Tough Delivery Choices

May 2015: Vol 38 No 5
by Sam Kilmer

The impact of digital marketing on growing and helping members.

Delivery and marketing have experienced an irreversible shift. Member interactions are switching from branches to self-service—especially to mobile—and it’s not just transactions that are feeling the change.

The biggest change surrounds buying decisions, including financial services. The financing of cars, for example, is driven by the buying of the cars and both processes are influenced by mobile. The same thing is true with home shopping (or building) and getting the mortgage loan to make it possible.

Increasingly, credit union marketing is less of a cost-center back at headquarters and more of a revenue-responsible field position driving better channels and analytics. Meaningful brand discussions now always involve real member experiences. A leading credit union CEO recently put it this way: “Marketing, IT and operations are so intertwined now that I can’t imagine a marketing meeting without the other two there.”

In the same way that LinkedIn is transforming HR and recruiting activities, digital media is blowing the door off delivery and marketing. According to, digital ad spending surpassed print five years ago (it passed radio and outdoor years earlier) and will surpass TV in three years. The gorilla known as Google AdWords—which lets users buy ads on searches related to their product or service and only pay if someone clicks on them—is a strong force in this market. And Facebook, Zillow and Pandora collectively sell billions in ads. The growth rate is exponential. Marketers target consumers with context closest to the buying cycle and it works. It’s harder to get closer to someone than their mobile device. One CFO recently reported that 15 percent of his institution’s mortgage loan originations came directly from Zillow ads.

Inseparable: Tech and Marketing

A look at big bank competitors and industry disruptors shows an unmistakable emphasis on tech and marketing. Say what you will about their delivery or regulatory differences, but one thing is certain: Big banks and disruptors don’t scrimp on marketing or tech and they are gaining high value market share.

Yet, according to recent data gathered by Cornerstone, CU tech spending (as a percentage of assets) has grown only incrementally—and has not grown in remote delivery. More troubling still is that the marketing spending mix hasn’t changed to reflect the movement of impressions. Spending on traditional media and sponsorships has risen, while spending on online channels in the marketing mix is flat.

Despite all the talk about product, price, place and promotion, most recent chief marketing officer conversations boil down to two aspects of place and promotion: branding and lead generation. For branding, it’s a good sign to see the emphasis on member experience (both channel development and employee knowledge training) and many of those expenses are outside a typical marketing budget. Lead generation has increasing focus on analytics and member relationship management, but not nearly enough in the online and search that increasingly guide many members. As tech entrepreneur Gary Vaynerchuk half-joked, “On the freeway, drivers aren’t looking up from their smartphones long enough to see your billboard ads anymore.”

A  telling sign: Beyond market pressures from industry outsiders like Apple, Walmart, LendingClub and PayPal, CUs are now using such digital marketing tools as Salesforce, Marketo, Hootsuite, and Web/mobile development platforms from outside the established industry pool. To use some of those new apps, CUs are recruiting employees from other industries. As the economy improves, finding specialized talent is increasingly difficult.

Decisions, Decisions

According to the Cornerstone research report Delivery Redirect: Start Now or Perish Later!, CUs need to make tougher choices on delivery resources, employees and capabilities. The biggest cultural hurdle is normally that digital channels are associated with service, while branches are associated with revenue. This mentality will change given that the majority of originations will happen outside the branch in just a few short years. Yet, the investment payback period may not need to wait that long.

A recent study by CFI Group showed that online improvements had 400 percent more impact on boosting member satisfaction than branch staff or branch convenience improvements. Surprising? Not to the 75 percent of the U.S. population clenching their smartphones.

CUs can operate across functional areas to create fantastic member experiences—ones that are fast/efficient, coordinated, proactive, and with excellent follow up—more easily than large banks. As digital delivery and contact centers become preferred service entry points, CUs need to understand the value for each channel at each point in the engagement cycle: education, advisory, needs analysis, lead development, presentation, closing and fulfillment.

Developing a delivery strategy that deliberates resource allocation is vital. Without discussing future value, past patterns will be reinforced, resulting in malinvestment of strategic capital, like over-resourcing a branch network redesign while under-resourcing a mobile loan origination capability. Tough choices allow CU leaders to divest in some areas to invest in the other areas that poise their CUs for better service and growth.

Sam Kilmer is a senior director with Cornerstone Advisors, a CUES Supplier member and strategic provider based in Scottsdale, Ariz.