Act Now And Get Those End-Of-Year Loan Dollars

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Is there a Jag in your member's garage this holiday season?

Looking for an end-of-the-year promotion to exceed your loan growth goals? Consider an auto loan or HELOC promotion focused on affluent households. Look at these consumer trends, according to USA Today:

* From 1999 to 2003, luxury vehicle sales have exceeded overall industry sales in four out of five years.

* From 1999 to 2003, all vehicle sales growth was 1.6%, while luxury brand growth was 7.0%. The most popular brand was Jaguar with 19.2% growth.

* Third-quarter average spending on a luxury car from 1999-2003 was $35,000.

* Last year the five luxury car makers spent $200 million on ads, most of which occurred from Nov. 22 to Jan. 3.

Given these, it may be a great time to grab some end-of-year loan dollars. But before you do, consider the target market carefully.

Three-dimensional targeting looks at acquisition, retention and new members: 40% of the success of your event depends on the target market. Increase your chance of success by focusing on three dimensions within your market. Assuming you have taken the first step of defining the target market in terms of demographics or lifestage, look at your entire membership for additional opportunities across these three attributes.

Current member acquisition: target this group based on the lack of an auto loan as well as their mix of active services. Consider an average age of 40 with household incomes over $70,000.

Current member retention: this group is the easiest to sell but is often overlooked because it's assumed the member will continue to bring his/her lending relationship to the credit union. This segment is comprised of members who already have auto loans financed with you. The segmentation of this group can include current month of loan (look at those in month 28-32), remaining balance (less than $5,000) plus age and household income. Offer this group an easy re-approval or the opportunity to put a third dream car in their garage.

New member: For those with a community charter, look for members that meet your age and income criteria as well as a close proximity (1 mile or less) to your branches. Let this segment know you are close and that you offer instant approval and personal service.

Make the offer compelling: the offer is the next 40% of your event's success. Getting the member (or prospective member) to respond is part science, part art. The science of response starts with a good product offer. Be careful at this stage not to rush to rate discounts and giveaways. Often these erode margins and do not drive one to respond, and they do not create sustainable value for the credit union.

Ask yourself questions such as: Why would I purchase this product? What's the competition doing? How can I add value to the offer without adding additional overhead? Thinking critically about the product will give your promotion more validity, therefore giving the member compelling reasons to respond.

Some recent offers I have seen include delayed payments and the ability to skip payments for a specified number of times over the life of the loan.

The art of the offer can include a co-op tie-in with a local luxury auto dealer. Perhaps this offer includes a private invitation-only event for a complimentary test drive. The idea is to make an offer that involves the member in a personal way that goes beyond the ordinary "here's our rate and it's great" promotion.

Make the offer omni-present and creative.

If you're keeping track, we have 20% remaining to increase the chances of our event's success. Now it's time for the creative part of the offer. The creative concept will depend on your market and brand position. For channel coverage, focus all of your outgoing messages around the promotion's central theme, including direct mail, email, web, print, outdoor, radio, TV, newsletters, inserts, point-of-sale and the all-powerful direct selling.

While you may choose to not broaden the message across all media, you should make sure your message is being carried to your members in more than three channels. Frequency is also important. Make sure your target market sees your offer more than once.

Any event works best when a combination of channels and frequency is used. This can range from multiple direct mail exposures to a mix of e-mail, direct mail, point of sale, inserts, etc. It's important not to do a "cut and run" with a single exposure.

Tony Rizzo is president of Pinpoint Direct Marketing in Minnesota, which focuses on the retention and acquisition of lifelong credit union members through direct mail, e-mail and data analysis.

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