The marketing potential of providing members Internet access

FRESNO, Calif. - Forget Earthlink, Mindspring, America Online or any of the other mega ISPs (Internet Service Providers) out there, credit unions can play the ISP game. Through affinity relationships or private label deals, credit unions can be the Internet access provider for their members-or that's how it will appear to their members anyway. Typically a credit union will partner with an ISP and either brand the service, what's known as private labeling, or co-brand it in the credit union's name along with the ISP. Why should credit unions bother with bringing another technology product into a growing array of Net-based offerings? Marketing may be one big reason. "Rather then send that member to some other ISP, credit unions can keep that mindshare of the member. There's a lot of strength and ability there to maintain a marketing relationship," said John Prather director of sales and marketing for ProtoSource Network, Fresno, Calif., an ISP targeting the credit union industry. ProtoSource recently signed on 10 credit unions to offer Internet access to members. Prather said credit unions can even provide Internet access that gives members e-mail addresses with the credit union's name (eg.,www.soandsocreditunion.org), or some catchy name that will instill brand recognition. One of the obvious marketing advantages of acting as an ISP is the credit union having a master member e-mail list it can use to market to members. "That's one of the key features we're finding credit unions are attracted to. With one stroke of a key they can send out a message about a new product or service to all their members who use their ISP," said Russ Parlsey, director of branded Internet services for ProtoSource Network. E-mail is much cheaper than any other type of traditional CU marketing channel, but credit unions have to be careful not to become just another spammer, said Prather. Prather said because of the unique credit union/member relationship, credit unions can send marketing e-mails without causing the annoyance many people feel when getting spammed "A credit union member has a completely different view of their credit union than they do from a company or bank they do business with," he said. It's that trusted relationship that the CU can take advantage of with e-mail marketing said Prather. Prather warned that credit unions should be careful when they sign an ISP deal that the ISP can not sell member e-mail lists to any third parties or use it for their own marketing purposes. One potential danger of offering Internet access is dealing with member angst when service is interrupted or when members get bogged down by constant busy signals. Credit unions need to look at getting service levels built into their contract, said Dave Plank, chief technology officer for CUNA & Affiliates. "What happens when things don't work right? Credit unions need to do an awful lot of due diligence. If they (the ISP) sell the credit union a bill of goods, who's going to look bad? It isn't that ISP, it's that credit union. You really have to do your homework," said Plank. ProtoSource charges CUs and other partners between $9 and $15 to offer ISP. Credit unions can price the service however they want. Parlsey said some CUs are giving the ISP service away for free if the member agrees to sign on for electronic bill pay, while others are charging the industry standard $19.99, and other CUs have priced it all over the board. Pennsylvania State Employees CU, Harrisburg, Pa., recently unveiled free Internet access for its members. In just two weeks, the CU has already signed up approximately 2,000 users. The CU is offering members the service through a partnership with 1stUp.com, a subsidiary of CMGI. 1stUp.com's ISP services are utilized by such Web giants as AltaVista and Excite. "People no longer need to pay for reliable, full-featured Internet access," said John Steinhart, executive vice president of marketing for PSECU. PSECU's free Internet application is available at the CU's site. The free Net access goes along with the CU's strategy of utilizing the Internet to serve members, said PSECU CEO Greg Smith. Credit unions are beginning to see the benefits of having members' e-mail addresses and are going beyond Internet access to get their members' e-mail addresses. IBM Southeast Employees' FCU, Boca Raton, Fla., recently sent its members a statement stuffer that asks for members' e-mail addresses, which the CU says they will use to send updates on credit union products and services, and financial education material. The stuffer provides a check list of services members can elect to receive e-mail updates on. Members who submit their e-mail addresses are entered into a drawing to win a $50 American Express Gift Cheque. Plank said e-mailing members has potential, but credit unions should get member permission. "It can be a real help to the member and the credit union, but I think it has to go along the lines of permission. If a member says `update me' and grants permission, there are a lot of wins on both ends," said Plank, noting the significant cost savings for the CU and the flow of information to the member. -pgentile@cutimes.com