All Business [Credit Union Management]

(Credit Union Management Via Acquire Media NewsEdge) When it comes to member business services, marketers' roles span research, product design and delivery, and education.

When a credit union introduces business services, when do marketers get into the act In planning the launch Developing the advertising campaign Aim for much earlier, suggests Mark Weber of CUES Supplier member Weber Marketing Group (www.webermarketing.com), Seattle. "It's the marketer s job to be involved from day one- in the initial marketing research, design of products, timing and evolution of the rollout, and staff training." To be able to contribute effectively to the team effort of developing this line of products and services, marketers need to hone a whole new skill set and understanding of business services, Weber says. They need to be familiar with the various segments of businesses within the credit unions field of membership; the nature of those businesses and their needs and preferences for business loans, deposit accounts, and cash management services; and the best ways to connect existing and prospective business members with those services.

For credit unions just beginning to consider business services or in the early stages of introducing them, identifying which existing members are business owners can help guide decisions about which products to offer and how to roll them out. Credit unions may find that 10 to 20 percent of their members are operating businesses as part-time or full-time endeavors; some may be managing their business finances through their personal accounts.

"You may find an incredibly untapped market to serve members' financial needs more effectively," says Weber, who previously worked for a large savings bank and helped launch two business banks in Washington. "The low-hanging fruit are already members- you just don't see them as business owners. You can spend several years just dealing with these existing bases." Which Segments to Serve After identifying the potential market for business services among current members, the next step is to identify the various segments they represent and the types of financial services they need. Small office/home office owners may be a significant hidden market. "The challenge is that we don't have a lot of data about who these people are," he notes.

Other potential segments include manufacturing, retail, health care, professional associations and nonprofit groups. Each segment has specific needs for deposit, loan and money management services, and credit unions should take a strategic approach in identifying which segments they can best serve and how, Weber recommends.

For example, a CU might decide to first introduce checking and savings accounts before launching business lending, which, as the recent recession demonstrated, offers both great opportunities and tremendous risk. By identifying existing and prospective business members and their financial needs, you can develop a product mix to maximize appeal and control risks.

Sharing Expertise Having introduced business services about 25 years ago, in recent years $400 million/47,000member Generations Federal Credit Union (www.mygenfcu.org) has formalized its business product line and begun marketing to prospective small business members, says CUES member Wendy Bryant-Beswick, VP/ marketing for the San Antonio-based CU.

"Our original sponsor group was city employees, many of whom had small mom and pop businesses on the side," she notes. "Over the last four or five years, we've expanded our deposit products for small businesses and obtained certification to offer SBA business loans." Generations FCU is focusing its small business marketing on "micro-entrepreneurs," with five to 10 employees and annual revenue up to $1 million, and middle-tier established firms in a growth mode that might need real estate or equipment loans or infusions of capital to grow their business.

The CU has launched "a strong approach in the digital space" to reach out to prospective business members, using Marketo (www. marketo.com) to automate email marketing and lead generation, as well as Salesforce. com for business development efforts. Another avenue is direct mail. Working with a vendor associated with CUES Supplier member Raddon Financial Group (www. raddon.com), Lombard, 111., Generations FCU promotes its business products and educational support to businesses within a three-to-five-mile radius of its 14 branches.

Online marketing tools have built-in metrics and reporting capabilities so the CU can more easily track click-through and response rates, and the CU assigns different phone numbers to ads in business journals so it can monitor responses. "There's a framework and structure in place to measure how we're doing," says Bryant-Beswick, who has a background in business-to-business marketing from previous positions with Morgan Stanley and Charles Schwab.

Once Generations FCU has connected with small business owners, "we know there's a longer lead time to build relationships, but CUs are all about relationship building," says VP/Lending Andrew Wilson, a CUES member. "What we bring to the table is our knowledge and expertise. Our staffare trained and skilled in asking probing questions to determine business members' needs and point them in the right direction of the services they need and in helping them complete the application and pull together the required documentation." Most branch employees have developed "a good solid working knowledge of business products and services," and three branches have been designated as small business centers with specially trained staff to build relationships in commercial districts downtown and on the north and south sides of San Antonio, Wilson says.

Education about financial management is important to small business owners, "who are doing a lot ofthat themselves and with limited experience," he notes. "They've told us how valuable it is when we can take some ofthat load off their backs or help them get through the loan process more quickly." In addition to one-on-one support during the lending process, Generations FCU also publishes a Small Business Lending Guide, a 30 -page publication that covers such topics as business plans, types of financing, documentation and the basics of corporate credit. In addition, the CU sponsors small business seminars on topics like budgeting, marketing and using social media. The free seminars give business owners opportunities to network and the CU a forum to showcase its services.

