LAS VEGAS-Two years ago, CoastHills FCU ran an auto loan promotion that grossed $20 million in loans and 650 new members. Now the challenge is to do even better with the same promotion in a much more challenging market.
To make that happen, the credit union, which won NAFCU's best promotional campaign for the year in its asset category, will be implementing some lessons it learned from the original "Deals For All Wheels" promo that in 2008 made 555% of its loan volume goal, 505% of dollar volume goal and 577% of goal for new member growth.
In a way, explained Scott Coe, SVP of marketing for CoastHills, "Deals For All Wheels" was a victim of its own success. The intent was to generate a combination of 1,000 new, used and re-financed auto loans, with a gross loan volume of $20 million and a net of 650 new members. It ran from April 1 through July 31-and therein lies lesson No. 1.
"The fourth month was overkill," Coe recalled. "The better option is to set a monetary goal and set that goal higher than imaginable...but when the goal is reached, the promotion has to stop."
Coe said the positives to learn from the 2008 promotion include the value of outdoor advertising, which he said is rising as fewer people watch television or listen to the radio. CoastHills blanketed California's Santa Barbara and San Luis Obispo counties with billboards and ads on the backs of buses. In addition, there were multiple graphics in branches, including posters and mats on the floors, not to mention 30-second TV spots that were looped on flat screens. "We gave people a reason to go out and buy cars," he said. We essentially took over the marketplace with this offer."
CoastHills partnered with CUDL for the indirect lending component. Coe said this was successful because-thanks to the heavy ad campaign-members and non-members knew to ask for "the CoastHills rate." The rate in the 2008 promo was 3.99% for those with the best credit, which was not the initial target. Coe said it originally was supposed to be 4.99%, but on Jan. 22, 2008, the Federal Reserve instituted an emergency rate drop of 75 basis points, forcing the credit union to drop its flagship rate by a full point.
As CoastHills readies to launch a new auto loan promotion this summer, its marketplace is very different from two years ago. Home values have plummeted, and the local unemployment rate is 15%. And, there is the interest rate factor.
"A rate of 3.99% might not generate the name 'wow' as it did in 2008 because rates are low now," Coe assessed. "It is interesting to try to set goals for numbers of loans or dollar volume in today's marketplace because we don't know what demand will be. We haven't set goals yet for the promotion, but we have budgeted for $30 million in auto loans for the year."
Coe's advice for a successful auto loan campaign? Timing is important, because "all elements must go together at the same time so members cannot help but notice."
"Members, non-members, staff and dealers all have to buy in for a promotion to be successful," he counseled. "Pull out all the stops. Make it fully integrated, drive it with a 'Wow!' rate, and design it to be easy to understand. Most car loan promos are pretty straightforward, but sometimes they can get too creative for their own good, such as a 90-days no-payment feature."
After the promotion is over, Coe said CUs still face a challenge to diversify. Thanks to the success of Deals For All Wheels, "People think of CoastHills as a place to get an auto loan, but we also are putting our efforts into small business lending. We are looking to strengthen and solidify our relationship with our members."
