In high school, I was the president of the board of directors of a credit union. The credit union was a student project backed by a local CU that was intended to teach us about the cooperative movement, and banking. I’m not sure how long it lasted after I left, it was still there when I graduated. Ironically, I went on to work at a bank all through my university and college, so I like to think that I know a thing or two about what credit unions are all about.
My high school credit union was an experiment by the school to introduce volunteer students to banking, but its secondary purpose was to instill some of the concepts of the whole cooperative movement.
I’m sure I don’t need to tell you, but credit unions are more about community, more about fostering and nurturing membership than the bottom line profits, or making a ton of money for some select few. They’re more about being the local financial institution that people remember from small towns, where everyone knows your name. Like the sitcom Cheers, but in FI form.
This is a value proposition which appeals particularly to older folks, who grew up with more of a sense of community; people who tend to be a little more rural than ‘big city’, and it also naturally appeals to the older generation’s female demographic, being the more motherly and grandmotherly types.
What I’m getting at is, demographically, credit unions members tend to skew on the older side. They also tend to skew female. They also tend to be more rural, and are more likely to own their own homes.
It doesn’t take more than a cursory Google search to confirm that attracting the next generation of members is something that is a top priority for every credit union, with or without a referral program.
We’re talking about millenials; not necessarily high-school students or first time bank accounts. Those are great things, but the people you’re most after are the ones that are in or are soon entering the phases of their lives where they are going to lean heavily on Credit Union/Financial services. They’re going to be buying homes, or starting families.
Another thing that I like to think I know a thing or two about is being a millennial.
Either way, I’m pretty confused that all of this talk about “millennials and how to attract them” are being written by analysts in their 50s mining data about what songs I’m buying on iTunes. Sure, there’s value there. As a data scientist myself, I get it.
But let’s talk about me for a second, as a single representative of the millennial ‘species’:
You know who I trust about financial advice, or which financial institution I should deal with? My Mom. Yup, I’m a man in my early 30s, who used to work for a bank, and I still call Mom for advice.
You know what else I like? Contrary (or perhaps, in addition) to all of the ‘Millennials like to serve themselves, and they don’t like human contact, and prefer to do things online’ sentiment, I actually want to talk to an expert that I know and trust, that I’ve met before, that I could reach across the table and touch.
There is also a huge movement among millenials to be environmentally conscious, eat, shop, and live locally and sustainably. There is a growing sense or desire for community, even if it’s not a community in the traditional geographic sense, and a growing distaste for soaring bank profits, financial funny business, and soaring bank fees.
Nobody delivers personalized service like a Credit Union.
When it comes to financial institutions, people trust the opinions of people who have been there before, and know what to do because they had a positive experience, or a negative one. They’re your existing members!
One Credit Union customer who shared some demographic data with us was thrilled to learn that the ‘typical member’ a Credit Union referral program brings in tends to be ten or more years younger than their typical existing members.
There are a couple of things to infer regarding Credit Union member referral programs:
- Your existing older customer base is dispensing advice and recommendations to the next generation of credit union members
- The younger members are responding in greater numbers
But if people are already joining credit unions because of referrals, why do you need a credit union referral program?
It’s true, people are being referred to your credit union by your existing members every day. A credit union member referral program formalizes the practice of thanking your members for bringing in new members, fostering a sense of community. It ensures fairness and consistency from branch to branch by codifying and standardizing referral rewards, and rules. In addition, referrals begin to become a measurable thing. You can start to look at who is referring, and who is being (successfully) referred. You can formalize the conversation with your members about how they can refer friends and family, and what’s in it for them.
A recent study found that the bulk of banks and credit unions allocate between 30% and 50% of their marketing budgets to acquiring new customers/members. A referral program can be a low-cost, valuable tool as a part of your overall customer acquisition strategy – allowing you to track referrals and thank your members for recommending you.
A referral program is also an invaluable source of additional information that you can use to help your targeted marketing efforts. It can help you understand what a referrer ‘looks like’ so you can go out and find more in your member base.
Referrals are an excellent and effective way to reach out into a growing demographic, one that every Credit Union wants to get their cooperative hands on… millennials, like me.