It's finally Spring, the season for growth, renewal, fresh beginnings and new opportunities. This is also a great time to look for fresh opportunities to grow your credit union's bottom line and to cultivate existing members. There are various strategies to best accomplish this, some more tried and true than others. At the close of 2017, results from strategic planning sessions yielded several trends in the credit union industry, both opportunities and industry challenges. One of the biggest and most noteworthy differences for the upcoming year was a more focused approach on member growth and lending strategies. The incorporation of more targeted marketing with an expanded use of social media, and the rise in the credit union market's share of auto loan financing were also predicted to be important factors that would play a role in credit union growth.
Cultivate Existing Members with Targeted Marketing
In its drive to find more lucrative opportunities for growth, credit unions realized a more targeted marketing approach - smarter segmented marketing - was needed to unearth potential new members. Instead of trying to appeal to the masses, credit unions have modified their approach and turned to their established members, building on existing relationships already in-house, and marketing new products to them. With this strategy, credit unions plan to cultivate membership, both old and new, and locate potential borrowers by leveraging pre-screening tools in order to pre-qualify members for loans. From there, working with a list generated using a credit union’s unique criteria, a pool of potential members and borrowers is composed, and marketed based on their likelihood of interest and qualification.
The usage of social media as a marketing tool, with the help of a targeted list, is proving to be an increasingly effective way to reach a specific segment of the market. In 2017 it was reported that over 81% of the U.S. population had a social media profile.
This modification in strategy has been widely noted as a departure from the old way of approaching marketing. It makes the most of the tools available and capitalizes on existing member relationships. Along these lines, it is worth mentioning that Experian has recently developed what it's calling "relationship clusters," a marketing tool that can further help segment the pool of potential candidates by applying specific parameters. Of the credit unions who've used the tool, a triple-digit increase in response rate was cited, making it a potentially valuable tool for marketing. By using their information more wisely, credit unions are able to cast a smaller net, increasing the likelihood that their marketing strategies will yield better results.
Look to Auto Loans to Get Moving
Another area of growth that has been cited is the auto loan market. With the rebound in the economy over that last few years, there was simultaneous growth in new car purchases and a corresponding surge in auto loans. Millennials have reached the age where they require a car for their families and are more invested in their careers and earning more. Paired with a strong economy, loans for new autos skyrocketed. Lenders were quick to jump on the opportunity. Initially, as the good times rolled, and many loaned money with relatively lax lending requirements. But as the market has settled, financial institutions have now found themselves holding loans that are not performing as well as hoped, and have been forced to pull back on offering as many auto loans. This represents a great opportunity for credit unions, who traditionally fund more used car loans. These numbers are also on the rise; in fact, a recent study reported that Americans were predicted to buy over 35.9 million used cars in 2023. This change in the auto loan market opens the door for credit unions to capitalize on not just used auto loans, but also new car financing.
As credit unions work to cultivate new opportunities and hone their marketing plans, it's important to remember that once you've secured a new member or loan, the work doesn't stop. Its equally important to nurture your new members, and maintain the carefully cultivated relationship. Credit unions have tools and products for their members at all life stages and by providing the best-in-market member services, you can watch the relationship grow into a partnership that will blossom for a lifetime.
