NAFCU Journal March April 2021

34 THE NAFCU JOURNAL March–April 2021 disadvantages. Absent a sustainable market position and trapped by compara- tively high overhead and thin margins the path to earnings is compromised and the viability of the brand is challenged. Price Competitor: The single most pop- ular strategy pursued by financial insti- tutions is price. More than one in three possess a comparative overhead advan- tage and utilize this financial flexibility to select price as their go-to-market strategy. However, when introducing the context of earnings into the equation, shortcom- ings regarding the executional effective- ness of implementing this strategy are revealed. More than half generate inferior financial results, questioning the sustain- ability of the selected pricing strategy. Value Competitor: Financial analysis indicates that approximately three in ten financial institutions utilize a value proposition as a means of differentia- tion. Financial institutions that compete on value have consciously dedicated overhead, often in the form of locational convenience, personnel or both, to acquire market share on a dimension other than price, and are rewarded by the margin advantage that each possesses. The challenge lies in its execution as the majority of value-oriented institutions possess depressed earnings, placing the brand vulnerable to competitive attack. Creating Competitive Advantage This research indicates that strategic planning has not provided the clarity of purpose to create competitive advan- tage. In total, half of all strategic plans have failed financial institutions. As a result, the greatest threat to the long- term survival of the majority of financial institutions is internal, which means that it is controllable, and it is the shortcom- ings revealed by their strategic planning process. With economic challenges and opportunities on the horizon, the plan- ning process needs to change. The future of half of the nation’s financial institu- tions rely upon it. A strategy needs to be executed effec- tively in order to be defended and this requires closing the knowledge gap. It is critical to gain an in-depth understand- ing of the market, the member base, the competitive set and the credit union’s operation. Exploring the market reveals incremental opportunities. Self-interest is identified when connecting opportunity to profit and the study of competitors assesses the level of resistance to achiev- ing the desired performance. A tactical plan that is well executed is a necessity. Tom Long presented at NAFCU’s 2019 Strategic Growth Conference on the importance of data-driven growth. For more than 25 years, The Long Group has been providing tactical guidance and insights to financial institutions through strategic planning, staffing and productivity analysis, customer and market analytics, distribution planning, and marketing. The Long Group’s proprietary consumer and business financial database forms the basis of its trademarked, predictive analytics platform. Tom Long can be reached at tomlong@longgrouponline.com or at 603-424-5664.