MADISON, Wis.-CUNA Mutual Group is offering credit unions a turnkey, prescreen program to recapture auto loans that is averaging 8% loan growth for the more 400 CUs on the system.
Stephanie Christensen, loan generation marketing specialist, said ROI studies show that for every dollar a credit union spends on the company's Auto Loan Recapture program, it sees on average $5 in interest. "It's turnkey, providing the prescreen, support-for letter and marketing development, and the direct mailing," said Christensen. "We also have gained a great deal of insight into what works and what does not by partnering with a large number of credit unions on this for years."
CUNA Mutual Group has offered the program since 2002 and recently began monitoring the ROI and promoting the initiative more heavily, a result of the recession. "Credit unions now, more than ever, want to know what is the benefit they will receive from the money they spend," Christensen said.
According to Christensen, credit unions' costs for the program are much lower than what they would pay running a loan recapture effort themselves, as the result of the lower marketing material and mailing costs CUNA Mutual incurs due to scale, and the higher prices CUs pay for credit prescreens on their own. CUNA Mutual Group's charges vary based on the size of the credit union; the company did not disclose pricing.
High Accuracy In Targeting
In addition to being able to reach more members cost-effectively, what makes the program effective, Christensen said, is highly accurate targeting of members who will pay attention to the offer and are qualified to make the switch. "Prescreening is very important in an auto loan recapture program. It can be very complex. Think about all of the things that define credit worthiness. You have three credit scores, and so many factors can influence your final number," she explained. "If you do not know the right credit attributes to choose you can pay a lot to the credit bureaus and get little in return. We know what to look for, we've been doing this for years."
CUNA Mutual Group has partnered with SerTech since 2002 on the program. Based in Dallas, SerTech provides a variety of credit-related services to credit unions.
Deb McLean, VP of marketing and business development for the $81-million Carolina Postal CU in Charlotte, N.C., has been using CUNA Mutual Group's program for several years and reported that auto loan volume is "steady" in 2011 thanks to the recapture initiative. She agreed that going to the credit bureau directly to run a prescreen loan recapture effort can be a "big pain" for a credit union to do on its own, and do well.
"The credit bureaus are not set up to work with marketers. They make it as hard as possible. You have to preplan for months, and the costs are astronomical. You then get the data in and unless you have an in-house person who can really crunch the numbers, it is challenging."
'On Cruise Control'
Mike Smith, VP of marketing and business development for the $275-million Community Resource CU in Baytown, Texas, said he has also used the program for the last few years, and for more than just auto loans. CUNA Mutual Group offers the recapture program for credit cards, signature loans, mortgages, and HELOCs. Signature loans are up 13% at CRCU this year.
"I had been doing this myself for 14 years and I can tell you there is a big difference in results and the amount of work you put in. It saves me time, money, and stress," said Smith, who said overall loan growth at his CU was 6% last year and 3% this year. "I believe the program has saved us from negative loan growth in 2011."
Smith calls the program the "campaign on cruise control," because he just updates his rates, adjusts the direct mail letter, and CUNA Mutual Group also relays the ROI. "I can tell you that doing it yourself with the credit bureaus is much too hard to do on a regular basis. I don't think you can do this kind of program on your own more than quarterly. Now we run it whenever we need it."
