CU: Dupont Community
Category: Credit Cards
When DuPont Community Credit Union decided it was time to goose its credit card portfolio, not only did the credit union boost outstanding balances by $15 million in just 60 days, but one year later, the program is self-sustaining and credit quality is strong.
"Our need was the creation of additional loan dollars, and we felt that we were out of the market by not having a platinum card," said Suzie Cook, VP-marketing at the $507-million CU.
Working with PSCU Financial Services' AdvisorsPlus, the credit union introduced its Visa Platinum card with a 2.99% interest rate for the life of the balance, 1,000 rewards points with the first use, and one point per $1 spent thereafter.
To promote the new card, DuPont Community worked with Harland to create a direct mail campaign, and relied on PSB The Marketing Super Source to put together a catchy slogan: "A credit card promotion so great that you will think we have lost our marbles: 2.99% APR!"
To make the program work required a collaborative, inter-departmental effort spearheaded by the consumer loan manager, the vice president of marketing and the vice president of lending.
DCCU was more than pleased with the results, issuing 882 new cards and 1,262 card upgrades. The average card balance jumped from $1,777 to $2,977, an increase of 68%. Response rates were 8.77% for new account acquisition and 21% for upgrades.
After adding $15 million to credit card balances during the two-month campaign, the CU posted an additional $1.5 million in the following months.
After five months, the campaign showed a net profit of more than $47,000, with new accounts generating $17,254 and upgrades bringing in $34,853. After debiting $6,000 for marketing materials, the CU posted a net profit of $47,871.
"It's been about a year now, and we still haven't seen any decrease, so it is sustaining itself right now," Cook noted. "We could repeat the promotion, but since we aren't introducing the platinum card, I wouldn't expect it to be quite as strong as a response. Plus, we are 103% loaned out right now, so we probably won't do it again just now."
One of the things the credit union would do differently, Cook said, would be to eliminate the second rate offering. "We wanted to include as many people as we could, so in addition to the 2.99% rate, we also had an 8.99% alternative," she explained. "But that just made it more confusing for staff and members alike."
Lessons Learned
Although DuPont is very pleased with how the promotion did and how the portfolio continues to perform, there are some things it learned from the experience that it would do differently-and that can be applied to other projects in the future.
"We're always looking at ways to grow the portfolio and make it the best deal for our members," Cook offered. "When we did this, we allowed cash advances at 2.99% paid in full, and we would take that out because we were seeing people take the cash advance and pay off a car loan they had with us, so they were just moving that balance from one product to another."
The credit union also learned some important internal processes-related lessons, as well. "Our volume was up more than expected, so in our post-game meeting, we discussed how some of that affected us internally," she explained. "Like making sure the tellers know that if an application comes through the drive-through, they know exactly which department that application goes to."
But the most valuable lesson was the strength of the collaborative effort, working across several departments and bringing in outside expertise to make the most of the program.
"We have a lot of irons in the fire right now," Cook said. "We saw how well we can do when we all work together and bring in expertise from the outside to help us maximze our efforts. That is something we can apply to other projects we're working on right now."
