By Ray Birch
KNOXVILLE, Tenn.—Knoxville TVA Employees Credit Union believes it has the answer to a problem that has been vexing credit unions for years—how to turn unprofitable indirect members into profitable ones.
In fact, it believes the solution is has developed is working so well the $3.4-billion CU is expanding the effort.
Knoxville TVA Employees CU now has eight people who run a dedicated outbound calling center that reaches out via phone to members with indirect loans. Denise O’Dell, VP of electronic services, told CUToday.info the credit union has found the best way to make indirect members full members is to have staff speak with them and not use email or direct mail.
“What we have found is indirect members respond when we speak to them, one-on-one,” said O’Dell, who acknowledged the approach is costly in employee time and salaries. “The key is getting the right people who have great interpersonal skills, and we have found they cross-sell very effectively with new indirect members.”
O’Dell said Knoxville TVA was “scared” when it first launched the program in 2014.
“It was a scary thing for us to consider,” recalled O’Dell. “We knew we had to put a lot of money toward dedicating staff members to making contact with our indirect borrowers.”
What began with just a few employees has now developed into that department of eight plus one manager who make calls and cross-sell. It is now formally called the Outbound Call Center.
Leading to Knoxville TVA Employees’ investment in the initiative was success. Too much success. The credit union was adding so many members via the indirect channel who were not using it for any other services that it had to make a move.
“Our indirect program was growing very fast, and we saw the potential problem with so many unprofitable members,” explained O’Dell. “Currently, 72% of our auto loans are in our indirect portfolio.”
Numbers Tell the Story
As CUToday.info has extensively reported, as credit unions have become much more reliant on indirect lending to drive loans and even member growth, it can lead to some misleading numbers around just how well the CU is doing. But KTVAECU now uses numbers to tell a different story, with O’Dell saying it has strong metrics in place to measure results and determine the program’s ability to expand.
“Initially, we determined—based on anticipated loan interest income—an employee in this area would need to generate $250,000 per month in new loans from this group to cover their salary and benefits,” explained O’Dell. “We began with just one employee, and applied this philosophy each time we added staff…But you need the right people in this position. We took our best cross-sellers who have good personalities that could just facilitate a good conversation with the member in a non-pressure-type environment.”
A Standalone Unit
Knoxville TVA tracks profitability of the Outbound Call Center as if it were a standalone branch, O’Dell said.
“They currently have $50,203,015 in loans and $30,580,359 in deposits,” she said, adding there is plenty of other data that reinforces the decision to establish the center.
To demonstrate with the Outbound Call Center has meant to the credit union, O’Dell outlined figures showing how indirect members have increased their relationships with the CU from 2014 – 2021:
- Online banking usage among indirect members has increased to 35% from 17.8%
- Checking accounts among indirect members have increased to 27.6% from 22.5%
- Credit cards among indirect members have increased to 12.3% from 5.2%
- Three-service relationships among indirect members increased to 41.5% from 27.6%
Dedicated Loan Processors
“In addition to the eight employees who make the calls, we also have couple loan processors who dedicate their time to the department,” O’Dell said.
The credit union does do some marketing to support its outbound calls, including sending a series of four emails to the new members that include the CU’s phone number.
“One of the biggest issues we have found with these members over the years is they don’t even know they are members of our credit union,” said O’Dell. “When these members call in they are automatically routed to our Outbound Call Center.”
Whether the call is outbound from the center or inbound from the member, staff are ready with credit history on the indirect borrowers, including credit report data that show loans and credit cards they have elsewhere.
“We have all the information we need. We know where they work…everything that was on the initial application,” explained O’Dell.
How the Calls Work
O’Dell said the outbound calls begin with an informal survey, asking members how the loan process went at the dealership and then shift to asking if the new members have any questions about the credit union. Staff then ask if the new members need help setting up automatic payments, and then move on to discussing loans they have at another financial institution and products and services the credit union offers.
“We say, ‘I see have a car loan with XYZ, and would you consider refinancing with us at a lower rate?’” said O’Dell. “We always, too, try to get checking accounts with direct deposits. We have had a lot of success there. We have also done very well cross-selling credit cards to this group.”
Another ‘Indirect’ Benefit
O’Dell said Knoxville TVA Employees has also experienced an indirect benefit from the reaching out to indirect members—world of mouth. O’Dell said the CU has been very satisfied indirect members are telling their friends and families about Knoxville TVA and, as a result, the CU has added “thousands” of additional members from these referrals.
“Staff in this center, talking with indirect members, this is all they do—five days a week, eight hours a day,” said O’Dell. “The personal phone call, it works. This is what we have found to be the answer for the problem of indirect members not doing much business with the credit union.”