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Too much to say here

September 29, 2009

First off, I can’t believe the time between posts. That needs to be fixed.

Tim McAlpine stated that William brought up a point about membership being optional. Interesting point in putting membership as an option instead of a given. Maybe the situation needs to be expanded.

We (credit unions) all have members, the law says you have to be a member to transact business with a credit union. Some credit unions have differentiated themselves by calling their members ‘customers’. The perception that seems to be driven here is that membership should have some value, it should be something that points you as being different. Membership implies ownership and with that you have some means of directing the course of the business usually by a voice at the voting booth. (there is another issue!) But membership in anything these days has a different set of values than when these organizations were originally setup. There is a book called ‘Bowling Alone’ which points to the deterioration of organized ways in which people relate to one another and are active in civil life. But that organized way of the past has changed. We can now begin the establishment of a relationship in a virtual world. Creating that type of relationship does not mean that human interaction in the future won’t include face-to-face events. It just means I don’t have to sign up for bowling by going to the bowling alley.

That may be the problem in the transition we are now facing. The membership (meaning) we required in the past is no longer a vital part of our future. Our usage of something is not dependent on us physically being there. We can be part of numerous transactions or events without leaving our home which in the past was not possible. Maybe the biggest issue is to create a new word that signifies this. The capacity to understand membership is difficult in our day and age and it comes with some baggage (we don’t have the time to belong to anything). Our interests don’t need to lie in a specific geographic area in order to see the value of a social networks. We need to view membership not as being optional but as being something different. The pillars are there for the older structures but they have also been expanded into areas we still need to determine.

Yogi Berra commented on the value of social networks by saying, “IF you don’t go to somebody’s funeral, they won’t come to yours.” If we don’t translate membership into something relevant it indeed does become optional.

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6 Comments leave one →
  1. September 29, 2009 3:09 pm

    Hey there Gene. I happen to be off today and saw your post. I want to clarify:

    Here’s the deal. Membership SHOULD mean something, it is at the very core of being a co-operative. The problem is that, in most cases, it doesn’t mean anything. It is a hoop to jump through to open an account at a smaller ‘bank’. The meaning isn’t communicated in many cases, and it usually isn’t well understood by the joining member.

    In Bologna it occurred to me that perhaps if membership were optional, it could be sold as a way to deepen a relationship. You can be a customer of the credit union, but if you really believe in us, want to help direct our future by voting (and voting for more than just the board) and share in our profits, we suggest you JOIN. Then the conversation takes on meaning and the meaning is conveyed and understood by both parties. When people buy a share, they are buying something that they really want to buy.

    Whether or not that is possible/legal is another issue. On that I have no idea.

    And I’ll echo Tim: “Had Gene Blishen been able to make it, with his Yoda-like comments and wisdom, BCBBC2 would have been exceptional!” We missed you!

  2. September 29, 2009 4:50 pm

    Selfishly, I’m glad Gene didn’t make BCBBC2. If he had, the thoughts above would’ve been shared w/ the 30 people there, and the thousands of us who wait for the oracle of Burnaby Mountain to pontificate would’ve been denied this blog post.

    To the topic at hand, I apologize in advance if my comments are too US-centric, but here, membership no longer has its privileges, to paraphrase something I heard somewhere.

    William is spot-on to suggest that membership should mean something, but more and more, its harder for CUs to deliver on that.

    First of all, I think it’s important for CU people to remember that often a new “member” simply wants superior products/service/customer experience, which has nothing to do with “membership”.

    But there’s something else going on here: The great selling point of membership — “ownership” or a “voice” — has been devalued. Thirty-five years ago (in the US), a small minority of consumers directly owned stock in a company. Today, it’s a majority. As consumers, we have much broader experience in “ownership”, and have found, quite frankly, that it’s not quite what it’s cracked up to be. So this big push on the part of CUs to showcase the ownership aspect of membership isn’t having the impact it might have once had.

    I would also remind William that one of the more successful co-operatives in the US — REI — allows people to buy from the store without first becoming a member. As a member myself, the benefit I get has nothing to do w/ ownership, but in getting discounts and early access to sales.

  3. October 3, 2009 10:07 am

    I tend to agree with Ron. It’s my perception that the idea of membership = a voice in the organization’s direction doesn’t hold real appeal to most members as evidenced in the declining numbers at many CU AGM’s (ours for sure). Is this just a sign of a growing apathy in general or ???
    REI is a great example. I think that for many people scarcity and exclusivity are more attractive than control.

  4. October 30, 2009 9:52 am

    Size has affected the meaning of membership dramatically. I mean, think about it. When Desjardins started a caisse populaire out of his house in Quebec, members truly owned a very large piece of their credit union. They had to. If par share requirements are equal for all members, then each member (say, x) should theoretically have a 1/x ownership stake. This means you have 1/x voting power, 1/x influence on operations, and x to lose if things don’t go well.

    X means nothing these days. A $5 par share requirement for a family that makes $40,000/year means as close to nothing as it possibly could…especially if it’s at a goliath credit union. My comment isn’t to criticize large credit unions – they got that way because they are great at what they do. My purpose is to point out that a member at a, say, 100,000 member credit union has .000001 voting power, .000001 influence on operations, and only $5 to lose if things don’t go well. No wonder folks don’t understand the power of member-ownership.

    We need to find a way to make membership mean more even as our collective size increases. This means partnerships with community groups and retailers to leverage collective buying power. This means serving members as consumer advocates on various levels of community, government, and commercial interests. This means making the members and staff have more “skin in the game” (higher par value requirements, annual membership fees, etc). This means, perhaps, giving members actual equity ownership in their credit union.

    Just some thoughts.

  5. October 30, 2009 10:27 am

    As someone who sits outside the CU world but sells technology services almost exclusively to CU’s, I have to say this preoccupation with structure as the differentiator for credit unions seems off-base. Despite years of industry effort, most consumers still don’t understand the difference between a CU and a bank. You can write this off as bad marketing or stupid consumers or whatever, but the bottom line is that dog won’t hunt. It’s not a reason to choose a credit union over a bank.

    REI is a great case study to consider. Do people shop at REI vs. Dick’s because it’s a co-op and not a for-profit company? No, they shop there because it’s a better place to shop: great products, passionate employees, a corporate philosophy that resonates, etc. I would bet that most first-time customers don’t have any idea REI is a co-op. The membership aspect is a reason to keep shopping–a benefit to being a repeat customer–not the basis upon which to do business with them. It’s just a variation on relationship pricing.

    As far as ownership/control goes, I’m a member at Truliant FCU, which has more than 100,000 members. The idea that I can exert any more control over how the organization is run vs. a local community bank doesn’t pass the smell test. Sure, I can vote for the Board, but if you look at member voting turnout (and the age and average tenure of our board), there is no way you can tell me members see it that way. And my share ownership doesn’t offer any tangible benefits to me individually; I hear over and over that our “cooperative structure” means I’ll get better rates, but I can easily find better savings and lending rates by searching the internet.

    The only real way to exert control at a medium- to large-sized CU is as a customer (i.e., feedback to employees). Which is no different than it is with a bank.

    My vote–time to be more like REI…

  6. October 30, 2009 11:17 am

    Sorry about the errors in that comment…wrote too fast. 🙂

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