3 lessons from the newspaper industry
For credit unions, there is clearly no time like the present to rethink our business in the Google age
After more than 80 years of publication, the final issue of the Kamloops Daily News rolled off the printing presses in January. According to the once well-read newspaper’s owners, the decision to shut down Kamloops’ only daily paper was driven by simple economics: the News had ceased to be profitable.
While the newspaper business may seem a far cry from running a successful a credit union, the story of the Kamloops Daily News’ demise provides a number of lessons credit union leaders should take heed of.
Pay serious attention to the demographics—and what matters to them
To many younger Canadians, printed newspapers are a throwback to an earlier age—a time before online news, smartphones, Twitter and push alerts. The same can be said of credit unions. Many younger Canadians view us as “granddad’s bank,”an alternative to the big banks.
There’s no question the newspaper and credit union industries provide a valuable service to young and old alike, but both industries are struggling to capture the attention and business of key demographics, especially young adults.
Rather than producing strategies that hang on commoditized offerings—adjusting a rate here, tweaking a product there, and topping it off with a free enviro-friendly shopping bag promotion—credit unions need to get serious about long-term strategies to establish relevance and loyalty with key demographics.
Wrestle with trends and innovations
With the explosion of online news sources, expert bloggers and advice columnists—not to mention social media sites sharing news freely—many people simply will no longer pay for what they can get for free.
Whether it be print subscription costs or chequing account fees, savvy consumers are looking for ways to avoid unnecessary expenses. Added to this is the constantly growing demand for on-demand access as telecommunications technology advances and people become more and more mobile, whether it be for work or recreation.
The common denominator here is the power of the Internet. It continues to enable change everywhere. And if there’s one obvious failure of the newspaper industry as a whole, it’s that after several years, it has been slow to figure out what the Google age means to its business. Credit unions risk being similarly guilty, with Google Wallet set to mark its third anniversary and the advent of peer-to-peer lending now nearly a decade ago. We can’t simply rest assured in studies that indicate many consumers still prefer the branch channel for significant transactions. Credit unions need to understand the full impact of digital trends on their business and ask “what’s next?” and “how do we get there?” and “how soon can we start?” rather than simply watching from the sidelines.
Don’t rely on short-term measures to fix sustainability issues
Many newspaper companies’ reaction to sliding ad revenues was to hike subscription prices. That strategy feels akin to punishing subscribers for the companies’ inability to be agile in stemming ad revenue losses. Not exactly loyalty rewards and putting customers first. And just plain risky, since tough economic times make purse strings all the tighter.
Likewise, credit unions can be tempted by short-term gain tactics—things like competing on price or waiving fees. However, as many credit unions across Canada continue to feel the pinch of tight margins and growing operating expenses, these short-term measures siphon more off of already challenged revenue streams. Short-term moves to cater to the immediate needs of consumers, without keeping one eye on the future, will only delay the inevitable. As many newspapers are finding out, subscription price increases are coming nowhere close to offsetting ad revenue losses.
The travails facing the newspaper industry are no doubt complex, but despite what some may say, its current business model is in trouble. While credit unions are not yet close to that point, we need to remind ourselves the future is happening now—but there is clearly no time like the present to rethink our business and define where we want to be in the Google age.