Digital to Dominate 2019 Credit Union Marketing Budgets

Marketing professionals see credit unions investing more resources in their 2019 budgets for digital marketing campaigns, in the hopes of increasing their much-needed market share of the millions of potential young members who are searching the web every day to finance their lives.

This digital marketing strategy is even more critical for credit unions because a FICO survey found that only 6% of millennials and only 9% of Gen Zers are credit union members. More than 70% of millennials and 67% of Gen Zers are customers of national banks, while 17% of millennials and 20% of Gen Zers are customers of regional or community banks.

To help credit union executives make important and difficult budgeting decisions, marketing experts offered insights about what digital marketing channels are more likely to reach young consumers, how much should be allocated to each digital channel, and why they need to invest in marketing technologies and employee education and training.

When it comes to digital marketing, credit unions have been lagging behind their bank competitors.

Chris Leone, president of WebStrategies in Midlothian, Va., cited research that showed only 27% of credit unions said last year that the adoption of digital channels was a top priority, compared to 63% of banks that said adoption of digital channels was a top priority in 2017.

But credit union marketing professionals like Leone have noticed that this appears to be changing.

“Finally, we’re starting to hear credit unions say that they’re willing to make more significant investments in tools, technologies and digital budgets in a way that maybe aligns a little bit more with the competition,” Leone said. “One study I read recently showed that executives are looking to increase digital spend across the board. Marketers in those organizations are most bullish, so they’re most optimistic on paid search, paid display, paid social and paid mobile.”

He recommends credit unions consider earmarking about 45% of their total marketing budget for digital marketing and allocating those funds to support search engine optimization, paid search advertising (PPC) on Google or Bing, online or banner display advertising, social media marketing (which includes video, but not organic social media marketing) and email marketing.

However, when determining a budget for 2019, it’s important to know what the credit union’s goals are. For credit unions, a main goal is to grow loans and membership, but it is just as important to specify those goals, according to Marne Franklin, CEO of Uncommn Marketing Partners in Greenville, S.C.

For example, if the goal is to capture 50 new auto loans and approve 50% of them per month, credit unions should review data and performance information to determine what the ballpark budget number should be.

“That means the credit union needs to receive 100 auto loan applications per month – approving half – to reach their goal of 50 new auto loans,” she explained. “This is where we start breaking the numbers down further. Where will those applications come from? If half are going to come from digital channels and the other half from other sources like traditional advertising and indirect lending, we now know we need to get 50 applications per month from our digital marketing campaigns. Looking at the historical data for search terms, click-thru rates and conversions, we can identify how many people must see a digital ad, what percentage of those must click on it, and how many of those must complete the application to get to our target number of approved applications, which is 25 in this case.”

To keep digital marketing budgets in check and goals realistic, Franklin recommended limiting the focus of marketing budgets to key products that drive revenue.

“While special offers and promotional rates can grab attention, it is important to dedicate a portion of the marketing budget to evergreen branding messages,” she noted. “This helps ensure that potential members are served ads about your core stable of services, such as free checking and auto loans, no matter the time or day they are seeking more info.”

It’s also important for credit unions to allocate about 12% of their marketing dollars to buying new analytics tools, chatbots, and marketing automation and website optimization software.

Updating the capabilities of your website is a credit union’s door to future growth, James Robert Lay, CEO of the Digital Growth Institute in Houston, Texas, said.

While credit unions won’t think twice about plowing millions to open a new branch with an expected ROI within three to five years, Lay observed, they hesitate to invest $50,000 to $75,000 and more to improve their website, which can produce results within days or weeks.

Lay said credit unions are digital retailers that need to optimize their websites for positive member experiences and conversions.

“That to me can yield some of the best returns on investment, even more so than any digital advertising,” he said. “You can buy all the [consumer] traffic you want, but if your website has a conversion problem, whether it’s a user interface experience or some other form of conversion experience, you’re going to be leaking opportunities and you’ll be literally wasting dollars.”

Personalizing member and non-member experiences when they visit your website, for example, can help capture more loan conversions. Website personalization technology tools are easier to use and more affordable than they were in the past, according to Leone.

Typically, when consumers are looking for financial products, they visit websites to check rates, fees and other terms for loans. But when consumers return to your credit union’s site for a second or third look at your home loans, for instance, the personalization technology tool will automatically switch out the content on the home page to feature the credit union’s latest mortgage offerings and other useful information to help them make a decision.

“Forty-four percent of consumers said they’re frustrated when companies fail to provide a relevant, personalized experience for them,” Leone said. “So I would encourage you to ask yourself, to what extent are you using personalization? How is this integrated into your advertising?”

He emphasized credit unions need to start acting as if they are an online-only business that knows how to make their member experience frictionless. For credit unions, that means making all online credit applications quick and easy, and coupling them with timely responses on loan decisions.

“Seventy-three percent of people under the age of 34 would consider banking with Google, PayPal, Square and Amazon because they are online-only businesses, and they understand how to make the customer experience as frictionless as possible,” Leone explained. “I strongly encourage you to do the same.”

While some marketers recommend credit unions invest in online display or banner ads, Lay believes display is dead because the click thru-rates are abysmal, (less than 1%), noting that 40% of click-thrus come from bots, not consumers, and the conversion rates are even worse.

Some credit unions may nevertheless use display ads because they may improve brand awareness. But with the rise of ad blockers, many won’t see the banner ad to begin with, Lay argued.

He urges his credit union clients to allocate some of their budget dollars for pay-per-click advertising because it can target members and nonmembers in real time as they search the web for financial products.

“With PPC people are actively searching the market for a solution and that’s why we’re seeing larger conversion rates,” Lay explained. “Yes, its cost per click is higher – 10 cents to 15 cents per click for display ads versus paying $5, $10 and sometimes more for PPC. But the bigger deal is that for products like a mortgage, your average net interest income can be up to $5,000. Well, even if you are paying $1,000 for the cost of acquisition, you’ve made four times your money back.”

Lay and other marketing experts agree there is a growing interest among credit unions about marketing automation powered by software programs that manage and automate targeted marketing messages to members via email, social media and text.

“The opportunity today, here in the experience economy, is marketing automation,” Matt Purvis, CEO of Purvis Management in Eugene, Ore., said “A major, strategic budget issue, marketing automation allows credit unions to understand individual consumer interests and needs in real time and provide precise information and appropriate offers on a one-to-one basis. Marketing automation is the not the end of ‘broadcast’ marketing, but gives marketers clear focus and priorities, and dramatically improves targeting and our ability to document returns on marketing investments.”

However, marketing automation is not a “set it and forget it” tool.

To maximize the application of technology tools, credit unions must also invest in their marketing staff’s education and training to help them achieve digital marketing campaign goals.

“We see an expectation of many senior leadership teams that their marketing department knows exactly how to market to every generation, marketplace or persona, yet they haven’t allowed a continuous education budget for marketing staff,” Meredith Olmstead, founder and CEO of FI GROW Solutions in Stamford, Conn., said. “If marketing isn’t being allowed time or money for conferences, learning materials, podcasting, or attending workshops and webinars, they can’t stay relevant. Marketing departments should be positioned to invest in continuing education for their marketing staff, or have the budgetary resources to employ an agency that can help them stay relevant with today’s changing landscape.”