Trailhead Credit Union’s Jim McCarthy: ‘I Knew We Needed to Make a Bold Move in Order to Grow and Thrive’
April 8, 2014
April 8, 2014
Editor’s Note: With 2013 in the rear-view mirror, Anthem asked Northwest credit union presidents and CEOs to reflect on the past, consider what lies ahead and talk about the challenges — and the opportunities — that await credit unions in 2014. Look for “The CEO Perspective,” an occasional series of interviews from the corner office, in upcoming Anthems.
If the television show “Portlandia” had an official credit union, would it look more like a brewpub than a financial institution, with warm, reclaimed wood accents from the neighborhood’s Rebuilding Center, a wall-size community calendar filled with upcoming events and a Little Free Library filled with books?
Would it covet members who were the very definition of “urban hipster,” with their tattoos, piercings, disdain for corporate culture and love of all things local and independent? Would its brand be intentionally gritty—flawed and raw, breaking all the rules of conformity?
In other words, would it be the new Trailhead Credit Union?
“Portlandia” may exaggerate to make a point, but the truth is that “these are the people who make up Portland, and their values and beliefs are being ignored by the corporate giants,” says Trailhead President/CEO Jim McCarthy. “Portlanders are champions for the little guy. They go out of their way to support local and independent businesses, and they gravitate even more toward brands that are a little irreverent and non-conforming.”
Knowing that, McCarthy set out in 2012 to change his credit union’s image. Because truth be told, the name Northwest Resource Federal Credit Union didn’t exactly shout “non-conforming.” And it was hard to stand out from the crowd when nine other Oregon credit unions all had “Northwest” in their name.
“After seven years of negative membership growth, I knew we needed to make a bold move in order to grow and thrive,” he says. With the help of a branding campaign developed in collaboration with Seattle’s Weber Marketing Group, “bold” is exactly what he got.
A six-month strategic and creative process included workshops, employee surveys, focus groups and a whole lot of research that revealed a very basic truth: “There is a large market that appreciates the authenticity of losing the neckties and showing your tattoos,” McCarthy says, and the credit union would never reach that market with a safe, conservative and ultimately boring financial brand.
In June 2013, Northwest Resource Federal Credit Union became Trailhead Credit Union. Within three months of the brand rollout, membership was up by 2 percent; today, membership is up by 5 percent and loans are up by 11 percent. “We are excited,” McCarthy says, “about the direction that the credit union is heading.”
McCarthy joined Northwest Resource Federal Credit Union as its president and CEO in April 2011, after serving first as controller and then as vice president of strategic planning for TwinStar Credit Union in Olympia. A graduate of St. Martin’s University and the Western CUNA Management School, he currently sits on the Northwest Credit Union Association’s Oregon Governmental Affairs Committee and is a member of the Northwest Credit Union Foundation board.
He recently sat down with Anthem to talk about Trailhead’s branding efforts — a process that would make even “Portlandia” proud.
Q: You’ve mentioned that Northwest Resource Federal was one of nine credit unions in Oregon with Northwest in its name. That alone must have posed a competitive challenge in terms of separating who you are and what you do from the rest of the pack. What were some of the other external factors that led you to the decision to rename and rebrand?
A: We needed to grow and attract a younger audience, and in order to do so, we needed to be distinctive in the marketplace. We needed a name that was easy to say, easy to remember, appealing to the values of our target audience, and different from the competition.
In terms of the brand, we recognized that we could not compete on the same level as many large multi-branch institutions, so it was important that our brand position our relatively smaller size as a competitive advantage.
We also planned on expanding our branch location(s) beyond our single branch in Portland’s Old Town neighborhood. The single location had been a hindrance to our growth, since Old Town is not exactly where most people think about coming to do their banking. Before we expanded into other neighborhoods, we wanted to make sure that we would be noticed when that time came. Having a distinctive name and brand would help us get noticed.
Q: How about internally — what were you hearing from members, staff, board, etc.?
As a commoditized industry, it was often difficult for our employees to explain to potential members why they should choose our credit union over the one closer to their house. We knew that we need to update our brand to give employees and members a point of differentiation.
In addition, the name Northwest Resource Federal Credit Union was very long and sometimes confusing. Members would often call saying they couldn’t log in to Online Banking; we would troubleshoot with them, only to discover they were on Northwest Community Credit Union’s website. Several members thanked us when we announced we would be changing the name, because they “often couldn’t remember the name of my own credit union.”
We are fortunate to have a progressive board that recognized that we needed to change in order to grow, and that trying to be everything to everyone was not going to set us apart.
Q: The name “Trailhead”: Who came up with that, and what did you hope it would convey?
A: We worked with Weber Marketing Group on the name change. We also had a Naming Committee, comprised of three board members and our six-person management team.
