I had a conversation with a friend where I insisted credit unions must have a national brand to compete with banks. In that same conversation, my friend, @pjliving, insisted I try a vegan restaurant he loves. Even though I’d rather take a punch from Mike Tyson than eat a meal without meat, I’m excited about going because he speaks with such passion.
Gratuitous clip from Hangover:
This made me wonder, if he is so passionate about a vegan restaurant that he can convince me to go, shouldn’t it be a heck of a lot easier to get our members to sell our credit unions to their friends and family? Filene research does show that word of mouth advertising is becoming a bigger force for financial institutions. Their research finds that consumers are more wary of financial institutions and so taking it upon themselves to do more digging before making financial decisions. This digging, this Filene paper suggests, will increasingly rely on personal recommendations. Therefore, FI’s should develop formal word of mouth marketing strategies.
Great local restaurants have already figured this out. When compared to the ad space McDonalds and Chilis has, local restaurants are just as much, if not more, of an underdog than CUs are with banks. So what can we learn from these successful local haunts? I think there are three main traits to a successful local restaurant:
Specialization: Vegetarian, Lebanese, or just a unique take on Americana, the best local haunts do something better than anyone else and don’t try to be everything to everyone. Let the chain restaurants that need volume worry about having something for everyone. Any local restaurant that attempts to mimic a chain will likely have just as much success as Moe Szyslak did with Uncle Moe’s Family Feedbag Restaurant:
Culture: Employees at your favorite local restaurant want to be there and believe in their product. At a great local restaurant, when you ask what the best thing on the menu is, they don’t say “everything!” They have a very opinionated view on the menu, and push it like a fan convincing someone to root for their team over a rival.
Big chains, on the otherhand, have a much different culture: scripted, fake and full of flair.
And for fun a link to an Office Space trailer recut to look like a thriller.
Exclusivity: Local restaurants don’t turn anyone away, but because there is low brand recognition, the average person doesn’t know about it. This isn’t always a bad thing. There’s a ton of cache in being the hip, cool place that always has a crowd of energized patrons. Local joints don’t want everyone, just those that love their restaurant as much as they do.
Notice that price isn’t one of these factors. Neither is convenience or brand recognition. Generally speaking, local joints are more expensive, aren’t on every corner and don’t have the marketing budget to announce their products to the world. But, those factors detailed above (specialization, culture, and exclusivity), are competitive advantages. If those advantages are leveraged appropriately, the local joint can compete everyday with the McDonalds and Chilis of the world.
Bringing it Back Home
Banks are almost always going to have more money, brand recognition, and convenience. Therefore, CUs must find their competitive advantages. Are your products any different than your competition? Is your CU trying to be a bank lite or a unique counter point to banks? Does you culture mirror Chotchkie’s or do your employees truly have a favorite product to recommend?
Challenge: Visit your favorite local restaurant and try to figure out why you go out of your way to eat there. Then, see if your credit union is providing your members any of those same reasons to be a loyal member.
thatCUguy 
Posted on July 7, 2011
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