Differentiation

With 21 different credit unions with more than 50 office locations and $4.7 billion in assets operating in New Hampshire, differentiation is vital to survival, not just amongst other credit unions, but within the larger financial services industry within which they operate. As the Financial Brand puts it:

“It’s a noisy and crowded financial services marketplace full of me-too competitors. If your brand isn’t well defined and clearly different, you’re not going to stand apart from the fray and get noticed.”

Credit unions, as financial cooperatives, have a responsibility to their membership to differentiate themselves and remain competitive. The New Hampshire credit unions that, I believe, are most effectively differentiating themselves are Service Credit Union, asset size, $1.5 billion, membership size, 129,991 and St. Mary’s Bank, asset size, $698 million, membership size, 77,177.

Eligibility to become a member of Service Credit Union is open to any individuals who live or work in the state of New Hampshire, with the exception of Coos County. More importantly, though, Service Credit Union is open to all military and civilian employees of the Department of Defense worldwide. Wisely, Service Credit Union, in addition to opening its membership to people living with the community within which it operates, has continued to target a specific demographic for membership, the military. By targeting this specific demographic, Service Credit Union can differentiate themselves, through their marketing efforts, by focusing on military matters.

This is most evident in their use of social media. Service maintains active Facebook, and Twitter accounts and a lesser used Youtube account. On Facebook and Twitter, the message is clear and direct. In addition to the requisite community involvement information that all credit unions post, Service send messages directly to their target demographic such as this post from Thursday, April 11th 2013:Picture 1

The message on Twitter is the same:
Picture 3

On Facebook, Service have an impressive 2,926 “likes”; on Twitter a solid, 949 followers. Their posts are viral because they are focused and directly relevant to their membership. It follows then that Service’s social media efforts support its strategic goals as they effectively differentiate the Service brand within it’s target demographic.

St. Mary’s Bank, like Service Credit Union, are an open credit union, offering membership to any individual residing in New Hampshire. But, unlike Service, they do not have an obvious target market. St. Mary’s Bank’s point of differentiation comes form their unique claim to being the nation’s first credit union. On their website they state that they are proud of their heritage and wish “to help members achieve their financial goals by providing best in market service and trusted financial advice”.

Their Youtube account is the clearest evidence of using social media to pursue their strategic goal of offering outstanding service while differentiating themselves as the nation’s first credit union. Their account has an impressive 6,582 views, owned mostly by the video “Bloopers: Invitation to Meredith Viera, Today Show Host”. That video is funny and succeeds at showing the brand’s personality while also celebrating the cause of its founding 100 years ago, its point of differentiation.

St Mary’s are not as effective at differentiating their brand as Service, but they have shown some successful efforts to do so. Their Facebook account is growing with an impressive 2,068 “likes”, most arriving this year. I believe that if they were to cross promote their Youtube account more they would be able to better differentiate themselves. There is a video entitled “Re-enactment of the founding of the nations first credit union”, that is overlong and not highly viewed, only 151 in four years. With a re-edit it could become a powerful viral document that clearly establishes their point of differentiation.

It is understandable that credit unions struggle to differentiate themselves. Most began their lives tethered to a parent company or organization. Since the trend began for credit unions to break free from parent companies and open membership to the outside community, most have been unable to stake out a new identity for themselves. Service Credit Union and St. Mary’s Bank are two good examples for all credit unions to follow.

About the author: Ian is an eCommerce Specialist for Triangle Credit Union. The views here are his own and not those of his employer. Ian believes in “co-operation among co-operatives”, and hopes that by writing about what is working for credit unions in NH others will benefit.

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The Social Risks for Co-operatives

Slide1As I have discussed, social media presents great opportunity for Co-operatives.  The International Co-operative Alliance has set forth an ambitious plan that “envisions co-operatives to be the fastest growing form of enterprise by 2020”.  It is likely that social media will be the harbinger of this message and is thus vital to the cause.  With great opportunity though, often comes great risks; namely, for co-operatives, in the form of compliance and regulatory risks.

Many co-operatives operate in industries, financial services, insurance, and even agriculture, that are heavily regulated.  I have discussed how credit unions, financial co-operatives, have been early adopters of social media.  They are thus the first co-operatives to deal with the risks.  It seems that many have found the risk too daunting to overcome.  A Financial Brand article found that “Credit unions on Twitter struggle to attract followers even after being active over two years, and 1 in 5 just give up entirely”.  The article found that “the vast majority of tweets sent are one-directional, often with links back to a press release or similar credit union web page.”  Such dry, safe content is indicative of an industry constrained by compliance and regulatory concerns.

