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Credit unions find success in marketing car refinance offers
Editor’s Note: This is Web-only bonus coverage from “The Road Forward” in the June issue of CU Management.
It’s an unfortunate fact that, despite a credit union’s best efforts, some members are going to shop for a car on the spur of the moment and accept someone else’s financing offer. But all is not lost. There’s always refinancing—an opportunity to recapture loans the CU missed the first time around.
“Everyone who buys a car and finances it someplace else, we make a refi offer,” says CUES member Michael Duffy, president/CEO of $370 million/33,000-member Financial Center Credit Union, Stockton, Calif.
And he’s not alone. For many CUs, loan recaptures are a significant part of an auto lending strategy.
“Every month, there's a group of your membership that got car loans from other places,” says Mark DeBellis, president of CUES Supplier member PSB Integrated Marketing, Lake Forest, Calif. “And those loans aren't as good as your loans. So what you do is you pull a credit report that gives you your membership and their current auto loan information, and you selectively go back and market to those who have a loan that’s not as good as the one you're able to provide them with.”
CUES member Natalie Baker, CME, VP/marketing at $268 million/20,000-member Dominion Credit Union, Richmond, Va., says her CU has used this strategy in combination with a pre-qualifying program to bring in a stunning number of refis. Not only does it benefit the credit union, but it inspires loyalty among members, because many save hundreds or thousands of dollars over the life of the loan.
“We recently did pre-approvals with a PURL—a personalized URL,” she says. “It was a postcard and email showing specifically how much we could save the member over their current rate or payment elsewhere. Both the postcard and email led to a personalized website where they could get more information. We mailed them to 1,592 members and received 105 loans for a total of $1,785,335 and an average of $17,003. That's about a 6.5 percent response rate, which is fantastic! I think showing real numbers as to how much we could save them really caught members' attention and caused them to act."
Plus the campaign wasn’t too pricey, costing the CU just $4,593.
Recaptures work for all types and sizes of credit unions, says DeBellis. The only down side is that for some institutions with a very small member base, the number of potential recaptures per month might be very small.
“Maybe it's 50 [offers] you're sending out, and you're getting five auto loans,” he says. “That's not what I would call a primary promotion that's really designed to drive a lot of volume. It's definitely worth doing, and you're saving the members money and bringing in profitable loans. But it's not going to pay your bills because there’s just not enough volume there. So I see that more as a secondary program, but one that's worth doing. You've got to have something else out there that is really driving big dollars.”
Jamie Swedberg is a freelance writer based in Athens, Ga.
