With so many in our industry extolling the importance of Gen Y, everyone knows that growing a strong member base in this segment is a key to future growth. They are the most diverse, highly educated generation in history—not to mention the largest. This combination of factors explains why, by 2017, Gen Y will outpace their boomer parents in income power. It doesn’t take a fortune teller to understand that the future of the credit union industry rests in the hands of this group. Yet, with all the talk about Gen Y, it seems that many credit unions are consumed with day-to-day issues and neglect nurturing future growth as they strive to maintain their existing, more traditional, member base. It’s completely understandable. Times are tough. Resources are stretched thin. When it comes to making decisions, we have to keep business going today before we can focus on growing tomorrow. Moreover, the rules of marketing to Gen Y are so different and important that many of us don’t know where to start. Little did you know you probably already have.
The problem is, too often, we think of membership growth as something that has to come from outside. While new members are a key element of the growth equation, an equally important aspect is cultivating the members you already have. How does that apply to Gen Y? Think about it this way: if your credit union is like most, you probably already have a good number of young members with youth savings accounts. With some simple marketing tactics you could probably grow this number quite easily. But, a savings account alone does not provide the level of interaction necessary to truly cultivate a lasting relationship with these young members. To achieve that, you need to fully leverage your arsenal of transaction-based products to form a continuum designed to meet the changing needs of Gen Y members and to help their parents teach financial responsibility. By doing this and actively employing a migration strategy to move individuals across the continuum, you’ll be on your way to building a strong base of loyal Gen Y members. And, since you can easily reach this group through your existing members, you can achieve strong returns with a minimal marketing investment.
The key to successfully implementing this long-term growth strategy is continually engaging young members with your credit union by promoting age-appropriate financial products at the right time—from pre-teens through the teenage years and into adulthood. Focusing on sticky, transaction-based products like prepaid, debit and credit cards significantly increases the ongoing interaction between your credit union and young members. This allows you to build the foundation of a relationship that has the potential to last many years. It also helps promote financial responsibility by encouraging young members to begin using these financial products while they are still under their parents’ watchful eyes.
Consider how this approach creates a win-win situation for young members and your credit union. When your young members enter their pre-teens, they are ready to learn the basics of budgeting without the potential of overspending. Reloadable Prepaid cards provide the perfect opportunity for members in this age range to begin learning responsible spending habits while providing their parents the peace-of-mind that comes with a built-in safety net. Your credit union will score points by fulfilling the desire many pre-teens have to establish a sense of independence. And, since these cards can be reloaded and used as frequently as desired, you begin to establish a stronger position in your young members’ minds.
While prepaid cards are appropriate for younger members, those in their mid-teens are ready to learn about managing their finances and staying within a budget. These teens should be actively migrated to a youth checking account with a debit card. They will learn crucial skills like balancing a checkbook, reconciling statements and staying with a planned budget. At this stage, a checking account provides a greater level of stickiness and responsibility. And, you build further loyalty by showing young members and their parents that your credit union is committed to meeting their needs.
As these members become older and more responsible, you can help them establish credit and learn to use it wisely by offering a low-limit credit card while their parents can still provide guidance and oversight of their spending. Like a checking account, a teenager’s first credit card will likely stay with them for many years. And, as these young members prepare for life after high school, college planning, student loans and auto loans provide further opportunities for interaction as they learn to become responsible adults.
By leveraging these powerful opportunities as they arise and actively promoting the migration to age-appropriate financial products that require increasing levels of responsibility, you demonstrate your ability and willingness to meet a young member’s growing financial needs while developing a long-term relationship. By the time they graduate from high school, these young adults that opened their first savings accounts with you as children could well be among your most loyal members.
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