CUJ Snapshot: What is Credit Union Direct Lending (CUDL) doing to help credit unions better retain members gained through indirect loans at the auto dealership?
Asked of attendees at CUDL's Annual Meeting In Las Vegas
Kathleen Brunton, curriculum developer, CUDL, Rancho Cucamonga, Calif.
We tell credit unions to contact those new members right away. If they wait, it is a done deal. Some credit unions have dedicated staff for indirect members. They call to ask how the transaction was with the dealer, then they discuss cross-selling opportunities such as GAP insurance. The important issue: is the member proximate to the branch-within three miles or so? If the member is close, the credit union should try to cross-sell checking and savings accounts and send loan rates. For non-proximate members, send pre-approved loan offers. The credit union already has the credit report, so it can see which offers are appropriate.
The three keys are: contact new members right away, divide by proximate versus non-proximate, and train the employees. The staff must know what to look for when the new members come in to the branch or call. Also, the staff has to know they need to do so, and one way is for credit unions to incentivize the staff. It doesn't have to be money; an incentive could be a certificate.
Another thing credit unions can do is supply dealerships with membership applications. Dealers that work with CUDL have good opinions of credit unions, so that is a good combination. Credit unions must visit their dealer partners regularly. Keeping up relationships with the dealers is a big key.
Tony Boutelle, president, CUDL, Rancho Cucamonga, Calif.
I think there needs to be better expectations and perspective on what is success. Credit unions are never going to get 50% of indirect members to become active members. I would say 10% to 15% is realistic success; although some of our members report larger percentages.
In the indirect business, the credit union is looking to make the loan first; make a member second. How to get the indirect member to use other services? That is a challenging prospect because the person went to the dealer to buy a car, not join a credit union. Financing is a commodity.
Credit unions should focus on the indirect members within a three-to-five-mile radius of their branches. Focus on those members and try to get them into checking accounts. Offer promotions to get members into their branches-perhaps give away a gas card.
We are building cross-selling features into our decision engine. When the MSR or a third-party company follows up, the package shows how the member can save money by refinancing other loans. We want to help credit unions be more successful in cross-selling. Any financial institution involved in indirect lending faces these challenges.
Every bank is trying to cross-sell, and they don't get large numbers. Credit unions have a great value proposition to offer, but some think one piece of mail will get a new member to sign up. Credit unions do not promote themselves enough. They need to give the story of the credit union and what it has to offer.