This is a continuation of “Unseen Credit Union Competition“. Last time, you saw what members receive after buying a car or home. Now, we rewind to the buying process itself.
Car Dealers & Credit Unions: A Necessary Alliance
In my business, I work with a wide variety of credit unions. Small to large, urban and rural, with everything in-between. What do they all share? A relationship with local auto dealers.
The degree of this arrangement varies from, “we send to you, you send to us”, to, “the dealer holds all the cards and we do what they ask”. Depending on whether the credit union engages in indirect lending or even cares about direct (and if you’re reading this, I bet you do) says a lot about where they fall on that balance.
Your Members Just Want a Car
On the face of it, your members don’t care about back-end relationships. Remember, their focus is on the car. A low loan rate, convenience in application, and speed of closing are what they want. Why? Because that means car shopping can end faster and car driving can start sooner.
Take a quick poll of your office or members in the lobby right now. Ask them who loves the car buying process. Did any respond like this?
“Yes, we get to do it again! I can’t wait!”
It may be exciting to get a new car, but the doing so isn’t what most would call “fun”. As their credit union, you can help them save time, money, and potential future frustration.
The first part of this series, Unseen Credit Union Competition, looked at the slimy tactics of aftermarket firms aiming to sell your members (and anyone who buys a car or home) questionable protection products.
It’s important you make members aware of these efforts. Not only is it the right thing to do, but if something goes wrong, where do you think they’ll go to complain?
Auto dealers don’t get involved in this stuff. They simply present their product offerings at time of purchase. Of course, some of this overlaps with your own lineup. But theirs is obviously better, since it’s connected to the manufacturer…or something.
What? It’s not? Oh, and sometimes it’s the same thing you offer, just more expensive?
Given that knowledge, I’m sure your team makes a point to explain this to every member, right?
Yes, maintaining a strong relationship with your local dealers is important. Frustrate them and they’ll stop accepting your drafts, inconvenience your members, and not send indirect loans your way. Some might even talk down to customers about your willingness to pay them! (I have heard this story more than once)
You’re in this together; surely, this town is big enough for the both of us!
Equip Members With Great Info
Your mission is to serve your members. And that means arming them with helpful information before they walk in to the dealership. What does that look like?
Lay out what you can offer a member buying a car. Here are some common possibilities:
Simplified search and shopping process (By referring to your car buying service)
Preferred and/or upfront pricing (Through a dealer group arrangement or car buying service)
Rate discount (Combination of services, auto-pay, promotion with partner platform, etc.)
Fast and accessible-anywhere application, approval, and funding process
Depreciation Protection Coverage
Debt Cancellation Insurance
Credit Life/Disability Insurance
Anything else? Yes, this is me asking you. Because who knows your credit union best? Hint, it’s not me.
Now we have a detailed list of everything your credit union can provide a member looking for a car. This is your “value proposition”. Look back again. These are the reasons why you are in the auto lending market. Do each of these items feel like the best possible options for your members? If not, it’s time to re-evaluate.
Assuming both are equally accessible in every way, would you eat at the best pizza place in town, or the 2nd best?
To ensure continued survival and growth, you have to be the best choice for members.
It’s ok. You can compete.
What’s your loan team’s relationship with auto dealers? We saw the range above, from best buddies to mortal enemies, and everything in-between.
Unless you are able to meet all your lending goals through tent sales, you’re going to need to work with dealers. That doesn’t mean you have to be a pushover! Explain how members you direct to them may receive information about your ancillary services and financing. If the member asks about dealer offerings, that’s their choice.
Some members will just do everything at the dealer. Perfect for your indirect program, if you have one.
Others will want to do it all on their phone before ever visiting the dealer. And stopping at a branch? Fat chance! Thus, how can you help accommodate this scenario? Does your technology allow it?
It shouldn’t matter how members choose to conduct their car search, financing research, and buying process. You simply need to provide the tools to make it easy.
Which leads us right into talking about your products! Ok, maybe not talking, but some form of member interaction, whether chat, clean website/app, or something else. This is where you guide members through what you can offer, why each matters to them (Big Data comes in handy here), and how you are helping reduce their risk, expenses, while preserving peace of mind.
I was “sold” GAP by my credit union like this: “Ok, so your loan is approved. Do you want GAP? It can pay the difference between your loan and insurance payout in the event of your vehicle being totaled. It’ll be $$ more per month.”
Are you shocked that I declined?
I’m not going into selling here (we’ve talked about that many times in the past). Ok, maybe I am. Only because selling is helping. And you are helping, right?
Your car buying service helps save members time and money. Explaining its benefits and how to best take advantage isn’t selling.
If GAP makes sense, explaining the costs a borrower might face without it is not selling.
VSCs are expensive, but how might a surprise $2000 repair affect your member, their job, family, and financial stability? Explaining it isn’t selling.
Your Member Walked Into A Dealership…
The dealer your member visits will present all of these services. You know they’ll be more expensive, and who knows if they are even the best fit? But if it’s the first time your member hears about them, that’s a huge opportunity missed for your credit union.
And it’s a disservice to your member.
There are two extremes. We covered one in the last article: Companies trying to sell your members questionable products they may or may not even need. The other is not mentioning anything to a member. You probably fall somewhere in the middle, and that’s good.
Now, it’s up to you to make sure you provide the best everything for a member.
Because isn’t “serving members the best” what your credit union is all about?