Is your credit union placing enough emphasis on the value derived from business development activities? Tapping into existing relationships, from members to vendors, to nurture opportunities is often an overlooked activity. Doing it well means avoiding selling at your prospect. Instead, you must change your perspective, as you might be missing openings that will lead to greater value and spark member interest. Nothing happens until there's a product that will create revenue for the credit union that a member also craves.
Driving business involves many steps, including boosting your influence and exposure in the marketplace. The best way to start is by looking at member-valued products and services. Business development isn't about pressure sales, it's about working to build trust, along with having a keen understanding of what drives members to react.
Serving Members: Understand What They’re Looking for
Credit union members, from millennials to Gen Xers to boomers, are in different life stages and require an understanding of what is important to them. Build business by focusing on their needs. For instance, millennials have emerged from car sharing to owning and leasing, and were responsible for 35% of all new auto loans financed in 2015. This number continues to grow as their need to get into a vehicle expands. Keep in mind, they prefer leasing, and if they decide to finance, it's with longer loan terms. The average loan term in 2016 was 68 months, up from 67 months in 2015, which signals a trend toward long-term financing by this group. As auto prices climb and finances get tight, look to provide longer terms. Want greater reach? Make sure your mobile offerings, from online banking to car shopping, are up to their standards. This is a mobile-first generation.
Messaging Strategy: Go Beyond Rate
Providing an understanding into the auto loan process will help members realize a lower payment doesn't always mean savings. Help members understand the borrowing process and how rate factors in. For example, what will a specific vehicle cost the member over the life of the loan? The average car loan in 2016 was $30,621, with the monthly loan payment climbing to $506. Borrowers continue to choose leasing, which makes monthly payments lower, hovering around $412. Financing adds to the total cost of the vehicle; younger members will benefit by being aware of this before hitting the showroom. The key is to stay relevant throughout the process with regular communications and through your online auto resource. Alerts coming directly from your online marketing efforts will capture members’ interest every step of the way. Educating members through all channels is also strongly suggested as it builds loyalty and trust, and helps members avoid financial pitfalls by relying on your wisdom.
Leasing: Find Opportunities for Growth
Providing an alternative to conventional auto financing will go a long way with millennials, who continue to prefer leasing. The other generations respond to a good lease offer as well, and your dealers will appreciate the opportunity to use your lease deals to attract customers. It's a positive move all around. Depending on the region, credit unions need to review leasing to remain competitive, but can do so with an understanding of the risks. In parts of the U.S., leasing accounts for up to 70% of new vehicles financed. Having a lease program that satisfies member demand will put you on their radar and make you competitive at the point-of-sale at the dealership. If you market successfully, another lease will be coming your way in three years, or if the member decides to purchase the car, another loan can be generated. When offering a lease program, perform your due diligence with your lease partner by asking: How many lease cycles have you been through? Is the credit union responsible for the residual value at the end of the lease? How is the credit union made whole? What are the hidden fees? Are there customer support services?
These are important questions, as programs exist that eliminate all risk for credit unions, allowing the credit union and member to simply walk away, or walk into another lease. Do your homework.
Business Relationships: Opportunity Hides Out in the Open
How are you meeting the demand for building your auto loan portfolio? Indirect lending and preferred dealer networks provide volume-building potential and are the elixir your portfolios need. Both require managing and marketing attention. Most credit unions don't possess in-house staffing to take on an auto buying and leasing program, so partner with a third party that can provide immediate growth support. Doing so allows your credit union to do what it does best and leaves the rest to its partners. Make note that your credit union, through its marketing and online resources, is providing auto dealers with a portal to your members. While it's great to have vast inventory on your website from dealers, you might be best served to limit member exposure to those who work with you and send business back. Your credit union is an amazing resource for a dealership, so start leveraging your authority.
Marketing Strategies: So Many Options, Plenty of Time
What's the best approach to marketing? All of them. When it comes to serving members, review your online and in-branch marketing efforts. There is nothing wrong with a shotgun approach when you’re trying to reach members online. Consistency is key – this way, members will remember the credit union when they are in the market for their next vehicle. Keep objectives clear and always place the emphasis on how the member benefits. What's in it for them? Why would they place their hard-earned resources with you? As discussed above, education goes a long way in building loyalty and trust. Members are bombarded by many marketing messages, so be their beacon on the information highway.
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