The credit union also partners with the San Antonio chapter of SCORE (www.score. org)- a nonprofit association that offers mentoring and educational support to small business owners- to provide online and live workshops and has signed SCORE'S business experts on as guest bloggers.

Generations FCU gets the word out about its seminars and small business services via its website, social media, Google advertising, and announcements at its branches. The CU began using Twitter in July with three aims: to build awareness, offer education, and emphasize the differences between CUs and other financial services providers, Bryant-Beswick notes.

Two CU marketers spend about 40 percent of their time managing social media content targeted to three audiences: small business, youth and consumers. They line up subject matter experts for guest blogs, develop and post infographies at least once a month, and send out tweets seven days a week.

"The results of our efforts in not only revamping, but also effectively promoting our suite of small business products and services has been significant," says Bryant-Beswick. "Since 2009 our commercial loan portfolio has increased by more than 52 percent" to $6.9 million. "With that being said, the real excitement is how much growth is still to come. Our one- and five-year goals call for heavy emphasis on our small business marketing." Shaping Products and Delivery Channels "Small business banking is a dynamic market that has changed a lot from the traditional merchant teller windows at branches," Weber adds. "That transactional environment has been replaced with expectations for remote deposit capture and online banking with cash management services for larger businesses. That can be a major undertaking, and there may be limitations if your core systems don't support those services." A scan of the competition is also in order. Credit tightening in the wake of the financial services crisis was especially onerous for small businesses, which may still be underserved by large commercial banks. But CUs that decide, for example, to market business products primarily for professional and health care services- think doctor and attorney offices- may find that those are the same business segments targeted by community banks.

Where Personal Service Matters Since it introduced business services in 2008, $192 million/21,000-member First Financial Federal Credit Union (www.firstffcu.com), based in Wall Township, N.J., has positioned itself as the financial services provider that works one on one with small business owners "to help them save money and meet their financial needs," says Kathy Zimmer, director of business development.

New businesses have an especially hard time finding financing from larger banks, but First Financial FCU, which has a business loan portfolio of $22.7 million, will underwrite business loans for these firms based on their owners' personal character, credit history and experience in the field, Zimmer says. "I'll sit down with a business looking for a $5,000 to $10,000 loan and spend the same amount of time with them as with a business looking to buy a $1 million property." As director of business development, Zimmer works closely with the marketing director to promote business services through educational blogs and monthly free and lowcost seminars on topics like how to establish a business, develop a business and marketing plan, use social media, and buy a franchise, which average 15-35 attendees. First Financial FCU also partners with SCORE to connect its business members with experienced mentors, and SCORE volunteers sometimes refer businesses to the credit union for a small working capital line of credit or credit card services.

"Every financial institution offers the same products and services, so we have to be a little more creative to set ourselves apart and capture their attention," she says. "We get involved with the local chambers, not just as a member but taking on active leadership roles. You have to earn trust and support. You have to work to make a difference. I'd rather be in a few groups and make a difference than be in 15 groups and just have your name on the membership roster." Posting testimonials from business members on its website (www.firstffcu.com) has proven an effective way for First Financial FCU to promote its business products and services, Zimmer adds.

One additional differentiator First Financial FCU promotes to prospective business members is that their employees can become members as well, even if they're not residents of the counties in the CU's field of membership. To underscore the benefits of membership, the CU offers employees free "lunch and learn" seminars at business members' locations on such topics as credit management and budgeting, retirement planning, and tax savings.

"We promote ourselves as an added benefit for all employees and work with business members to share those benefits," she says.

StartUP Challenge Generates Buzz Forging ties with the local business community has also been a successful strategy for Michigan State University Federal Credit Union, which made headlines last fall for its startUP Challenge, awarding a $25,000 prize to two local entrepreneurs who proposed creating a website called CrowdLanding to aggregate business financing opportunities for other business startups.

