For some credit unions, a community charter may be their only avenue for survival. But for all others pondering an expanded charter, they seem to dwell on starry-eyed possibilities without acknowledging some very big branding issues.
#1 Lost focus
Credit unions with closed charters concentrate on the unique needs of a very specific and narrowly-defined audience. They know exactly who they serve and why they exist. Tragically, many community chartered credit unions let their concept of “audience segmentation” erode into a singular demographic: “all people ages 18-55.” (Translation: “everyone with money and a pulse.”) The bigger your target audience gets, the harder it becomes to find a unique value proposition. The lowest common denominator is rates, price and fees.
#2 Massive marketing muscle
Maximizing community charters requires a whole new level of marketing — billboards, radio, TV, online ads — plus a much larger budget that can be quite a shock for those who aren’t prepared. Closed-charter credit unions are accustomed to a very limited range of marketing tactics. They aren’t familiar with what it takes to generate name awareness and build a mass-market brand. They have little- or no experience with CPM, SEO, click-through rates and paid search.
#3 Estrange your sponsor
To your original sponsor, a community charter can look like a deliberate attempt at distancing yourself from their organization. As you change names and start marketing to the general public, the feeling that your credit union was once an exclusive, club-like employee benefit disappears right along with the special access your credit union once enjoyed. No more welcome packets at new employee orientations. No more kiosks in the employee cafeteria. They may even kick you out of their facilities altogether.
#4 The old name won’t work
If you have a word like “Employees,” “Teachers” or some other equally-limiting term in your name, you will never convince the community that “everyone can join.” Many credit unions think adding the word “Community” in their names connotes an open charter, but that never works as hoped. You can try switching to an acronym — AECU, BECU, CECU, DECU, EECU, etc. — but these stiff and corporate combinations of letters are already ubiquitously used by other credit unions. Even if you can find a suitable web address, people will still get confused when searching for you on the internet. In all likelihood, a community charter will require a name change.
#5 Cooperation becomes competition
Credit unions are comfortable competing with banks, but they aren’t used to competing with other credit unions. Don’t be surprised when your once-friendly pals at the credit union down the street give you the cold shoulder. Once you have a community charter, you are trying to steal their members.
#6 Bankers hate community charters
Every time credit unions expand, the ABA becomes more agitated. Each new community charter fuels the ABA’s fight for credit union taxation. If every credit union in the U.S. had a community charter, then what argument would there be against taxation?
This article originally appeared on Callahan & Associate’s website, CreditUnions.com, and is republished here with permission.
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