The Strategies of Success in Credit Unions

Success comes in a lot of different flavors. We tend to look upon the Low/Cost Price strategy as one of the best, because credit unions following that strategy tend to be the biggest - at least in volume. But there are other strategies which work better for most credit unions (and their members), and here's why: in any market, there can only be ONE biggest. Everyone else is second place. In the low cost/price world, second place is a very bad place to be, because, ultimately, the biggest player will set their fees and rates so low as to barely make money. The second place player, lacking the extreme volume advantage of the number one credit union, is forced into a losing position.

Now compare this scenario with the other players - the branding player, the technology player, the service player, the location player and the niche player. All of these can be "winners" - that is, profitable - in a market dominated by a commodity credit union. True, they won't be as big, but they can co-exist because they are targeting very different member behavior patterns. For example, the niche player may strictly target SEGs and members in a specific industry or even ethnic group. By catering to the desires of the niche, this type of credit union is the first choice of many potential members almost regardless of rates and fees. This is not a license to charge ridiculous fees, but, in a niche, you may be given more leeway by your members because you serve their needs far better than the larger credit union with a low cost/price strategy.

Which strategy is yours? Do you know the behaviors your credit union is best at catering to? If you don't, see if you can get a better handle on it during your strategic planning this year.

-Robert