ST. LOUIS-Anheuser-Busch Employees CU more than doubled its projections for an auto-loan refinance campaign by outsourcing the telemarketing.
The two-month effort netted over $350,000 in auto-loan refis, more than twice what the CU normally generates when its loan recapture effort is handled internally, explained Emmerson Smith, VP of branch operations. "We've had our own loan staff make the calls in the past. But it was getting to the point where that was costing us almost as much to do it as the loans we brought in."
Costs were rising due to the time it was taking staff to connect with members targeted for a refinance. The most recent effort preapproved a segment of ABECU members who had good credit and an auto loan outside the CU. They were notified of the preapproval by mail.
Smith turned to Lending Solutions, Inc. (LSI), which already was handing the $1.2-billion CU's 24/7 call center duties, to reach out to members with a 5.75% APR, 60-month deal. That made the decision to send the work outside a lot easier, Smith said. "They have experience in working with our members and knowing how to sell our products. They also can make the calls on weekends or after business hours, which is usually the best time to reach people." Since the promotion, ABECU has cut its 60-month used rate to 4.99%.
The arrangement also netted the credit union more than 20 ancillary product sales from the LSI team, Smith added. Moreover, it freed up ABECU to handle the large number of loan approvals coming in. "It was an excellent partnership," Smith said. "Not only was it more cost-effective and productive, but my staff now had the time they needed to close each deal and not keep members waiting."
Cost for the outsourcing came with a $1,000 set up-fee to load the member targets into the outbound team's automated dialing system, and to customize loan application screens for the call center team. ABECU then paid an hourly rate based on the time each call center representative spent on the effort. Jeff Frantz, SVP at the Elgin, Ill.-based LSI, said that ended up costing the CU about $110 per booked loan.
Frantz said LSI is highly effective at outbound calling due his teams' focus and skill. "Anhueser-Busch's loan staff probably wears 10 different hats, which makes it hard to be effective at outbound calling. Our people are focused on one thing-making calls. And we are not a telemarketing company. We are using loan officers who understand the product. They know how to coach and talk to members so they understand the advantages of bringing their loan over to the credit union."
Each member targeted for the refi had a higher rate than the credit union's offer - and ABECU knew that - which made it easier to get the loans, Smith said. Based on the campaign's results, Smith expects that ABECU will outsource loan telemarketing again. However, during the past effort, Smith said that 60% of the loans were for used cars, further emphasizing that this year the auto loan market could remain unpredictable.
"My prediction is that new car, and overall auto loan volume will come back a bit in April and May. We will get aggressive in marketing to our members so they understand that we are their best option."
