Is ‘Common Bond’ Part of Your Brand?
Credit unions, as not-for-profit organizations, are required to limit their membership in order to qualify for their untaxed status. Historically, this helped create a “common bond” between credit unions and their members. But is this why people join a credit union — for the sense of belonging and togetherness?
The credit union industry doesn’t reference “affinity” as a central component, nor are “common bonds” cited as a core philosophy of the movement. Not at the National Association of Credit Unions , nor the Credit Union National Administration, nor America’s Credit Union Museum, nor the California Credit Union League. Not even in Canada are themes of “affinity” or “common bonds” mentioned.
Some see the “common bond” requirement as a core tenet of the credit union movement, while others see it as a legal technicality preventing millions of Americans from enjoying what credit unions have to offer. If it weren’t for legal restrictions, would pretty much all credit unions would extend their services to everyone regardless of where they live, work or worship?
Key Takeaway: The original purpose of requiring credit unions to have a “common bond” was part of their legal foundation as not-for-profits. But the “common bond” gave credit unions tremendous brand clarity. When you target a specific audience segment, you can serve their needs with a razor-sharp focus. It’s this focus that helps create a relevant, differentiated brand.
Key Question: If you’re a bank, how does the “common bond” question apply to you?
As credit union charters have expanded and more credit unions merge, their focus on a common bond (also known as a “target audience” in marketing) has all but vanished. The more you grow and expand, the harder you have to work to stay focused. Just because your credit union is open to all people who live, work or worship in your state doesn’t mean you shouldn’t be looking for common threads you can identify in your members’ lifestyles. The more insights you gain about your target audience, the strong your brand will be.
This article © 2012 by The Financial Brand and may not be reproduced.
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Jeffry:
Another key question in this, I think, is: How relevant is the common bond, as currently defined by the FCUA, to today’s consumers? The answer is: It’s not. And that’s because it’s a legal restriction based on affinities that people don’t care about that much anymore. I can definitely see that single-employer CUs had a big marketing advantage years ago, when people worked at the same company for decades and identified so closely with their job and their company. The CU-membership-as-job-perk had some value then. Today, I would think, any number of lifestyle markers might serve as much better pegs on which to hang a “common bond” kind of brand. People seem to care a lot more about, say, their favorite sports team, or charity or hobby or high-tech lifestyle, than a job they may not keep for more than a few years. Or, for that matter, a neighborhood they might leave for that new job.
Yes, without any field of membership restrictions, a lot of CUs would try to market to every possible member. Would all of them? Nah. Some CUs with community charters are pretty savvy at branding themselves and effectively targeting slices of their potential field of membership right now.
I agree Aaron. The affinity people feel for their financial institutions seems to be quite rare, and, in the case of credit unions, eroding. Creating the feeling of a common bond is still possible. It was just easier when credit unions were handed a highly-focused target audience.