6 Methods That are Helping Lending Institutions Across the Country Drive More Loan Volume
November 2015

Not long ago, in the midst of a long conversation that could’ve taken us down a woe-is-me path about today’s difficult lending environment, a credit union leader sat back and smiled.

“We can sit back here and crunch numbers all day,” he said. “But the fun stuff is figuring out how to frame loan promotions so they’ll strike a chord with people.”

Yes, margins continue to be challenging. Yes, many credit unions continue to face a disconnect with those young adults entering their prime borrowing years, which makes marketing to existing members — many of whom are on the back end of their major life purchases — all the more difficult.

But opportunities not only exist, they are growing — exponentially, in some markets. It’s just that now you might have to be the one knocking.

Consider these six methods that’ve proven effective for financial institutions in the recovering economy, and adapt them to meet your institution’s mission and local circumstances:

1. Provide immediate gratification. This isn’t a novel approach, but putting cash back into members’ pockets sells. The key is striking with a scale and impact that’ll capture the public’s fancy and make your investment in the promotion worthwhile. Keep the offer simple, and offer instant returns. Sensing a receptive market, one credit union is running a big campaign touting 1% cash back on mortgage transfers. The progressive nature of the payback means they’ll attract not just people with smaller mortgages for whom the extra $1,000 will make a sizable impact on household money flow, but also well-off folks who can make that cheap money work better for them through investments.

2. Find niches and exploit them. One mortgage broker with an innate understanding of his home state recognized that many homeowners too fresh into their residences to take advantage of the refinancing binge of the past few years had now built enough equity to make the leap worthwhile. With a sliding scale of target numbers in mind, he conducted data analysis of every existing mortgage in his county and surrounding areas. An inexpensive direct mail campaign yielded hundreds of hits on a 10,000-piece send. Another example: A credit union with a comprehensive, well-refined data analysis platform has made money hand over fist through the efforts of its streamlined, determined outbound calling team pitching individual and bundled loans. In both cases, modest investments in personnel and marketing — underpinned by a commitment to data analysis — has paid enormous dividends.

3. Build referral relationships. As a greater number of credit unions have transitioned to multiple-SEG arrangements or even community charters in recent years, they’ve placed more emphasis on strategic business development. Align your credit union with employers, professional associations, and community groups and cater your promotions and marketing efforts to those audiences. Make these offers inclusive, so that individuals within these groups can earn rewards for bringing other people on board. Never overlook the power of strong relationships with area real estate professionals and car dealers. And don’t leave your own staff and members out of this payback loop: They can be your strongest advocates and recruiters.

4. Go green. Being environmentally conscious isn’t just a public relations gambit anymore. It can mean big business. More consumers have been swayed to embrace the benefits of sustainability — some because they recognize the benefits to the environment, many more because they recognize the benefit to their checkbooks. But sticker shock can be a deal-breaker even for all but the most motivated of buyers, whether they’re looking at major infrastructure improvements such as a solar power system, or incremental purchases such as energy-efficient appliances. Develop lending strategies that help members bridge the gap between investment and cost savings through efficiency.

5. Appeal to items of local significance. Loans don’t always have to be big to be meaningful. Consider credit unions in the northeast who offer seasonal fuel oil loans that help area residents balance their wintertime heating bills over the full year. Or an Oklahoma credit union in Tornado Alley that provided specialty loans to help people buy shelters. Or financial institutions across the country that have recognized the growing number of people willing to spend extravagantly on their bicycles — some of which cost upwards of $5,000, not to mention the costly accessories they’ll likely add on. These loans will benefit the members who take advantage of them, and will register with people who will appreciate your creativity and put you on their radar for future loans.

6. Expand the market. Limiting your target market to people with outstanding credit will limit your profitability. You can find some diamonds in the rough, because many otherwise reliable borrowers took a hit during the recession due to circumstances that were out of their control. Among that often forgotten segment are people who will respond well to financial education and coaching that will dramatically improve their creditworthiness. Help these people help themselves and they’ll pay you back with their loyalty.

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