There is hope for co-operatives, though, as according to Nichole Kelly in Social Media Explorer, compliance and regulatory risks can be managed.  PR risks, which fortunately co-operatives rarely face, are much harder to manage due to their unpredictable nature.  Compliance and regulatory risks are known; a credit union knows that it must take care in tweeting current loan rates, for example, as any inaccuracies would be published inaccuracies and thus open to fines and censure if incorrect.

Quitting Twitter and abandoning social media are not the answer to regulatory risk.  Creating a plan that includes active engagement and risk management is the solution. Suncoast Schools Federal Credit Union were recently caught over-thinking their social media strategy, likely due to fear over compliance and regulatory risk presented by Twitter.  After a year and a half of inactivity they jumped into Twitter to respond to an odd and unsavory tweet about one of their locations two days after it appeared.  The delay and their strange response turned into a PR risk once the Financial Brand picked it up for this article.

Co-operatives need to be active and engaged with social media if this decade is to see the growth the ICA predicts.  There is no need to shy away from engagement due to regulatory concerns, as these are risks that can be managed.

Social Media Lessons to be Learned from Financial Cooperatives

To consider how cooperatives should best use social media to connect with members and potential members, I will look at the state of the social media within the financial cooperative, or Credit Union, industry.  According to the Financial Brand, “retail banking has consistently ranked among the earliest and most aggressive industries to adopt social channels”.  Never to be outdone by their shareholder-owned competitors, Credit Unions have also been aggressive adopters of social channels.  As early adopters, financial cooperatives can teach the cooperative movement many lessons from what works, Facebook pages, to what does not work (at least not yet), Pinterest boards.

A quick survey of financial cooperatives in NH shows an active and engaged industry. Bellwether Community Credit Union , Granite State Credit Union, Service Credit Union, St. Mary’s Bank, and my own, Triangle Credit Union, all actively manage a Facebook page.  Posts on Facebook range from the community minded, to inform members of local events and sponsorships, to financial advice, often done through the resharing of fin lit blogs, and general Credit Union announcements, during the recent snowstorm, Nemo, all took to Facebook to inform members of branch closings.

Facebook is a great member-facing tool as it is where many of a cooperatives’ members and potential members are located.  A cooperative benefits greatly when they create shareable content on Facebook. For example, Bellwether’s branches and offices recently participated in the Go Red for Women campaign to create awareness of heart disease.  A photo collage of the event was posted on Facebook.  The post received 26 likes and 3 comments, placing Bellwether positively in the news feeds of each of those who took the time to engage.  Here cooperatives can see an example of how social media can be used to share the message of community, which is tantamount to the success of any cooperative.

Beyond Facebook, Bellwether use Linkedin, St. Mary’s, Triangle, and Service use YouTube, and Service and Triangle use Twitter.  Triangle also maintain a blog, to which I am a contributor.  There is no doubt that the adoption of these different tools create additional platforms for listening but are they truly capable of engaging?  A look at Pinterest boards shows how aggressive early adoption can force a cooperative down a narrow and unfocused path.

A Financial Brand study of Pinterest reveals that a great deal of time and effort may be misguided when it comes to social media use.  They cite the example of Fireman Community’s use of Pinterest.   As I mentioned earlier, the banking industry and by extension the financial cooperative industry, are quick adopters of new social media tools.  In 2012, Pinterest was all the rage, with Banks and Credit Unions alike directing efforts toward the image-sharing site.  But can their be any value for a financial cooperative with only intangibles to sell to engage in a tool that makes sense for restaurants and clothiers that have a need to display visualizations of their products?  Financial Brand’s analysis of Fireman’s determined that approximately 67 hours were spent maintaining the page to net 274 followers of which many are other Credit Unions, marketing professionals, and not in fact members.  Making the answer a resounding “no”.

In the comments of the article an articulate and fascinating argument plays out.  Fireman’s defend their use of Pinterest, stating, “Pinterest is part of our holistic multi-channel content strategy, not just another social network…That means we’re not just wasting time on Pinterest; we’re integrating it into our overall communication strategy.”   A worthy and admirable response, but the resources of a cooperative are generally limited.  Consideration should always be given to utilizing only those tools that have been proven to be successful.

Financial Cooperatives, and other coops by extension, must use caution when proceeding with social media channel adoption.  According to the Financial Brand, “65% of consumers surveyed say that they would stop using a brand that upset or irritated them as a result of their social media behavior.”  Coops run the risk of pushing themselves unfavorably on potential members and of publishing irrelevant and unnecessary content because they feel the need to communicate or participate in new channels; the more channels, the thinner and less relevant the content will be.  Social Media is as much about listening as it is about connecting.  Cooperatives will be successful and reap the rewards of social media as long as they focus on creating great content, and limiting themselves to participating in proven channels.

Ian – Southern New Hampshire University Grad Student