While the credit union industry has experienced a 10-13% increase in year-over-year auto loan growth in the early months of 2017, the recent slowdown in new car sales may signal darker skies ahead. Any downturn in new car sales is usually followed by an upturn in manufacturer and dealer incentives making it harder for credit unions to compete.
Should your credit union lose sleep over this? Probably not any more than usual but it’s likely a good time to make sure you’re doing everything possible to continue to succeed in the auto lending battle. One strategy you should deploy (in good times and bad) is getting your sales and marketing efforts fully aligned and supportive of each other.
Too often, Marketing drives opportunities in the door but the sales staff isn’t able, willing, or prepared to support it. Too often, Marketing is offering promotions that don’t necessarily appeal to the target market of the credit union. Too often, sales people are saying they don’t have enough realistic opportunities to meet their loan goals and blame Marketing for not providing those opportunities.
Just as your members will need to get their new cars aligned from time to time, now is the time for your credit union to make sure your Sales and Marketing efforts are fully aligned.
Following are four ideas to help align and unify these two critical areas. First you’ll see a “Sales” strategy to create more auto loan growth; then you’ll see a supporting “Marketing” strategy provided by Steve Jones of Concepts Unlimited, a leading advertising and marketing firm specializing in serving credit unions like yours.
Sales: Dig deep into member’s wallets. Regardless of what brings the member into your branch or call center, identify additional lending needs they may have and auto loans they have elsewhere. This may require training, coaching, or accountability but likely will require all three. You have very competitive products and typically better rates so make sure your loan member is able to benefit from their credit union membership. Recapture and steal every auto loan they have elsewhere.
Marketing Strategy: One of the most successful marketing programs we helped develop and implement is a hybrid loan preapproval offer. It isn’t your typical “you’ve been approved for an auto loan” offer, it’s preapproving members for specific amount, specific rates for specific loan types – all in one dynamic printed and personalized direct mail and email package. The response to this program is unbelievable. Why? Because it put almost every loan type – vehicle – boat – RV – LOC – personal – HELOC in a preapproved status right in the member’s hands and with the exact amount they are approved for. Imagine receiving a marketing message telling you $50,000 is waiting for you at the credit union for a vehicle, $40,000 for a boat, $80,000 for an RV, $10,000 for a personal loan, etc. Almost everyone is in the market for one loan type or another almost at any moment and you just filled that need on the spot.
Sales: Plant the seed for future lending needs and follow-up on every loan opportunity. Don’t expect the member to come back to you or remember you when they’re sitting in the salesperson’s office at the dealership; stay in touch and don’t let them forget about you. There are too many competitors out there wanting to win your members’ business … be proactive in making sure they do their loan business with you.
Marketing: If you have an aggressive onboarding process – one designed along the lines of a 1-1-1 or 1 day, 1 week and 1 month engagement communication guidelines, including a loan message in these messages is vital. What is your closing ratio for a loan to a brand new member? Does everyone walk out of a branch or leave your website with loan funding in their pocket? A majority of them should and an aggressive onboarding process will contribute to reaching this goal.
1 day after opening an account you send the new member your “Welcome/Happy You’re Part Of our Family” email. 1 week later, include the “do you have any other products in mind we can help you with and by the way here are our current loan rates” message. 1 month later, follow-up with “how can we help – do you need any assistance logging into online banking, setting up your mobile banking, need for facts about our remote check deposit service?” Providing helpful information shows you care about this new member relationship and are there to help.
Sales: Make it fast and easy to get a car loan. Buying a new car is fun … getting the financing for that car is usually not! Make sure your process includes fast approval and processing with easy and pleasant access throughout. Your member will make their loan decision, in part, on who offers the best overall experience. They probably still won’t describe it as “fun” but it should definitely be “painless”. If you don’t make it painless, your competition will (in fact, they probably already have).
Marketing: It’s the age old tale – members spend months picking out a model, weeks selecting the color, days considering options and about 2 minutes or less sitting in the F&I office at the dealership deciding on the lender who will get their loan. More often than not, the lender they select won’t be you. Otherwise, your credit union would have 80 – 100% of your member’s car loans. In reality, your share-of-auto loans-to-members is likely closer to 10% – 15%. Almost every member at your credit union age 18 – 75 has a vehicle loan at some institution. If you’re not getting your fair share – 18 – 25%, then you need to take away all the speed bumps – make the applying and funding processes convenient, fast and easy.
If you’re not offering the convenience they need before they make this decision, then you’re invisible in this transaction. Online applications, online rate/payment comparison calculators, fast approvals and funding, and consistent communication are all as important as your rates and terms. How many times has a member come into your credit union to refinance a loan after being laid away by a dealership at 15% when you’re offering 1.99% on the same product? How could that happen? Simple, that bright shiny new car is just waiting for them outside the dealership finance office door and if your member isn’t preapproved at your credit union, they just have to sign a few dealership documents and drive away. If your current technology doesn’t allow members to conduct all their loan activities online, from application to funding as well as accepting loan payments, it’s time to upgrade.
Sales: Make it personal and tailor your offer to your target market. The best and most successful sales pitches are those that are based on known needs of your members. Don’t make generic sales pitches (“Would you like fries with that?”), extend auto loan offers to those members who have told you they’re in the market for a car or have recently purchased a car and financed it somewhere else. Personalize it by helping them see why they should have their car loan with your credit union.
Marketing: When you’re pondering how to personalize an auto loan offer to members, consider the reason they are making an auto purchase in the first place. Relate to your member and you’ll have a better opportunity to get a second and third “look” by them when it’s time to select a lender. Are they tired of chauffeuring a teenager around and want to get them their own car? Has a job change created a longer daily commute and the desire for a more fuel- efficient or eco-conscious hybrid? Has the workhorse truck they’ve always counted on beginning to carry bigger repair bills? Targeted email campaigns can turn a member from a tire-kicker into a no-holds barred buyer. It also demonstrates that you truly understand their perspective, what they need, and how you can provide the solutions to make their life better in tangible ways. That’s the way every long-term relationship starts and stays … by personalizing your offers.
With the auto lending business being so incredibly competitive, your credit union can’t afford to be performing at any less than your absolute best. And one way to get to that “best” level is by aligning your sales and marketing efforts to create the most appropriate, convenient, and memorable experience for your auto loan seeking members.
If your credit union needs to develop a dedicated auto loan strategy for the balance of 2017 and especially if you want to align your sales and marketing efforts, we need to talk. Please contact me at 636-578-3280 or Probert@fi-strategies.com.