How COVID-19 Changed Brand Loyalty
Understanding these changes is important for marketing professionals in general and presents a great opportunity for CU marketers specifically.
Mid-September marks six months since the COVID-19 pandemic forced changes to the way we live, work, interact and consume as Americans. Since then, this crisis has touched nearly every aspect of our lives from the very predictable to the quite unpredictable.
Without a doubt, we have seen what began as a public health issue expand into financial, political, social, cultural and technological realms. At the intersection of these factors, we see how COVID-19 has thus far created a new consumer environment. Understanding these changes is important for marketing professionals in general and presents a great opportunity for marketing professionals in the credit union industry specifically.
What Are the Changes and Opportunities?
Filene’s report “Credit Unions and the Coronavirus: Notes on the Impacts and Implications of the COVID-19 Crisis, Part 3” shared polling data released by the Pew Research Center at the end of June indicating that 87% of Americans are “dissatisfied” by the direction in which the country is headed, 71% feel angry about the state of the nation and 66% are fearful.
This large-scale dissatisfaction has translated into many outcomes, but the one affecting the work of marketing professionals is how consumers feel about the businesses they choose to support.
COVID-19 has accelerated consumerism as a political and social stance. According to a consumer sentiment survey commissioned by Groupon in May, 75% of Americans plan to support local merchants as much as possible and 86% had already done business with a locally owned business during quarantine. So, while economic and regulatory factors limit how much consumers can spend and where they can spend their money today, there is more intention behind consumer spending decisions. We see a strong trend toward supporting local and small businesses to keep staff employed and help these establishments live through dark times to serve the community another day. In short, while consumers are struggling, contributing to the local economy has never been more of an act of passion and intention.
The authors of the aforementioned Filene report proposed that not only do credit unions have a mandate to help people achieve stability in difficult times, they are in fact uniquely positioned to do just that. The report reminds us that the U.S. credit union movement was born out of economic inequality and obstacles to fair, safe and affordable credit, culminating in the Federal Credit Union Act of 1934. “By staying true to the principles of cooperative finance and member ownership, we believe that credit unions can help individuals and communities weather these latest storms, and that the credit union system will emerge stronger by doing so,” the authors concluded.
The conditions are ripe with both need and opportunity. More American consumers, angry about the state of the nation, are acting with purpose and intention when deciding where they spend their dollars and which businesses they support. Credit unions are and have been the answer as both a local business and valuable support system for lifting local economies and community financial well-being.
How Might Credit Union Marketers Take Action?
These changes in consumer preference for and loyalty to small businesses open doors to several smart strategies and tactics your organization can take to grow bigger, reach further and change more people’s lives for the better.
- Increase marketing expenses. This idea might lose some readers – yes, credit unions are existing on the thinnest of razor thin margins today. But when you downsize your marketing engine, you downsize your earning horsepower too. Now is not the time to go from a sedan to a moped. And data from the past 40 years consistently links a correlation between marketing budget and income.
“Factors Contributing to Credit Union Asset Growth, 1979-2016” reported that increasing marketing expenses by just 0.1% of assets increases asset growth by 0.79% on average. You get an eight to one return on your marketing investments – take it or leave it.
- Do market research. When the economic landscape changes, consumer patterns change too. Understanding behaviors during these times, and how to respond, turns unprecedented situations from anomalies into strategic advantages for your business. How confidently do you understand your members’ needs this month? Or anticipate them next month? When did you last do market research to validate what you know? Now might be a good time to reassess. A case study from Kern Schools Federal Credit Union lays out for marketers how to conduct market research, run focus groups and assess brand loyalty.
- Update your digital home base and messaging. The 2019 study, “Who Do Credit Unions Belong To?” sought to understand how credit unions are perceived in times of social and political polarization. The research found that 83% of credit union websites were indistinguishable from any other financial institutions’ websites and lacked visual cues representative of their membership. Credit unions whose websites did differentiate with a mission statement and custom images performed better in asset growth, ROA, member satisfaction and quantity/quality product performance measures. Are you speaking the language of your community members looking to support local? Reach out and ask! Accept you don’t have all the answers, invite a conversation where you listen more than speak, and don’t try to fool your audience.
- Rethink your product and service offerings for a new world. Necessity is the mother of invention and in today’s world, that looks like breweries and distilleries making hand sanitizer and clothing companies making face masks. As needs continue to evolve, what new offerings have you pivoted toward? RV lending, cannabis banking, evacuation loans? The more creative a brand is, the more it can still meet consumer needs regardless of our changing world. And the most successful brands will co-create solutions with those who will use the product or service. Dennis Campbell of Harvard Business School conducted extensive member experience research for credit unions in which he concluded some areas of the credit union need to underperform for other areas to shine – this is the best way to meet the targeted needs of your members.
Credit unions exist at a critical pivot point in many people’s life stories, the point where a life is turned around and things get back on track. It is the nature of the work that credit unions do that makes these life pivots possible. How marketing professionals are able to tell, share and reach more with these stories is what makes a credit union’s impact in the community much bigger.
As a marketing practitioner, I often come back to this lesson from Filene’s report “For the Long Run: Leveraging Reflexive Opportunities”: “Your credit union can build life-long member loyalty by creating opportunities for members to reflect on their relationship with the credit union. These ‘reflexive opportunities’ tap into members’ self-identity, enhance defining moments and support life-changing events that bind members more closely to your credit union brand.”
COVID-19 changed everything about brand loyalty, and fortunately consumers are looking to connect with you and your local credit union brand. Marketers, you’re on!
Holly Fearing Senior Director, Marketing & Communications Filene Research Institute Madison, Wis.