The winning business plan was among 35 submitted to a review committee including an intellectual property lawyer, marketing professional, CPA, MSU dean, and representative of the Lansing Area Economic Partnership. The challenge earned praise from NCUA Board Member Michael Fryzel, who wrote that "MSU FCU is to be commended for their new and innovative program for individuals with ideas for a small business. They clearly recognize our financial recovery hinges on the small business community that will help grow local economies." The challenge drew attention to MSU FCU s $250,000 startUP Loan Fund, which offers microloans, up to $15,000 over five years, "to fill in some funding gaps for small proprietors who are just starting out," says CUES member April Clobes, EVP/chief operating officer for the $2.3 billion credit union with 169,000 members (www.msufcu.org).

The CU introduced business services about five years ago, starting out slowly and ramping up both the range of products and the marketing over the last couple of years. "We wanted to be sure we hired the right staff, had the right expertise in house, and had the right processes and procedures in place," she says.

That approach is paying off: In the past year, MSU FCU's business loan portfolio grew 38 percent to just under $61 million.

The CU's range of business products continues to evolve. Most recently, it introduced a business sweep account, and business members provide feedback regularly, asking, for example, for payroll and payments management tools, and Internet banking controls that permit different levels of access for different staff.

Business services have been a good fit for a university CU as "the most entrepreneurial generation yet" graduates in an economic climate where good jobs are hard to find, Clobes notes. That same climate has small businesses clamoring for financing, which sometimes means business lenders need to stand by their underwriting criteria.

"We recognize that some businesses are coming to us because their bank won't renew their loan, so we have to consider carefully, 'Do we really want to take this on '" she says.

MSU FCU serves members across the nation, but tends to keep its business lending within the tri-county area surrounding the university. Among its niche business markets are professional services, such as veterinarians graduating from MSU's vet school. "We may offer business credit cards or lines of credit to businesses outside the area, but if we're going to do a real estate loan, we like to keep it local where we know the market," Clobes says.

The CU also offers in-depth seminars for its business members, eight-hour sessions with financial experts on topics like developing financial statements, managing cash flows and ramping up for growth. It charges a fee to cover the costs of these quarterly seminars, which typically draw 10 to 20 participants.

Building Relationships one at a Time Marketing business services relies on personal interactions much more so than consumer products, Weber suggests. "You certainly want to create broad-based awareness as you're rolling out businesses services, but you also need a one -on-one approach to match the business owner's needs for credit, deposit services and online access." Business banking expertise typically resides in a centralized function at headquarters, but some CUs expand outward as demand for these services expands, by positioning business bankers in branches identified as convenient locations to targeted business segments and training branch managers and other staff to help promote these services and help identify member business owners.

"Business banking relationship managers don't wait for small business owners to walk through the door," he notes. "They're out in the community, attending chamber of commerce mixers, leading seminars for small business owners, and inviting them to come in for consultations. In business development, you have to go out and grow it yourself." This type of outreach can help establish CUs as resources for small business owners, as can branch design. Weber Marketing has worked with several CUs to design branches with a highly visible business services area that conveys the message that small business banking is a foundational offering.

Weber cites the recent grand opening of a Vancity Credit Union branch in Vancouver, British Columbia, that features a small community room available for community groups, nonprofit associations, and small business people who need meeting space.

"There's a space next to the community room they call the 'think tank,' where they've invited people who are movers in the community-like small business owners and organic produce co-ops- to talk about how to grow the community and local businesses," he explains. "Everything about the branch has been designed to reach out and support the community." (Watch a video about $12 billion Vancity CU's branch redesign http://www. youtube.com/user/vancitycu).

Weber suggests that other CUs look for ways to support young entrepreneurs and small business owners who are just starting out with opportunities to network, share ideas and consult with mentors. Especially with all the recent emphasis about the role of small businesses in creating jobs and growing the economy, "here's what I love about this approach: Here are all these small businesses that can't get a loan from a bank," he says. "Isn't that why credit unions came into being 100 years ago- to serve people who didn't have access to financial services " (2) "Business banking relationship managers don't wait for small business owners to walk through the door." Mark Weber Resources Attend CUES School of Business Lending, an in-depth, three-part program. Learn more at cues.org/sobl. Also attend the new CUES Advanced School of Business Lending, March 11-15 in Miami. Learn more at cues.org/advsobl.

Subscribe to the free CUES Business Lending Edge e-newsletter at cues.org/ble.

Mark Weber is the lead faculty at CUES School of Strategic Marketing" cues, org/sosm) and CUES School of Strategic Marketing" Il (cues.org/sosm2).

Karen Bankston is a long-time contributor to Credit Union Management. She is the proprietor of Precision Prose, based in Stoughton, Wis.

(c) 2013 Credit Union Executives Society

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