While the days are long and the temperatures are hot, the focus might not be on ways to boost your auto loan portfolio in 2019. However, now is the best time to start your strategic planning for next year. This is especially true for auto loan growth and member acquisition strategies, with a specific interest towards existing members and millennials.
The average price for a car is now slightly over $30,000, a sum that has over 86% of new car buyers financing their purchases, according to Experian. Credit unions will find success by offering loans to fit their member’s needs featuring faster approval times, customer support, competitive rates and most importantly, lower monthly options. While auto sales have dipped over the previous year, the numbers are still trending in positive territory for the industry. According to Experian, several factors are supporting auto sales, including attractive discounting, low gas prices, ample access to credit and low debt burdens.
Need more motivation to get started? Let’s look at the overall activity taking place in the first quarter of this year. During January, credit unions picked up over 450,000 new members (1). This number represents an increase of 0.41% in January, up from 0.19% reported in January 2017. Membership is up, along with that is a demand for credit that is being fueled by solid job growth, consumer confidence and personal spending. Take advantage of this climate and create a strategy that will continue to bring growth to your credit union well into 2019.
What steps should your credit union take to jump start the process? Here are 8 tips to get your credit union where it needs to be:
- Spend time preparing. There are many programs to concentrate on, but auto lending should continue to be an area of focus. It’s important for credit unions to plan for auto lending as it is one of the largest parts of the CU lending portfolio. Most CUs see auto loans as the “bread and butter” of lending. Planning helps credit unions adapt to market and industry conditions. Establish goals that are attainable and then execute based on what resources you have available to you. If your strategy is the same year in and year out, it’s safe to say your loan volume target will be challenged in this highly competitive market.
- Does your strategy have a mission? As we look towards 2019, what are some of the lessons that are being learned this year? Credit union’s used auto loan balances rose 1.2% in January, faster than the pace set during the same time in 2017. What is your credit union doing to service this growth area? Look at ways to engage the member shopping for a new or pre-owned vehicle by offering local inventory easily found on your website. Help members find what they want in order to reap benefits for your credit union.
- What presence does your credit union within the market it serves? Find ways to go after underserved areas. With the recent boom in auto leasing, is your credit union ready to partner with a third party to bring leasing to members? This super-prime credit option, with strong returns, may be a suitable fit for your credit union especially given the short terms accompanied with leases. Now is the time to explore options and become more competitive. Turn-key solutions designed to engage members in the buying and leasing process exist. Research what works best for your credit union and look for programs that provide support from onboarding to marketing. Do your homework before you just discount this option. Thirty-one percent of new vehicles sold are leased nationwide. If you only offer a finance option, how are you competing in this highly attractive marketplace?
- What are the priorities? Growth should be at the top of the list for 2019. List some of the ways your credit union can reach this goal. Many credit unions have limited time and personnel to cover every growth strategy. Is it prudent to bring in a third party to help achieve some of growth you hope to achieve next year? Can your credit union accomplish this on its own? An outside company comes in with experience and logistical knowledge to assist a credit union in the areas of expertise they are seeking. It may be more effective to stick with what you do best and let a partner help.
- Exceed expectations. Because the auto loan and technology landscapes are constantly evolving, member expectations need to be considered. With all the online advances, members have expectations. They assume they will easily find everything they need online. Is your credit union’s online presence up to par? Remember, big banks are competing for your member’s loans as well. Prioritize the experience visitors have when visiting your credit union online. Some areas of review include: searchable and fresh content, member engagement, online auto shopping and going beyond rate to reach the member.
- Assign and distribute actions. Designate contact persons who will be responsible for maintaining the strategy. Included in this action are those within the branch who will field the online requests coming in. Make sure loan inquiries are handled promptly. Members who do business online are accustomed to a quicker response time. Any online leads should be addressed immediately.
- Launch the plan. The planning is done and you’re ready to start rolling out your strategy. Make sure marketing and messaging plans are part of the launch. If you’re with a third party, work on customized marketing strategies to support your launch. Messaging through email, text messages, social media, in branch promotions, website advertising and all other member touch points will create the buzz needed to make the launch a success.
- Review the plan and make sure everyone is working towards the goal. Periodic reviews ensure the strategy is moving along as planned. Schedule regular meetings to discuss goals and review the strategy. If it needs modification, make those changes. Working with a third party? Keep lines of communication open, they often have great ideas throughout the year for promotional activities to give your strategy a little boost where needed.
The goal for a comprehensive approach to growth in 2019 is to have a solid plan in place that will reach members. Create a fresh message, look around at what works and what doesn’t. Trying a new personalized approach that aligns with your members needs will get their attention, which is especially important as engagement and service needs are forever changing. Strive to be one step ahead.
- Credit Unions Trends Report, CUNA Mutual Group. March 2018.