The committee had identified several naming criteria for the new name: It needed to be easy to spell and pronounce, it had to demonstrate local pride, and it had to not be geographically limiting. We wanted a name that appealed to Portlanders and felt very Northwest, without using the word “Northwest.”
Q: What did the branding process with Weber involve, and what did it show you in terms of employee/community feedback? Were your original ideas confirmed? Did you head in any new directions?
A: Weber started the process by collecting surveys and conducting focus groups with all of our employees, board and management team. It was reassuring that the results of this research showed that each group independently named our top three culture attributes as “casual,” “supportive” and “progressive.”
Weber helped us dive deeper into who we were and where we wanted to go through the focus groups and some other branding exercises. The results confirmed our original ideas, but with greater clarity. We also studied the brands of other successful small businesses in our market that our target audience does business with, and examined how some of their characteristics can translate into financial services.
Q: The focus of the Trailhead brand seems to be on attracting young members – Portland’s hip, anti-corporate, all-things-local urbanites. Is that an accurate assessment? And if so, why is that audience crucial to Trailhead’s future? Is it crucial to the future of the credit union movement?
A: Yes, that is an accurate assessment of our target audience, and I believe this audience is crucial to Trailhead’s future.
These are the people who make up Portland, and their values and beliefs are being ignored by the corporate giants. Portlanders are champions for the little guy. They go out of their way to support local and independent businesses, and they gravitate even more toward brands that are a little irreverent and non-conforming. So, we are positioning our locally owned credit union to fill that void in financial services. There is a large market that appreciates the authenticity of losing the neckties and showing your tattoos, and we are able to help build member trust by being less stuffy.
I do think a younger audience is crucial to the future of the credit union movement. Not all young people are going to be “hip, anti-corporate urbanites,” but I think that credit unions need to break away from trying to appeal to everyone all the time and really look at ways to connect with the younger people in their own markets.
Q: Once you came up with a new name and identified your target audience, how did you go about attracting their attention? And were those efforts successful?
A: Prior to our name change, the credit union had experienced seven years of negative membership and loan growth. Since implementing the name change on June 1, 2013, we have seen 5-percent growth in membership and 11-percent growth in loans (as of February 28, 2014). We do not have the budgets to do large advertising campaigns, so I would say that we have attracted that audience through our new and distinctive brand image.
Our Old Town branch is a lot more visible now, with new signage and window posters. Our new website has seen a 25-percent year-over-year increase in visits, with a 12-percent increase in unique visitors.
The overall culture at the credit union is more happy and relaxed, as employees are allowed to wear jeans every day and don’t have to hide their tattoos and/or piercings. Employees feel a new sense of pride for the brand. Our members can feel this, and they feel more comfortable in turn.
The “Coming Soon” banner that we hung on the new Mississippi District branch during construction sparked a lot of buzz in that neighborhood, and the branch opened 57 new accounts during its first two weeks of being open.
Q: That new branch in Portland’s trendy Mississippi District is the only financial institution branch in the area. One of your employees says it looks more like a brewpub than a bank, and he’s not far off. Is this the Trailhead brand come to life? What’s the community response been like?
A: Yes, Mississippi is the quintessential Portland neighborhood and the epitome of the Trailhead brand. The neighborhood is filled with independent, locally owned shops and restaurants, and it’s filled with residents who firmly believe in the benefits of buying local.
We all want to support each other to help the neighborhood thrive. Trailhead was able to use reclaimed wood from the Rebuilding Center a block away in the construction of the branch, and our Grand Opening incentives were all gift certificates to other businesses on the street.
The community has been very welcoming and seems to be excited to have a credit union in the neighborhood. After six weeks, we have 97 new members, with 54 checking accounts and 22 loans.
Q: What’s next? As you look to 2014 and beyond, what are the challenges for Trailhead — and for the credit union movement? What are the opportunities that most excite you?
A: We are excited about the direction that the credit union is heading. Our employees are energized and extremely hard-working. After many years of going backwards, it is nice to see things moving in a positive direction.
We are focused on trying to do what is right for our current members, while attracting and helping new members. Technology and ease of access is important, so we are working on putting the additional tools in place that our members want.
The challenges continue to be compliance and attracting younger members for sustained, long-term growth. Also, the current low-interest-rate environment puts a strain on yields from loans and investments as operating expenses continue to climb. But I am excited for the future of the credit union. The staff and board are united in our focus to be the best we can be.
We still have a long way to go to recover from the economic downturn and the turmoil it inflicted on the credit union, but there is a bright light at the end of the tunnel. The revitalization of the credit union, with the new name and brand, gives us all the enthusiasm to try and live up to our tagline: “Small Enough to Know Better.”
Up Next: Look for the next “CEO Perspective,” featuring Lower Valley Credit Union President and CEO Suzy Fonseca, in the April 22 edition of Anthem.
Questions about this story? Contact Gary M. Stein: 503.350.2216, firstname.lastname@example.org.
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