It is no secret to anyone who has been following the mortgage market that it is becoming increasingly purchase-oriented. Rising interest rates show the refinance days are over. The Mortgage Bankers Association predicted that purchases would make up 48% of originations by the end of the year, up from a mere 26% at the beginning of 2013.
However, it has also been predicted that the total number of originations will decrease, which it why it is important to capitalize on your relationships with members, prospects and referral partners to generate purchase business.
The healthy state of the purchase market creates an opportunity for credit unions to increase their return on assets and speed up revenue growth.
According to a study from the Filene Research Institute titled “Mortgages and Credit Union Performance: 1980-2011,” credit unions that offer mortgages are more profitable and grow more quickly than those that do not. The report shows that a 10% increase in mortgage share elevated credit unions’ return on assets by approximately six basis points on average since 2000.
Providing mortgage services enables credit unions to more effectively meet their members’ product demands and helps to prevent losing members to competitors. Credit unions must take an all-under-one-roof approach and serve all needs of their members, especially mortgages, or they risk becoming a second tier financial partner to their members. They will eventually lose opportunities as a mere part-time provider.
Purchasing a home is the biggest financial decision anyone can make. Being engaged in that process ensures the credit union is providing the bulk of its member’s financial products and positioning itself as the primary financial institution.
Credit unions’ main differentiator is member service. Offering members a well-rounded set of financial products and guiding them through the home-buying process only strengthens their core competency of superior service. It can also be an opportunity to cross-sell additional products to members and capture a greater share of their wallets.
Competition for purchase market dollars is fierce and credit unions cannot afford to make costly mistakes that can cause them to lose out on opportunities. As with solving any problem, the first step is awareness. Credit unions must be aware of three common marketing mistakes to avoid in order succeed in today’s purchase market.
Mistake 1: Not clearly defining the objective of the marketing plan
Credit unions that want more purchase business need to clearly define what success looks like. How many new mortgages do they want? Will they come from members, referrals from customers or referral partners? Establishing clear objectives enable credit unions to effectively evaluate marketing results and focus internal resources on achieving a specific goal.
Next Page: Not creating, not measuring
Mistake 2: Not creating a plan to match those objectives
Credit unions must be able to match the message and the frequency of that message to their objective. A targeted marketing approach intelligently uses relevant data for one-to-one marketing purposes. One-to-one marketing customizes and personalizes the message specifically to the individual’s situation, which demonstrates to a homeowner that the credit union is still actively managing their account. Blasting generic newsletters to all the Realtors you can find with the hope that one calls you is not only wishful thinking, it is wasted energy and money.
The duration or frequency of the message also plays an important role. If the objective is to generate business from past members it is necessary to reach out to them more often than on a popular holiday.
On average, people move every seven years. Routinely communicating throughout that seven-year span with helpful advice about their loan and the changing market conditions will help maintain more consistent top of mind awareness.
If your objective is to gain referrals from past members, give them something of value. Act as a counselor to your members. If a homeowner continues to be impressed with their own experience, they will refer business to friends and family.
Mistake 3: Not measuring marketing results
How do you know if your marketing efforts are meeting your objectives? Many credit unions do not know how to measure their results. They are using outdated technology that sends out marketing collateral but doesn’t measure the program’s effectiveness.
By measuring results, credit unions can focus on what is working or re-adjust the plan when something does not work. The key is a re-imagined CRM – one that is more complete and includes more sophisticated database management and an automated marketing solution.
Credit unions can track results the hard way by manually downloading data, making calculations and wasting several hours with a spreadsheet, or they can effortlessly measure results by simply pressing a button with a sophisticated system. If you do not hold marketing accountable to deliver tangible results, you may be wasting valuable marketing dollars.
The purchase market offers a lot of potential opportunity for the credit unions who care to grab it. Those capitalizing on the purchase market by having an effective marketing plan and solution will deepen member relationships, boost profitability and become their members’ primary financial institution once and for all.