PHOENIX — Ask a simple question; get a phenomenal response.
Desert Schools FCU took that approach, and watched its auto lending soar by 85%.
It all started when the $3.8 billion CU was trying to figure out how to boost its auto lending during the hot-and-heavy summer auto lending season. "Some people said all car buyers care about is the rate, while others said all buyers care about is the payment," said Cathy Graham, VP of marketing. "We did not know, so we decided to do a focus group."
In-person focus groups can take a long time to put together and can be very expensive, Graham noted. So Desert Schools did an online focus group, which she said comes together faster and is easier for people to participate.
And instead of guessing what members wanted, the focus group revealed that having a competitive rate is key, but if consumers can get something else in addition to that great rate, "that can really put you over the top," said Graham.
"People do not want cash back if it is funded by a higher rate. They want to know what the details are upfront — they want to know the rate first," she advised.
If the interest rate is not stated right away, they assume it is bad, Graham continued.
"Consumers are skeptical. They want to know what the catch is. Our rate was not the drop-dead lowest, but we were upfront so people really felt comfortable."
Applications Spike
Desert Schools constructed an auto refi program that targeted both members and non-members through out-bound calls, pre-approval lists, and general advertising and marketing. The program offered a 1% cash back incentive, up to $500, and began in June 2012.
Television and radio ads first ran on a Sunday, Graham recalled, and on that Monday the CU's application volume "spiked."
"You really want to see that as a marketer," she said with a laugh.
The program was promoted June to September 2012, when the marketing portion was halted. From that point forward, Graham said there have been periods of time DSFCU has actively promoted the program and other times when it has not done any promotion.
And the difference has been clear: In the last two years, during non-promoting months the CU's auto lending average has been $7 million, while in the months it is promoting the auto refi program its average has been $14 million.
In August 2014 — a promotional month — DSFCU booked $18 million in auto loans.
Since the program's inception, Desert Schools has seen an 85% increase in volume compared to 2011. The CU has given back more than $2.37 million in incentive bonuses, and has signed more than $237 million in new auto refinancing plans since the program began in 2012. "Once we received the insight from our focus group and realized how we had to position the offer, we have not made one change," Graham reported. "We have run the exact same offer for two years."
Since March 2013, after several months being off, DSFCU has been consistently promoting the auto refi program. Graham said the CU's management team had not seen any other lender offer cash back prior to its program, but there are "lots of lenders offering it now."
And she sees no reason to discontinue the program. "We keep saying if we start to see diminishing returns with our advertising dollars we will stop, but we have not seen that."
