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I have come across a number of press releases and stories of late where credit unions refer to their “members” as “customers.” Isn’t having “members” one of the things that differentiates credit unions from banks and their “customers”? Should ardent credit union supporters get all worked up about this? Or should we just take it easy and not be such sticklers for semantics? Let’s step back, widen the lenses on our cameras and take a panoramic look at this. It seems like such a small thing, but if you really think about it, “members” vs. “customers” is a microcosm of the bigger issue of credit unions’ image dilemma. Here is where credit unions’ image dilemma starts – it’s hard to brand credit unions or shape the industry’s image until people understand what credit unions are. Aside from California and Washington, where credit unions have been astutely marketed by the leagues, I’d wager that if you polled 10 people you bumped into on the street, only about half would nail what a credit union is, and that may be generous. The average person might know that credit unions provide financial services. Many would probably say credit unions “are just like banks.” But it would be tough to find those who know credit unions are nonprofit cooperatives with volunteer boards of directors. They would likely be unaware that credit unions are one member-one vote institutions that ensure all have a voice in the credit union. They might not even know credit unions on average are a better deal on loans and deposits and charge fewer and lower fees than banks. There are also a lot of negative perceptions of credit unions, such as credit unions have fewer branches than banks, aren’t as sophisticated, and don’t have as wide array of products and services – some of which is true. A common misconception I’ve heard more than once is that credit unions only provide savings accounts. I think it’s safe to say most Americans don’t really know the fundamental differences between credit unions and banks, and unfortunately I bet there are a few million Americans who think credit unions are labor unions. So if the industry finally could get over its crutch of how to fund a branding campaign, where would it start? I said “crutch” because I do believe industry leaders are too quick to point to a funding problem for a national campaign. It’s not rocket science, the big CUs have to carry the day with the funding, and they know it. The mid-size and smaller CUs could contribute greatly, even at a much lower stake, because of their vast numbers. Construct a formula by assets or members, but it can be done. Think of all the CUSO ideas that have gone bad that cost credit unions money – I think a branding campaign is worth a chance. Returning to the “members” vs. “customers” microcosm- if you have credit unions out there already, and they are out there, referring to their members as customers, the branding campaign is in trouble before it starts. Credit unions have to get on the same page on this one-word issue for a branding campaign to work. I think it’s OK that most Americans don’t know the fundamental, structural differences between credit unions and banks. You want to know that the lawn mower cuts grass, not about the intricacies of the mechanics. Credit unions should pick the best differentiator with other financial services providers and play that up in a branding campaign, not try to tell the whole story. Is the best differentiator that credit unions are nonprofit? I don’t think so. There are a lot of nonprofits and being a nonprofit doesn’t have the aura it once did, especially with recent scandals. What’s next? Run by volunteers? No offense to the dedicated, selfless credit union volunteers out there who give their time for little or nothing in return, but volunteers are in no way, shape or form the key differentiator of credit unions. Volunteers can even be conceived as a negative. Consumers might be concerned that unpaid volunteers who have no financial stake in the credit union are setting the policy for the institution where they keep their money. (Yes, I know by regulation they have a fiduciary responsibility, but try explaining that.) Again, no offense to volunteers who have helped this industry a great deal, but it just doesn’t sell. What’s left? Credit unions pay better rates on loans and deposits? Maybe, but rate chasers can always find a better deal somewhere, especially with branchless financial services companies out there, and those institutions trying to enter a market by offering rates that beat the market. I don’t think that is the winner either. No, the winner is “membership.” Too bad American Express took it years ago, but membership has its privileges. When you are a member, you are an owner and you benefit when the credit union performs well -you have a stake in its success. Good performance will result in better rates, fewer and cheaper fees, and a higher year-end dividend. When a bank does well, its shareholders benefit the most, not necessarily its customers – membership has its privileges. So referring to “members” as “customers” does matter, and credit unions that do it should stop. It makes credit unions sound even more like banks. Another benefit of a branding campaign that focuses on the fact that members are owners of the credit union, is if this message did get out it would be a heck of a lot easier to inform members about what they are giving up if their credit union decides to convert to a bank. Let’s get those marketing wheels turning out there for a branding campaign: “Credit Unions: Where Membership Means Ownership.” -

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