It is our pleasure to share a guest post with you today from Nicolette Lemmon, President, Lemmon Tree Marketing Group. Enjoy!
In this economy, everyone has been streamlining, cutting things out of the annual budget to compensate for the corporate bailout and the rising delinquency costs. Yet, the “real” costs of budget cuts are not always clear and definable until after the damage has been done to the organization.
Take for example, the traditional and conventional way of budget cuts. The first line of costs across the credit union will be:
- Cut travel and training costs
- Eliminate staff positions that have come vacant
- Reduce agency, vendor or consulting costs
- Cut proportionately by total spend or by non-payroll spend in every area
While all are valid ways to trim costs, the impact begins to show in member service, the lack of new accounts due to the disappearance or inconsistency of the credit union marketing messages, and the loss of innovation due to a downtrodden attitude from constant pressure to perform better with fewer resources.
The initial savings may actually contribute to a spiral in other costs that are not clear in terms of financial impact on the credit union. For example, the financial benefit may be short term savings, but the long term impact is the difficulty in catching up next year.
One client of mine commented that her credit union was becoming so focused on lean and mean that they were likely to be “skinny and weak” when the market turned around. Her concern was that the credit union would miss the ability to capitalize on a turn around in the economy because of the lack of resources, talent and capacity.
In addition, there is a need to constantly be working on creating a position in the mind of members to retain and attract new business. This requires constant building and reminders, like pushing on a giant flywheel.
In fact, what you invest in marketing today is so you’ll be in business next year. So, it might not be doing more marketing to attract members and loans, it is more likely the strategy behind the marketing that is most important.
Action Plan: Here are four questions to ask to determine the strategy for budget cutting:
1. Can we find those products that are more/less worthy of marketing investment? What about geographic areas that are more/less worthy of marketing investment?
2. Can we find some member segments that are more/less worthy of marketing investment?
3. What are we getting for the spend – there is a cost to ramp up marketing and gain speed as well as a decline after the expenditure has maxed out the incremental growth
4. Which budget cuts would most likely minimize the negative impact on the bottom line?
About Nicolette Lemmon, President, LemmonTree Marketing Group
Nicolette founded LemmonTree Marketing Group (www.LemmonTree.com), a full-service marketing agency, in 1984, providing Virtual Marketing Outsource, MCIF analysis, CUPowerTracking and market research solutions to clients nationwide. Since 2003, with a team of advisors, she created and heads the faculty of the Credit Union Marketing University, a weeklong academically-based program.
Her company has assisted hundreds of credit unions to achieve their corporate goals with marketing strategy, marketing solutions, research and database analysis solutions, training products and an education component of Credit Union Marketing University.
Nicolette can be reached by email at nslemmon@lemmontree.com or by calling 480.967.1405.
