Monday, February 13, 2023

SECU Ad Campaign

 To: SECU Board of Directors


Dear Chairman Ayers,

Phew, that Super Bowl game was a real nail-biter, wasn't it. Sat on edge the whole game in anticipation! No, not over who was going to win - the Eagles or the Chiefs. But whether or not, you and the SECU Board were going to spend millions on a Super Bowl commercial - as part of your new SECU Ad Campaign. Some of your "fans" had put it about that SECU was going to "step it up" and "get it down" with M&Ms, The Farmer's Dog, John Travolta, and Mr. Peanut! Glad you dodged that bullet! Many SECU members are as enthusiastic about the Board's new SECU Ad campaign as Philly fans are with the outcome of the game. 

Don't know what you and the SECU Board are paying for the SECU Ad Campaign - but you can be "d-sure" you're going to be publicly asked!  You could go ahead and post the cost of your 2023 advertising budget on the SECU website to increase your proclaimed drive for transparency - be sure to turn the "Comments" section on! Maybe think of the "exposure" you will receive as some "free" advertising.  Pretty sure existing members want to know why you are spending their money so freely without a real clear goal. Bet you'll receive quite a few comments and - shall we say - some "active" feedback! 

Do know for a fact, that whatever you and the Board are spending for the SECU Ad Campaign is far more than the cost of any SECU television ad purchased in the past! How so sure? Because in its entire 85 year history, SECU has never purchased any television ads - not one, none, nada!

6 reasons that prior SECU Boards chose not to do any commercial advertising:
  1. Never could figure out a "message" since all ads pretty much say the same thing - we're wonderful, we love you, we're convenient, and boy do we have a deal for you! In marketing, there really is little difference between hokum and bunkum, baloney and balderdash.
  2. No one could find a solid reason to advertise - growth in assets and members at SECU was always strong, year after year until 2022.
  3. Commercial advertising is very expensive - lowering loan rates, raising savings rates, improving services was a better use of existing members' money.
  4. Commercial advertising was not cost effective - for example, as you must have realized, why would you pay a "per viewer rate" for 130 million Super Bowl fans when at best fewer than 13 million of those folks live in North Carolina? Even if all 13 million North Carolinians were eligible to join SECU (which they are not, but we hear you have ambitions!), you are paying 10 times the cost to reach a "marketable viewer" (the 13 million folks who live in N.C.) The other 117 million Super Bowl fans - for which you would have been paying "top dollar" to see the ad - couldn't even use the services of SECU. Is "mass advertising" wise, or simply wasteful?
  5. Over 2.7 million members have found their way to SECU without costly advertising - Those folks joined because they saw some value for themselves in SECU. They all joined voluntarily and were not in any way enticed, incented, nor lured into membership. No BOGOs, no "come-ons", no "last chance, only two left" offers, no bait and switch. Rather than wasting money "preaching" to members about "what it practiced" through ads, SECU spent its time and member funds in "practicing what it preached"! Members prefer performance over "promises".
  6. Word-of-mouth "advertising" works best and costs nothing - Everybody knows that! Think how you selected your most important personal service providers - your doctor, your dentist, your mechanic, your hairstylist. You asked a knowledgeable, trusted friend! We all do, because we know that ads aren't usually the truth, the whole truth, and nothing but the truth. Most folks in North Carolina have always felt comfortable in recommending SECU to coworkers, family and friends; because SECU honestly and consistently told members exactly why and what it did - and, more importantly - then, always did what it said!
And, Chairman Ayers, for the record, what are the current SECU Board's reasons for bingeing on advertising:
  1. WHY?
  2. WHY?
  3. WHY?
image.pngThe new SECU Ad Campaign seems a wee bit rife with overconfidence and self-importance. Kinda feels like SECU is taking a "corporate selfie" with the members no longer front and center - not sure where that comes from.  Hard to learn much about others while looking in a mirror.


SECU Risk-based Lending # 2

 To: SECU Board of Directors


Dear Chairman Ayers,

As promised, here is the second commentary on Risk-Based Lending (RBL) for you and the SECU Board to consider. Many members believe you and the SECU Board have made a serious mistake - an unforced error - in approving the implementation of  risk-based lending. Hope that you and the SECU Board will at least acknowledge that an error in your decision is a possibility. You need look no further than the last email (RBL #!) to confirm that possibility - as your ill-conceived decision to centralize collections last summer had to be reversed after SECU's loan delinquency mushroomed, doubling in just six months. And probably, the decline in SECU year-over-year assets at 12/31/2022 - for the first time in its 85 year history - was not to be found in your "Strategic Plan."

The SECU Board has received numerous letters from members with substantial expertise in finance - many with significant experience directly with SECU - challenging your decision to implement risk-based lending. Chairman Ayers, as a lawyer, one would hope that you would not only acknowledge the possibility of Board error, but more importantly acknowledge the SECU Board's fiduciary duty to always act in the best interest of SECU member-owners. The decision by the SECU Board to implement risk-based lending does not appear to meet that standard. Those members who question your decision may well be wrong, if so simply pause and fully explain to the membership the basis for your decision. A pause and a detailed discussion with the SECU membership will in no way adversely affect the operation or financial health of SECU - your refusal to listen may. As Thomas Paine said: "Reason obeys itself, and ignorance submits to whatever is dictated to it."

So, let's look at a couple of ideas and impressions that you and the senior staff are putting forth about risk-based lending at SECU (most of the data and quotes comes directly from information provided to the SECU Board or to all SECU employees)
1) Members have been led to believe that SECU doesn't serve "A" paper borrowers. (Members who are rated "A" have credit scores between 720-850). That is simply not true. Here is the actual breakdown of SECU borrowers toward the end of last year (the SECU Board received this information):


Of 1,179,000 borrowers at SECU at the time of your analysis, 247,000 were "A" paper! The percentage distribution looked like this: