NASHVILLE–Quit wasting time trying to sell a checking account to members who come to the CU through an indirect loan.
Instead, sell them another loan, recommends one credit union that has had strong success in doing just that.
In remarks to the CUNA Lending Council meeting here, Mike Long, EVP and chief credit officer with University of Wisconsin Credit Union in Madison, said UWCU has learned a number of lessons—and generated significant new business—since setting up an outbound call center in 2011 as part of an effort it calls “Extreme Lending.”
The $1.6-billion UWCU has approximately 350 auto dealer partners and a 75% loan-to-share ratio that it is working to push higher. He told other credit union lenders UWCU has had solid successes in turning single-relationship members into multi-product members, and over the past year has put considerable effort into indirect lending.
“The key is to get another loan, not a checking account, and then build on that,” said Long. “You can’t just send out a flyer on checking accounts and follow up on that in six months. You can’t just be saying ‘We want to thank you for your loan and if you’d like a checking account, come in some time.’ You want to be demonstrating to the member that if they bring another loan relationship you can save them money and time.”
UWCU has thrown all the resources it can into building consumer lending, said Long. It began with three outbound callers (it now has six), including one person dedicated to refinancings of private student loans (which he called a huge opportunity”).
Among the lessons it has learned: “There seems to be zero percent correlation between the length of the call and the success of the call,” said Long.
UWCU’s outbound calling team works regular hours and also send emails, he said.
Another lesson learned: $500 seems to be the magic number. If UWCU can show it can save the member that amount or more, it significantly boosts response.
Another key for UWCU is that it has built what the credit union calls the “Lead Refinery,” which looks at online consumer loans apps, loans approved but not taken, mortgage loans, HELOC apps, direct inquiries, and indirect in order to deliver solid leads to its outbound sales team.
“We took all those credit bureaus and brought those opportunities forward so the outbound caller wasn’t wasting their time,” he said. “(The Lead Refinery) also calculates how much the member will save over time and queues those up. That’s the good news. The bad news is we can’t get to all those leads.”
In 2013, UWCU’s outbound callers generated $30 million in loans for the credit union. In 2015 that figure rose to $46 million, and this year it is projecting $50 million in loans.
“This would have been business we wouldn’t have had a chance at,” said Long. “We knew this was probably going to be the last thing someone wanted to do that day—call someone up for another loan. So, we gave a department the leads and they call.”
Long said there is a primary focus on abandoned loan applications, especially in mortgages (he joked that mortgage lenders are “horrible at cross selling”).
“Where we have identified opportunities to save members money, we find we have a 61% response rate, and of those we close on about 54%,” said Long.
Looking to indirect specifically, Long said he is “bummed out” by how much business is left on the table. Looking at 2,537 indirect loans made by UWCU, he said the credit union identified opportunities 1,800. From those it further found 381 leads, and out of those it saw a 73% response rate, a 53% close rate, and $3 million in new loans. It currently has 699 of those loans assigned for follow up with its outbound calling group.
“Assuming the same response and close rate, UWCU left $12.3 million on the table just by not getting to members,” said Long.
Prior to concluding, Long offered this “cheap advice” to credit unions based on lessons and experiences at UWCU:
- Qualify the leads. “This is a volume business”
- Lead with loans. “We have given up on checking accounts for building relationships; we go for the loans first”
- Make the calls
- Quantify the savings. “We have found savings of $500 or more per year is the magic number for getting a call back”
- Properly staff the department. “You have to have people who like to make the calls, are good at it, and aren’t intimidated by hearing ‘no’ a couple of times per day”
- Be fearless. “We weren’t sure it was going to work, but it definitely has made a big difference”