What Credit Unions Could Learn From Coke And Pepsi

A while back, I worked on a consulting project for a Pepsi bottler who was building new plants in Argentina and Brazil. What I learned on that project should be of interest to credit unions.

I bring this up because of a blog post by Tim McAlpine, who wrote:

In the past, there was an unwritten understanding within the credit union movement that credit unions were all in this together and the banks were the enemy. The new reality, especially in multiple credit union markets, is a full-on, no-holds-barred fighting to the death.”

Tim’s remarks, along with some of the comments to his post — and Trey’s comment that he might be working in the “most uncooperative cooperative industry in existence” — suggest that CUs are struggling to find the cooperate/compete boundary.

Here’s where my consulting project experience comes in: On my trips to South America, I was surprised to find that representatives from Coke and Pepsi would meeting to discuss the market and the opportunity it held. This wasn’t some kind of nefarious, illegal collusion.

At the time, the regions of South America that I was visiting were greenfield territory for the soft drink providers. As a result, two of the fiercest competitors on the planet — Coke and Pepsi — were collaborating to help develop the market. They knew that if they didn’t first get people to like their products — and make it a staple of their diet — then they would just be pummeling the crap out of each other for a market that wasn’t even worth fighting for.

So here’s the lesson for credit unions:

Cooperate to build awareness of — and demand for — credit unions as a category. Then compete tooth and nail for the consumers who want to be CU members.

What Bellco is doing should hardly merit criticism or controversy. In fact, I could argue that what it’s doing is good for CUs. A merger or acquisition is often a trigger for customer defections. As a result, Bellco could be helping to ensure that New Horizon’s members don’t defect outside the CU membership ranks.

With expanding fields of membership, overlap is inevitable. Nobody has a protected market. If a CU isn’t marketing to other CUs’ members, then it’s not competing effectively. After all, it’s a lot easier to poach from the choir, then to convert the heathen.

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7 thoughts on “What Credit Unions Could Learn From Coke And Pepsi

  1. Well said (as usual) Ron. This has been an interesting topic to watch how people side. As my informal poll indicates, close to 80% of my blog readers say ‘Great job Bellco.’ This is surprising to me, as I tend to believe most people following credit union industry blogs tend to be on the altruistic side.

    It is interesting to watch the credit union industry struggle with how competitive to be. On one hand, we’re all in this together, almost like a quasi-franchise network, but then on the other hand there is real secrecy and animosity towards direct competitors and a reluctancy to work together to defeat the big evil banks. This comes up constantly in our dealings with our own credit union clients.

    Your story about Coke and Pepsi is hard to believe when we think about these two companies’ public behavior towards one another in mature markets like the US and Canada. It is incredible to think they can take the gloves off when entering new markets. Smart indeed.

  2. Ron, You won’t find many CU folks who are going to agree publicly with you on this one, but I believe most see this as the reality.

    Thanks for sharing the Coke/Pepsi story. Very applicable here.

  3. I worked at the Oregon Credit Union League (now the CUAO) back in the days of HR 1151. In August of 1998, President Clinton (Bill) signed the Credit Union Membership Access Act which was essentially our “going public” and beginning to compete with each other.

    I’ve always felt that if a credit union had built a “club” with fierce loyalty that they had nothing to worry about.

    I’ll never forget a heated discussion at a CEO Roundtable where the small were fearing the large (the age-old-size-issue-rears-its-ugly-head) and arguing passionately to protect their FOMs. So much so, that the late Don Crawford, rose slowly, and in perfect cadence said (oh, and keep in mind he’s African American):

    “Folks. I think there’s a bigger issue here that we’ve all forgotten. It’s called the Emancipation Proclamation. You can’t OWN people any more.”

    You could hear a pin drop…..

  4. Ron, I do agree with you on this one. We need to work together to build consideration for credit unions, after that it is up to the individual credit unions to obtain and keep members.

    A couple things are happening in Washington right now that I think are doing this. Everyone knows about BECU’s huge marketing campaign and how many new members they’ve brought it. But it is the first time in our state that a CU has really gone out and spent a ton of money advertising a CU. The first round of ads were pretty generic about what a CU was and that it was open to all people in the state. I feel that this campaign not alone helped BECU but also helped raise awareness for every CU in our state. People who have drove past a CU on the way to work every day for 10 years now may say…”Hey I get what that is now and I wonder if I could join.”

    Our statewide advertising coop group is also trying to do this same thing with promoting CU’s in a generic way. All we want to do is gain consideration in the consumers mind. I won’t say we are going about it in the best way, but we are at least trying. Hopefully each year we make more headway and produce something that blasts Washington CU’s into the mind of consumers.

    If we ever get to the point where we’ve raised awareness to a new level it will be interesting to see the battles between CU’s. But at least we can sleep better at night knowing that people are with a CU that looks out for their best interest.

    (Wow that was quite a warm & fuzzy post…I luckily I have my guitar next to me so I can break into some campfire songs)

  5. Ron,

    I know you are right. It is a reality of business.

    The Bellco thing makes me feel a little like finding out my mom had boyfriends before my dad. As an adult this is obvious, but there is still a little kid inside that is totally grossed out by it.

    I am all for credit unions keeping it in the family so to speak – as far as member retention. I just dont know if now is the time to let all the family’s dirty laundry out into the public.

    Eh, but what are you going to do? We have all been competing against each other for years. I guess now its out in the open. 🙂

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