HOLLYWOOD, Fla. - A pilot program aimed at addressing one of the most vexing issues in credit unions–turning “indirect” members into longer-term relationships, has started to show promising results.
The pilot program was created by CUNA Mutual Group as a means of doing something about so-called “one-and-done” members whose only connection to the credit union is a loan payment. CUNA Mutual has now published a white paper, titled “Developing Members from Indirect Borrowers: Lessons Learned,” that shares the early lessons from the 13 credit unions that piloted the four-month project. The results were revealed during CUNA Mutual’s Discovery Conference here.
One key: a dedicated call center staffed with trained, full-time employees. “The pilot identified ways credit unions could engage indirect borrowers by introducing other credit-related products to meet their needs and save them money,” explained Heather Thiltgen, VP-consumer programs with CUNA Mutual.
The most successful product offered indirect borrowers in the pilot was a line of credit, which had a 28% sales rate and an average size of $2,098. Credit cards netted a 17% sales rate with an average $5,005 line, and and auto refinances had a 15% rate with an average line of $16,140.
Among the credit unions participating in the pilot, Austin, Texas-based Amplify Credit Union, has been deriving 50% of its new membership through indirect borrowers.
“The most interesting outcome for us was that call center personnel who weren’t our employees were just as effective as our employees,” said Pierre Cardenas, SVP-retail with the $465-million Amplify. “Our members responded very positively, which indicates outsourcing this in the future might be worth considering.”
CUNA Mutual’s Thiltgen recommended that when it comes to indirect members, credit unions consider:
* Dedicating resources to make the program successful.
* Verifying regulatory compliance surrounding use of credit data.
* Obtaining necessary technology/systems support.
* Tracking results.
* Pricing for the relationship.
* Remembering that auto loans are seasonal and considering other outbound opportunities such as new-member onboarding programs.
“The pilot produced some interesting results on what appealed to indirect borrowers, such as, the success of an auto-loan closing was best when the member saved at least $20 a month,” said Thiltgen. “Also, those with higher credit scores were least likely to accept card offers, and line of credit offers were the most successful, which might be related to the sense of security it creates ‘just in case’ something happens.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
