By Fernando Pena, Fractional CMO, Rokture
In today’s crowded marketplace, smaller credit unions face a unique challenge when it comes to growth. That challenge is standing out in the crowd of advertisements and continual messaging that is prevalent today. Larger financial institutions have the luxury of massive marketing budgets and widespread brand recognition, but small businesses, including credit unions, don’t have the resources to compete at the same level. This can be frustrating, especially when endless competitors market to the same members. The key to success for smaller credit unions isn’t trying to mimic the tactics of large corporations but rather focusing on differentiation.
When it comes to growth, many small businesses, including credit unions, mistakenly believe that they need to build a dominant brand like Apple, Verizon or Geico. These large corporations can afford to flood the market with advertising to establish a dominant presence. But the reality is that such branding tactics simply don’t work for smaller institutions that don’t have the budget or resources to back them up. This is where differentiation becomes essential. It’s not about trying to imitate the big players but positioning your credit union in a way that makes you stand out to your ideal members.
The Power of a Position of Market Dominance
For a small credit union to thrive, it must create a Position of Market Dominance (PMD). This concept is about crafting a unique identity and value proposition that resonates deeply with your target audience. The goal is to ensure that potential members don’t think of your credit union as ‘just another option’ but as the only logical choice for their financial needs.
A PMD is more than a catchy slogan or a flashy marketing campaign. It’s about tapping into the existing conversation in the minds of your prospective members. Think of it as the bright red light in a sea of beige. It needs to be distinct and relevant and speak to the pain points or desires that your audience already has. Many members of smaller credit unions seek more personal service, lower fees and a sense of community that larger institutions can’t offer. Your credit union can embrace and amplify these qualities in a way that makes your members feel understood, valued and supported.
Differentiation Starts with Understanding Your Audience
The first step in crafting a PMD is understanding your target audience. If you don’t know your ideal members, how can you effectively communicate with them? Demographics, like age, income and education, are essential, but psychographics truly make a difference. What do your potential members care about? What are their values, interests, and concerns? Every institution has something that makes it unique and likely an excellent fit for a specific segment of the population.
Let’s consider a small credit union that targets young professionals. They might be highly concerned about their student loan debt, saving for their first home, and managing their finances in an environment of economic uncertainty. If you understand these issues, you can tailor your messaging and services to meet these specific needs.
A successful PMD for this target group might read, “Helping You Get Out of Debt and into Your Dream Home.” This speaks directly to their financial goals, positioning your credit union as a trusted partner in their journey. When crafting a PMD, it’s crucial to understand what they want and, just as importantly, what they don’t want. They’re not interested in being served by faceless corporate institutions that don’t offer the same level of care and personalized service that your institution can.
A Value Proposition That’s Irresistible
Once you understand your ideal audience, it’s time to create a value proposition that clearly differentiates you from the competition. A value proposition is your promise about the benefits members will receive when they choose your credit union. The challenge is ensuring that the benefits you promise are unique and differentiated.
Let’s consider a credit union specializing in providing financial education and resources for members looking to improve their credit scores. This clear point of differentiation directly addresses the pressing concern of poor credit for many people. By offering personalized guidance and tools to help members raise their credit scores, your credit union would position itself as the go-to resource for anyone looking to make positive financial changes.
The key is avoiding overused and empty phrases like ‘best customer service’ or ‘great rates.’ These are not differentiators because every credit union or bank claims the same thing. In fact, using these terms commoditize your services as potential members might view you as another provider of the same products and services as the institution down the street. Instead, focus on what truly sets your credit union apart and how you can make life easier or better for your target audience.
Retention: The Other Side of Market Dominance
Creating a PMD isn’t just about attracting new members but also retaining the ones you have. When your credit union can uniquely meet the needs of your members, they’re less likely to leave for a competitor. A strong PMD helps foster loyalty and trust, ensuring members feel valued and understood. It also creates a favorable environment for recommendations, referrals and the all-important positive reviews on social media channels.
If your credit union offers a streamlined mobile banking experience tailored specifically to your members’ preferences, it becomes something that larger institutions can’t easily match. Personalization builds strong relationships with your members, making it difficult for competitors to steal them away.
The Path to Growth
In a world where countless financial institutions are vying for attention, differentiation is the key to success for small credit unions. Rather than competing with the big players on their terms, focus on what makes your credit union unique. By understanding your ideal members, creating a compelling PMD, and offering value that resonates with their specific needs, you’ll be able to grow your membership and build long-term loyalty.
Craft an identity that speaks to your members’ desires, concerns and goals. When your credit union stands out as the clear solution to their financial needs, your growth will follow naturally. Embrace the power of differentiation, and your credit union will thrive regardless of economic conditions or increased competition.
Fernando Pena is the founder of Rokture, a company that helps smaller credit unions and community banks develop and execute tailored growth strategies that focus on the digital channel while creatively managing around limited advertising budgets, technology platforms, and resources.