Benefits of Smaller Social Media Audiences & Larger Marketing Budgets

Where is social media headed? What should credit unions be doing now to ensure they are keeping up? Something interesting is happening that could make those questions irrelevant. It’s possible that social media is coming right at them.

Credit unions may be – accidentally – standing in the exact spot where all social media platforms are headed.

Enter evolving consumer trends, increased awareness of how social media platforms are using (and sharing) our data, and changing expectations for interactions from personal and brand connections in a post-digital world – and truly something interesting is brewing.

Fewer Friends, Happier Friends

David Pierce of The Wall Street Journal reminded his readers of the phenomenon known as Dunbar’s number, the maximum number of people one can maintain relationships with at any given time: Approximately 150. The number of connections that the average Facebook user has is more than double that amount according to Pew Research. In his article, Pierce concluded he simply had too many connections (more than 1,000) and that his secret to a more enjoyable social media experience was to unfriend many of them so he could know his friends again – a way, so to speak, of avoiding feeling like a drop of water in an ocean.

This isn’t an isolated occurrence. Senior executives at Return, a leading digital marketing agency in Europe, claimed that the biggest challenge digital marketers face in 2018 is creating an experience and narrative that people want to engage with. Marketing Director Mellissa Flowerdew-Clarke said, “We’ve seen a shift over the years from a mass-media centric, one-to-many approach, to digital enabling data-driven, one-to-one tactics. The next phase is, what Forrester calls, ‘post-digital,’ where success will be determined by marketing’s ability to adapt to one-to-moment marketing.”

There are a growing number of social media platforms abandoning the adage that “more is more” and instead focusing on creating experiences that more closely resemble hanging out with friends IRL. For example, one of social media’s more innovative players, Snapchat, is redesigning itself to focus more on connecting with known friends and small groups over the “broadcast” mentality of sharing public messages. Another emerging media platform is focusing on connecting via video chat with no more than 30 people, ever. Pew Research reported that as of January 2018, 22% of U.S. adults are using WhatsApp, a cross-platform personal messaging service that allows for sending of text, photo, audio and documents as well as voice and video calls – which now rivals the amount using Twitter (24%) and LinkedIn (25%), two very public platforms.

A Cozy Place

Not many credit unions see followings of one million and up like large national brands do. Many credit unions listed on The Financial Brand’s list of the “Top 100 credit unions using social media” have a cozy 5,000 followers or less. A quick search reveals the average credit union has far fewer than that. And that’s not only OK, but perhaps a big plus.

A small social media following may work well to a credit union’s advantage. People expect brands today will have loads of data on them, and hope that knowledge of their preferences can at the very least make for a more enjoyable, effective experience when dealing with said brand. At worst, people will be skeptical of what a brand is doing with their data, fearful it won’t be adequately protected and annoyed when it is only used to sell something they don’t want.

Credit unions that know their members well and have small, local communities of followers can customize and tailor the experience to be relevant to their situations: Local economy, news, events, knowledge and experiences (think the “Keep Austin Weird” culture). With honed, well-crafted content and dedicated attention to providing customer service through the channel, a credit union could serve up everything a member is seeking through that connection.

Credit unions looking for “success” on social media would do well by directing time and resources into learning more about their social media audiences, micro-tailoring and producing content to speak to needs based on that knowledge, investing in technology and capabilities to digitally connect and communicate with members on a one-to-one basis, connecting organization-wide objectives with digital marketing strategies and tactics, and taking full advantage of the differentiating position that “knowing the customer” puts them in to give audiences a customized local experience that isn’t replicable among national brands.

More Marketing, More Growth

Filene’s report “Factors Contributing to Credit Union Asset Growth, 1979-2016” (Dopico, 2018) included a review of both published reports and analysis of extensive data on credit union growth factors, and concluded that credit unions aiming to grow, in any sense of the word, should develop and carry out marketing plans that are consistent with their strategic plans.

What might that look like to be more strategic with marketing content on social media and other marketing efforts? The simple answer is to focus on activities most likely to result in faster growth. According to the report, “Marketing efforts could focus more on attracting new members or on informing members of attractive interest rates or convenient features in the credit union’s deposit accounts.”

The research also concluded the factors that most reliably contribute to growth are deposit benefits, ROA, product breadth, and most significantly, marketing expenses. This may seem like stating the obvious, but statistical analysis of the contributions of the various “high-impact” growth factors shows that increasing marketing expenses by 0.1% of assets (doubling the typical, and small, marketing budget) increases growth by 0.79% – a factor of nearly 8:1 return on investment.

“Our results imply that increasing marketing has far larger impacts on growth than dedicating a credit union’s resources to other areas (such as increasing deposit benefits, compensation, occupancy or operation expenses),” the report’s author, Luis Dopico, wrote.

Marketers and credit union decision makers, take heed: Credit unions’ marketing efforts do pay off, and according to the report, could be greatly contributing to the reason why yours is still in business today. The data further show the impacts of marketing to be in an upward trend.

“This upward trend could perhaps be the result of increasingly professionalized marketing efforts among credit unions, particularly compared with the late 1980s. The uptick in marketing effectiveness in recent years could also be the result of new computer-based marketing techniques (websites, email, more effective marketing research, better targeted expenses, etc.) and emerging social media platforms.”

All credit unions can take advantage now of this unique opportunity to see great growth with just a small amount of additional resources put into marketing efforts. If an organization’s leaders see this opportunity for what it’s worth and decide to increase marketing budgets within today’s environment of consumer preference for individual outreach and personalized messaging on digital channels (the desire), credit unions would then feasibly be able to meet those needs (through a focus on local and personal service). The effort would be viable due to an increased marketing budget to allow for knowledgeable and dedicated staff, and tools, technologies and strategies to be successful. This forms the trifecta of human-centered design: Desirability, feasibility and viability.

What is old is always new again. And often, the most innovative ideas are the simplest. Being genuine, trustworthy and human isn’t going out of style anytime soon. But the execution is crucial. To stay up with where digital marketing is headed, credit unions should recognize the opportunities within their uniqueness and devote the right amount of resources to allow those opportunities to flourish.

Holly Fearing is the Marketing & Communications Director for Filene Research Institute. She can be reached at 608-661-3758 or hollyf@filene.org.