Source: Callahan & Associates “Peer 2.0 Software” – June 30, 2008

Key Insights:

• The country’s largest credit unions spend, on average, the least per member, but they may also be gaining media efficiencies with their marketing budgets.
• A marketing budget of $350,000 is not enough to support and sustain a billion-dollar credit union. That represents only .035% of total assets.
• Similarly, a $150,000 marketing budget is inadequate for a $500 million credit union. That’s only .03% of total assets.
• A $40,000 marketing budget is dismally low for a $250 million credit union. That’s about .015% of assets.
• A marketing budget of $2.8 million seems excessive for a $500 million credit union, as does $1.2 million for a credit union with $250 million in assets. That’s around .05% of assets.

Key Questions:

• How can any credit union at any size have a marketing budget of $0?
• What is the average cost of marketing per new member?
• What is the average growth in assets per marketing dollar spent?

Bottom Line:

• The average marketing budget for most financial institutions (bank or credit union) at any asset size should be at least 0.1% of total assets. (Case in point: BofA, whose $2.0 billion marketing budget is almost exactly 0.1% of its $1.9 trillion in deposits.) Many factors affect this guideline — up or down — including, but not limited to, growth goals and media costs in specific markets.
• Now is not the time to cut your marketing budget (as tempting as that may sound to some among your senior management team). First of all, as market conditions get tougher, you need to ramp up your spending — just to stay where you’re at. Second, it’s easier to “cut through the clutter” when there’s less clutter.

Take this poll and guess what the annual marketing budget is for this $1.9 trillion beheomoth — including branding, advertising and community support —  Don’t forget: BofA sponsors the U.S. Olympic team, the Dallas Cowboys, NASCAR, etc.

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The answer is on Page 2, or lurking at the bottom of this article.

Here’s another creative marketing effort from the folks at Arizona State Credit Union. (If you missed The Financial Brand’s previous coverage, check out their LOL Cats poster here.)

With around $100 in supplies, the credit union made this merchandising display to promote its financing for construction projects:

They also made wood blocks that were displayed on desks of member service reps and teller stations:

“Merchandising is a retailer’s tool. Just visit the grocery store or Macy’s. Even Walgreens does it. You just don’t see it in a financial institution.”
– Paul Stull, SVP/Marketing
Arizona State Credit Union

This campaign ran in branches only. No other media was used to support the promotion.

In an interview with The Financial Brand, Paul Stull, SVP/Marketing for Arizona State CU, said, traditional media has its place, “but doing something simple with big impact has more power with members who are right there in front of your sales team. It starts conversations and drives sales.”

“It was fresh, unique and made our point at a low cost,” he added.

Arizona State Credit Union has $1.1 billion in assets.

Bottom Line: The $5,563 campaign helped the bring in $2.3 million in new loans in four months. That’s a return of over 40,000%.

In recognition of the promotion’s phenomenal results, the Credit Union Executive Society bestowed this year’s GMA Golden Shoestring Award to Arizona State CU.

Key Takeaway: You don’t need big bucks to generate big results when you have a good idea.