Move Members from the Showroom to Your Lobby

CUs concede it’s a challenge to turn ‘indirect’ members into PFI members.

April 24, 2013
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Follow-up strategies

You can’t overemphasize the importance of consistent follow-up contacts in the onboarding process, says Keenan Bender, director of consumer lending for $850 million asset Meritrust Credit Union in Wichita, Kan.

Lori Gallegos, executive vice president and chief operating officer of $400 million asset First Credit Union in Chandler, Ariz., agrees. “We started an outbound calling program in late 2011 to tell people that we appreciate the loan and introduce them to other products and services,” she says.

First Credit Union introduced a new approach— marketing additional products and services based on the account level rather than the product level, Gallegos adds. Rather than sending the same message to all new members, the credit union markets differently to new members who’ve arrived through the indirect channel.

The combination of outbound calling and customized marketing approaches has improved the credit union’s average products per member from 2.5 to 3.2. That’s still below the 4.1 average for all members, but reflects significant progress toward the credit union’s goal of five products per member, Gallegos says.

Meritrust’s onboarding program improved after the credit union refined its outbound calling strategies, according to Bender.

Meritrust started onboarding campaigns three times in the past few years with little success, according to Bender. The marketing department handled earlier attempts entirely on its own. The newest campaign, however, relies on the strengths of a combined team from sales, member services, and marketing.

“Historically, sales has been a four-letter word in credit unions because we’ve been so focused on service and transactions,” Bender says.

But the changing face of financial services means that staff who have sales skills are more valuable than ever for credit unions, especially when it comes to onboarding members who’ve joined via the indirect channel.

Sonya Baer, a 15-year veteran at Meritrust, leads a team of four employees who call all new “indirect” members. Armed with data from the indirect loan application, Baer’s team welcomes the new credit union members, explores their other product and service needs, and helps them with additional loan or credit card applications.

The program has doubled the effectiveness of their onboarding efforts, and every fifth follow-up call has resulted in a new checking account, Bender says. This is impressive because people generally are reluctant to change checking accounts due to the automated bill payments they’ve set up.

“The opportunity is ripe for the picking,” he says. “Most people want someone to call them and ask about any questions they might have.”

People making these calls should have the proper skill set along with extensive knowledge of sales and member services, Bender adds. Employees who don’t possess these skills aren’t likely to fare as well.

The only cost of such a follow-up program is personnel, Bender says. The more staff he can assign to the program, the more he can grow the credit union’s membership base.

Automatic loan payments

Ent Federal Credit Union, Colorado Springs, Colo., uses follow-up calls to set up new members with automatic payments.

Simplifying the payment process is an important factor in future member relationships and in helping members stay current on their payments, says Bill Vogeney, executive vice president and chief lending officer for the $3.7 billion asset credit union: “A loan closed correctly is half collected.”

Ent Federal’s loan losses on auto loans (indirect and direct) are only 29 basis points, which is indicative of the credit union’s dedication to consistent underwriting. That consistency is the key to maintaining good relationships with dealers.

“Nothing gets a dealer more upset than not knowing which way the wind is blowing,” says Vogeney. “Many credit unions had to pull back dramatically with their credit policies in 2009, making it that much more difficult to rebuild business when the economy started to recover.

“If the dealers’ finance managers have been burned once, they’ll wait until the credit union starts doing silly stuff to regain their business, which restarts the entire bad cycle.”

Other credit unions are having onboarding success by offering incentives, such as a $25 fuel card to come into the branch to discuss products and services, according to CU Direct Corp.’s Boutelle. But he suggests you keep your incentives modest and offer them only to small groups of members at the outset.

Claire Ippoliti, chief lending officer for $410 million asset People First Federal Credit Union, Allentown, Pa., considers the first 60 days of the onboarding process the time to build and strengthen personal relationships.

“We want to distinguish ourselves,” she explains. “We don’t want to be seen as just another financial institution offering products and services.”

Ippoliti determined it was too costly and time consuming to have different approaches for indirect members and other new members, so marketing efforts are the same for both groups.

The credit union follows up the approval of indirect loans with a phone call and a welcome gift. It also uses demographic information from its auto loan applications to determine which follow-up postcard message to send new members.

The credit union sends new members a survey, which they can complete and turn in at the branch to receive another small promotional item. After the initial 60-day relationship building period, the credit union targets new members with specific products and services designed for their needs.

Using this approach, the credit union has seen a 4.2% increase in services per new-member household, according to Ippoliti.

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