WALNUT CREEK, Calif. -
Though the CU did have to make good on its guarantee-having to pay off just twice in 50 days-it was worth the 697% ROI the program boasts.
The CU offered its members a bounty of $100, to be credited to the person's savings account, if its "loan-by-phone" telephone call center could not make a decision within six minutes of initiation. First mortgage applications were excluded.
According to Noelle Fischer-Herbert, the CU's vice president of corporate development, the two misfires occurred only because the credit bureau was down at the time the applications ran.
"We periodically put our efficiency in front of our members in a way they understand," she said. "In this case, there is a challenge and we pay them. We tell them we are efficient, and we won't take much of their time."
Prior to launching the promotion, Fischer-Herbert said management asked the loan staff if 99.9% of applications could be processed in six minutes. The service reps said the average time was significantly less, making six minutes a reasonable goal.
"Our loan staff has timers on their work stations," she explained. "The six minutes started when the loan application is completed and we had all the information we needed. Some of the members had stopwatches, too. They started their clocks at the same time our loan staff did."
The guarantee period ran for the first two months of this year. Fischer-Herbert said Pacific Service did not advertise on television or radio. Instead, the challenge was put forth on the CU's website, on post card mailings, and was added to all lending promotions scheduled for that time.
The CU distributed 20,000 direct mailers touting the six-minute guarantee, and 381 members took them up on the challenge. The results: $9.4 million in loans versus $200 paid out for an ROI of 697% and a breakeven of 1.5 months. Not to mention a wealth of good feelings.
"Our members loved, loved, loved it," Fischer-Herbert declared. "We do a member service survey on a monthly basis. During that period, we had several responses from members that they couldn't believe how fast the process was. Some said, 'It didn't get anywhere near six minutes.'"
For the previous two-month period, Nov. 1 to Dec. 31, 2006, Pacific Service's loan volume was 1,274 loans for a total of $26.8 million. There was no promotion running during that time. During the Jan. 1 to Feb. 28 promotional period, PSCU generated a total of 1,438 accounts for a total loan volume of $33.4 million. Of these, the credit union said 381 accounts and $9.4 million were tracked directly to the six-minute guarantee effort. The overall volume increase between the two periods was $7.4 million.
Pacific Service is a $1-billion CU serving 70,000 members in the San Francisco Bay Area and is one of the nation's top 100 credit unions by asset size.
