Successful Indirect Lending Program's Not Just About Making Loans

LAS VEGAS – So the dealers you have indirect lending relationships with sent you new members, now what do you do with these new members after the vehicle loans are made? Some disturbing results from a survey conducted by the Credit Union Direct Lending Marketing Advisory Council among CUDL credit unions show CUs haven’t done a good enough job at capitalizing on converting new members into participating members who are aware of and use more of their credit union’s products and services than just auto loans. “It’s important that vehicle buyers who finance their car with a credit union at the dealership site and become members of that credit union, see the dealership as an extension of the credit union,” Laurie Keller, vice president, marketing LBS Financial Credit Union, Westminster, Calif. told attendees at the fifth annual Auto Lending Symposium that was sponsored by CUDL and held at the Rio Hotel and Casino June 18-20. Unfortunately, qualitative and quantitative data gathered by CUDL’s Marketing Advisory Council from more than 200 credit unions show there are misconceptions on both sides – credit unions and new members – about each other that are preventing this from happening. On the credit union side there were comments such as these: * “These new CUDL members don’t care about the credit union.” * “We don’t have the staff or resources to spend time on CUDL business.” Comments made by new members went to both extremes. On one side, some new members said: * I wouldn’t change a thing about the process. It went very smoothly and hassle free. I would definitely consider using other services from the credit union.” * Everything just kind of fell into place.I’m very please with the whole financing experience.” Others however, said: * “The credit union is literally invisible to me.my becoming a member was an accidental intersection between my car purchase and the dealer having a relationship with them and being able to market their loan rate to me.” * “My introduction to them was accidental and they haven’t really done anything to enlighten me about what products and services they have to offer.” So what’s the problem? “Credit unions need to remember that members who come to them through indirect lending relationships are members because their credit union’s indirect lending program brought them in, unlike other members who voluntarily chose to belong to the credit union. They bought the car, not the credit union, and credit unions shouldn’t assume that they care about or know anything about the credit union other than the loan they got,” Keller said. The fact is, Keller said pointedly, “new Credit Union Direct Lending members are not like a credit union’s other members, and they cannot be marketed to the same way. Credit unions can’t afford to do nothing with this group of members.” Key to marketing to this segment of members is making personal contact within 30 days of funding their loan, said Keller. Buying a car is an emotional experience, and credit unions need to capitalize on that. “Communicate your brand,” she said. “Remember, these members know nothing about your credit union. This can be done in a variety of ways such as sending them a customized `welcome’ package that includes information about the credit unions’ other products. Introduce them to your delivery channels.” The Marketing Advisory Council’s survey showed that credit unions that have dedicated personnel and other resources supporting their indirect lending marketing are the ones that have the most successful indirect lending programs. Conversely, `underachievers’ and `bottom performers’ tend to be mid-size and small credit unions that do not have the economies of scale that allow for dedicated CUDL staff. Additionally, the faster a credit union contacts a new member that came from the CUDL program, the more successful that CU will be in generating additional business. The key challenge for credit unions is allocating better resources to their CUDL efforts, said Dave Dawson, president, Database Marketing, who joined Keller in her presentation. The company was responsible for conducting the survey. Unfortunately, said Dawson, most credit unions do not have full-time personnel – marketing or other staff – dedicated to CUDL. Just as important as making personal contact with new members is building relations with dealers a CU does business through. That includes personnel face-to-face contacts and making sure the person a CU sends into the field is an experienced loan processor who understands the auto buying business and clearly understands the credit union’s expectations and policies. `”Find out what motivates each dealer and emphasize to them what your credit union’s strength is,” said Keller. She also recommended credit unions coordinate their communications with dealer offers and promotions and hold joint sales events. “Each dealer can be an advocate for your credit union,” Keller said. -