SAN ANTONIO—Credit unions need to move away from “seasonal” loan marketing in favor of omni-channel, ongoing promotion of their lending products.
The move, says Harland Clarke, will help credit unions better meet consumers’ lending needs when they arise.
“Improving loan to share ratios is a constant challenge for many credit unions given increased pressure from traditional and non-traditional competitors,” explained Scott Hansen, chief marketing and strategy officer at Harland Clarke. “The challenge is compounded by flat or declining marketing budgets and skyrocketing service level expectations from members thanks in part to the ‘Amazon Effect.’”
Hansen said that based on Harland Clarke’s experience with clients, only 1.5% of members are shopping for a loan in any given week.
“Yet traditional, periodic loan promotions are typically scheduled for only several times per year, meaning the vast majority of members never receive an offer, having to seek out lenders on their own,” he said. “Discrete, periodic campaigns are out of synch with member demand patterns and their preferences for how to engage with their primary financial institution.”
Hansen stressed that CUs can increase the ROI of loan marketing programs, while driving down acquisition cost per loan, when member expectations are met or exceeded by delivering the right loan offers precisely when members need them, through members’ preferred communication channel.
“In other words, shifting to perpetual loan marketing programs that are running all the time, delivered through a variety of complimentary channels—print, email, contact center, Internet banking and mobile banking—with offers that resonate with each member.”
Approaches to Consider
The most successful credit unions, Hansen said, are shifting to this new approach for loan acquisition programs, outlining several approaches:
- Immediacy Program: “Most experts agree that 75% of all cross-selling to a new member occurs within the first 90 days,” said Hansen. “Implementing an onboarding program with 30-60-90-day outreach using direct mail, email and outbound contact center calls ensures success for a welcome-engage-grow strategy that optimizes cross-selling of auto loans, mortgages, credit cards, personal loans and deposits. The credit unions we work with are experiencing 7%-10% ongoing response rates using omni-channel onboarding programs.”
- Triggered Program: Knowing that only 1.5% of members are seeking loans each week, Hansen said that an important question is, “Who are they? Credit unions cannot afford to market to all members every week—and those not in the market for a loan would quickly tire of their efforts. Constantly monitoring real-time credit bureau data allows credit unions to identify members who meet underwriting criteria the moment a credit inquiry takes place in their name. The credit union can then respond proactively. Credit unions using our ShopperAlert program are able to trigger a call from the contact center, deploy an email and send a mailer that are consistently achieving ongoing response rates in excess of 12.5%.”
- Recapture Program: When a competitor secures the loan from the credit union’s member, what’s the credit union to do, said Hansen. “By accessing credit bureau data, and identifying members with auto and mortgage loans at competing institutions, the opportunity exists to target the member with highly personalized offers that can significantly lower their monthly payments. We have seen clients that use our RefiGenius program experience 5% ongoing response rates through direct mail, email and outbound contact center engagement.”
- Persistent Pre-approval Program: “Credit unions must be delivering offers precisely when the member needs a loan,” Hansen said. “That means offers in front of the member every day, every week, every month, all year long. Constantly screening credit-worthy members for pre-approved auto, credit card, and personal loan offers across all three bureaus with integration to the credit union’s Internet banking and mobile banking solutions means that offers are frequently refreshed and always available for the member. And, with direct mail, email and contact center follow-up, results are even better. Clients that use our LoanEngine program routinely see more than 5% of all offers accepted, with 80% conversion to booked loans, and an average cost of acquisition of $60 or less.”
Hansen said that for credit unions to be high growth lenders in today’s digital economy, they must ensure that loan offers are there when members need them—"for every type of loan they may need, delivered across multiple communication channels, in near real-time.”