Market to the Middle and Prepare for the Market Upturn Now 

NACUSO quarterly magazine Connection, June 2002
By Carol Anne Burger

Raddon Financial Group President/CEO Robert Lawhead wants credit unions and CUSOs to understand that it makes good sense to go after their best contributing members (and not to be shy about it, either). That fact isn’t news to most CUSO officials by now (if it ever was). But many CU presidents had to learn the hard way (losses or stagnant investment and insurance program numbers) that it was better to target and market to the most profitable members first. 

“Member households with investment and insurance services in the credit union have about $18,000 more in deposits than those without them,” said Lawhead. “They have about $10,000 more in loans than those without investments and insurance services. And they have more combined balances and use an average of five more services than households without.” 

But of member ‘wallet share,’ the CU has only 13% of total deposits and 0.6% of investments to begin with, while deposits at other institutions is 33%, and investments at other institutions is 53%. So there is big room for improvement. Getting that boost means doing the research that identifies the sales potential and the products these members desire and marketing those products to them. 

Consumer segmentation shows that credit unions are having the most success with the middle income depositor. The retiree with a rollover IRA can build the base of the CUSO investment/insurance program. “That’s the ‘low hanging’ fruit.” Lawhead advised against marketing heavily to the ‘Upscale’ client,’ because “they have a lot of choices. You can get them, but it’s harder.” 

The appeal to the middle income member must consider the ‘what’s in it for me?’ point-of-view,” he said. “So any advertising/marketing should answer that question –and not in a lot of words. It doesn’t have to be real slick, so you don’t have to spend a ton of money. But it has to be easily understood.” 

“I think more credit unions and CUSOs get this now, “said Lawhead. ‘And there is no better time than now to set up programs or reemphasize existing ones, because you just know the cycle is coming.” The cycle is the long awaited economic recovery and the flowing back of money into equities markets by investors scared off by scandals like Enron, Tyco, Global Crossing and Adelphia. Already labeled a crisis of confidence’ by the media punditocracy, credit unions and CUSOs have an edge there that would be the envy of the biggest banking behemoths.

With all that good will, Lawhead said CUs and CUSOs ought to be doing better. The reason they haven’t is because they’re too timid. ‘There is real value in the trust members have in their credit unions. I would market to that trust, especially now.”