be knowledgeable in the principles of cooperative ownership and its benefits to members. We believe this will lead to immediate and long-term benefits for our credit union.

As Sy Syms used to say on his TV ads: “An educated consumer is our best customer.” We believe that to the hilt. This is why the phrase “education as marketing” is a principle we believe in and live by.

 

 

 

Aug. 20, 2001


Comments

 
 
 
  • wake up call -- restating the obvious, but neglected message
    Anonymous
     
     
     
  • The problem identification is correct, the solution is going to fall short of the goal. Non-members are the ones who need to be educated.
    Anonymous
     
     
     
  • A socialist institution in a capatalist society... a challenge to get people to understand
    Anonymous
     
     
     
  • Comic relief: All credit unions are not the same; just like all banks are not the same. Consumers may not be as stupid as the author believes; or willing to believe the generalizations and untruths. Stockholder owned institutions frequently deliver better value to consumers than cooperatives, perhaps in part because of the mythical beliefs (or CUNA's bright lights) of some of their managers.
    Anonymous
     
     
     
  • very good
    Anonymous
     
     
     
  • This is all well and good, but I was expecting something with a little more "pop" than just training employees about the value of credit union membership. How do we get the word out to the general public? Do we pool advertising dollars? How do we compete for market share with the big banks? What national or regional organizations champion the cause of CU's to the general public?
    Anonymous
     
     
     
  • If we don't gert additional capital we're either a thrift or turning away member deposits at some point not so far away
    Anonymous
     
     
     
  • Thought provoking - will keep my eyes open for more articles along this line in the future.
    Anonymous
     
     
     
  • First rate assessment of the rationale and alternatives for capital development. Nice job!
    Anonymous
     
     
     
  • excellent overview
    Anonymous
     
     
     
  • It puts the issue in perspective. Dealing with the issue before we have to, will allow us more flexability.
    Anonymous
     
     
     
  • Very relevant for growing credit unions
    Anonymous
     
     
     
  • In agreement---We need more capital options
    Anonymous
     
     
     
  • A well balanced article providing all aspects of the issue for the reader.
    Anonymous