Everybody's talking about the unprecedented opportunity that sits before today's credit unions. As programs like free checking and debit rewards circle the drain at big banks across the country, angry customers are shopping for alternatives.

To be sure, this extraordinary chance at growth cannot be squandered. That said, leadership at the nation's CUs must proceed with caution when courting these angry bank customers.

Strings Attached to the Term 'Free'

The first sales tactic that naturally comes to mind for CUs hoping to take advantage of the big-bank PR nightmare is to advertise their own free checking products. But what many may not realize is that the word “free” has quite a bit of baggage where regulatory examiners are concerned.

Truth in Savings regulations state that advertisements cannot refer to or describe an account as “free” – or even “no cost” – if any maintenance or activity fee may be imposed on the account. Therefore, it's extremely important for a credit union to fully understand the fee structure behind its “free” checking product when planning to advertise it as such.

Perception is Reality

For many bank customers – even the really frustrated ones – the perceived difficulty of switching financial institutions will be a major roadblock. Not only do they anticipate the switch taking a great number of hours; they also worry about what they'll miss if they ditch their national bank with ATMs on every corner, convenient online bill pay – and now sophisticated mobile apps that let them do their banking from anywhere, anytime.

CUs must first do their research to understand exactly what products and services they will be competing against when trying to win business from the big-bank customers in their area. By preparing a competitive analysis on products ahead of time – and taking the time to train front-line staff on the sales strategy – CUs will be better equipped to answer the challenging questions they'll undoubtedly receive from prospects.

The Extra Push

Regardless of how simple a CU makes the switching process, marketers are still facing an uphill battle, as they are asking busy Americans to take action – and quite a bit of it. They are asking the prospect to do her or his research, compare financial institutions, make the switch and then learn entirely new people, new locations and new processes.

For that reason, a CU may consider giving these anxious customers a little nudge in the right direction by offering an incentive for making the switch. Perhaps this is double card rewards during the first six months – or maybe a cash-back incentive for each debit transaction in the first year. But remember, full disclosure of the promotion is important to satisfy regulatory requirements.

Careful What You Wish For

Those big-bank customers who are up in arms have a right to be upset with the changes their banks are making. And they are not in the minority. One study showed more than 50% of debit customers said they would stop using their card or switch banks if certain fees were imposed.

However, CUs looking to attract these upset customers should be realistic about the type of customer they are pursuing.

Are these the kind of hair-trigger customers who will jump ship at any hint of a new direction? What is their threshold for change and how does the CU mesh with that level of tolerance? Most importantly, are these customers going to be profitable or are they likely to expose the CU to headaches – or worse yet, risk?

If a CU has identified qualities that a prospective member should have in order to be a part of the institution, it should continue to adhere to the plan. Otherwise, growth could come at a pretty significant cost.

Starting Close to Home

One segment of the target market that CUs have a tendency to overlook is that of current members. Smaller CUs know all too well that a great number of their members use only one or maybe a small handful of the services available, choosing to place the majority of their business with national banks. But many of these members may right now be reevaluating their decision to compartmentalize their financial services.

Organic growth has a tendency to give development efforts invaluable momentum. CUs should evaluate how many of their current members are not taking advantage of their most competitive programs – like free checking – and go after them with sales gusto.

More than the Sum of Parts

Credit unions, in particular, have a tremendous competitive advantage today. Fed up with big banks that seem to value shareholder return over customer satisfaction, consumers are looking for a financial institution that will not only treat them fairly but will also appreciate their input.

Because CUs are member-owned, consumers are likely to be attracted to the idea of belonging. For this reason, CUs must remember to take a step back before crafting advertising, PR and communication campaigns to bring in the free-checking crowd. They must be sure to include messaging about the overall value – beyond affordable products – that a CU can contribute to a prospective member's financial future.

In Conclusion…

Hostility against that nation's large banks and financial-service mammoths has been bubbling under the surface for a long while, and it is very near erupting. Today's consumers are ready to hear from the CUs in their neighborhoods. Those CUs that take the time to first craft a strategy for which customers they want to bring into the fold, how they will win them over and how they can earn their trust and loyalty over time have the best chance at success.

It may be tempting to strike while the iron is hot. But doing the homework and preparing for today's new kind of customer will be worth the effort. After all, there is usually only one chance to make the right first impression.

TJ Riha is CEO of debit consulting firm PayFusion LLC and Andrea Stritzke is vice president of regulatory compliance for PolicyWorks, both in Des Moines, Iowa.

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