Credit union membership is growing: Over the last five years, average credit union membership has increased by over 7,600 to 132 million members nationally, a number that represents 18 to 22% of US households.
However, credit union membership is decidedly older: the average credit union member is 53 years old, while the median age of Americans is 38.5 years.
As a result, the goal of credit union marketing managers is to attract new members under 45 years old. In demographic terminology, that target is Gen X, born 1965 to 1980, and the older segment of Millennials, born 1981 to 1996.
Attracting younger members requires a new approach for credit unions
Most credit unions have histories rooted in a shared community, like a trade union or workplace association, and in a common geographic area. As such, marketing has emphasized shared community values and the benefit of education and community involvement.
By contrast, younger prospects have a history of use of online financial services, and they are not easily motivated by traditional credit union messaging.
Younger prospects prefer online financing
The Consumer Banking Preferences & Behavior Report reports that consumers under 45 seek tech-enabled banking features. These potential members have preferences rooted in their online finance experience:
- 2x more likely to be members of online banks
- 2.5x more likely to apply for a loan on a mobile app
- 3x more likely to consider a nontraditional source for savings/checking account
- 4x more likely to transact on an auto loan using an ACH funds transfer
Promoting your credit union as Tech-Savvy
To generate response from Gen X and Millennial prospects, marketing messages should emphasize the tech-savvy capabilities of the credit union’s desktop and mobile websites. These prospects can be reached via social media, landing pages, and digital ads.
Instead of promoting traditional credit union values like community, Gen X and Millennial messaging should position the credit union as the “Smart Choice”:
- Higher interest rates on savings accounts – grow your money faster
- Lower rates on loans— cheaper to borrow money
- No minimum credit score for an auto loan – financing based on helping the individual
- Transparency – no hidden fees
- Free overdraft protection – and low or no cost money orders
- Build a better FICO score – active measures to help build a better financial future
- Personalized service – financing designed for the individual
Reaching the financially challenged younger prospect
A sizeable segment of Millennials and Gen Xers are credit-challenged. College loans and poor credit card management are two sources of Millennial’s problems. Credit monitoring agency TransUnion reports that 43 percent of Millennials have subprime scores, compared to 20 percent for older consumers. As a result, many banks simply turn away Millennial and Gen X prospects.
While financing for these prospects require a higher level of supervision, a credit union can benefit from financing at a higher interest rate. Credit unions can reach these individuals primarily with social media ads and posts and Search ads like AdWords.
To develop these prospects as members and to increase the likelihood of loan payments, the credit union will need to focus messaging on how a new member can improve their credit score and lower their payments:
- Making payments on time for the loan and for any credit card activity
- Keeping credit card usage below 30 percent
- An appropriate debt-to-income ratio
- Avoiding credit hard inquiries
Credit union marketers already excel in this type of messaging – the only challenge is to tweak the messaging to make it appropriate for a younger audience.
Target both Men and Women Millennials and Gen Xers
Credit unions have membership requirements, primarily geographic – those who live, work, or attend school in a specific geographic area. Most credit unions provide membership opportunities to extended family members as well.
In reaching out to prospects, seek out both men and women: credit union site visits are evenly divided by sex. To improve results, credit union marketers should A/B social media campaigns with a messaging and images that are primarily male and female.
Grow the credit union with younger ages and lower scores!
The growth of a credit union now rests on its ability to market to potential members who are younger and likely to have lower credit scores. While making the transition to this type of messaging may be outside of a marketing manager’s comfort zone, the growth of the credit union’s community demands nothing less.