NORTH HIGHLANDS, Calif. — SAFE Credit Union has been doing indirect lending for 14 years and like many credit union indirect lenders, it realized early on that members that are signed up at the local auto dealer are not typical members.
Members that come from the indirect channel are typically a single-service household where the service is that auto loan. They may have a $5 minimum share account to establish membership, but these aren't exactly members that call the credit union their primary financial institution.
The $1.2 billion SAFE had experienced difficulty transitioning single-service members obtained through Credit Union Direct Lending into multiple account relationships. Its previous attempts to cross-sell additional accounts through direct mail programs produced limited success. In an effort to create a stronger relationship with these members, SAFE recently deployed an indirect loan cross-selling solution from Better Branches, a CUSO specializing in front- and back-office workflow solutions, and outbound sales provider SegmentOne.
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The technology has provided a quick, turnkey solution that takes a data feed from an indirect lending interface, analyzes the information, and develops credit offers that are unique to each member. Borrowers are contacted within 30 days of acquiring a loan and are cross-sold additional products and services. "It's been an industry-wide challenge to cross-sell through indirect lending relationships, particularly when they were not members when they came to SAFE," explained Dave Roughton, the CU's executive vice president and chief operating officer. "We're looking at the consumer products on their credit report and identifying where we can save those new members money by refinancing consumer and equity products. We are not looking to extend terms–it's like term to like term." SAFE has only been operating the application in conjunction with its call center since June 2006, but has already realized a 20%-30% sell-through rate with those indirect relationships, Roughton said. The first aspect of the initial conversation with the member is a service call since the person is a new member. The credit union wants to make sure that the member is satisfied with their new vehicle or loan and inform them that their first payment is coming up. Once it becomes clear that they are satisfied, SAFE begins to discusses options for saving them some money in other areas.
If a member was to say, for example, that the savings was attractive, but they just lost their job and they wanted to refinance over a longer term, the software could quickly provide an answer, said Rick Poulton, president of Better Branches.
"The analytics have two parts and the first is the unique offer–that Holy Grail of one-to-one marketing," Poulton said. "So rather than follow up with 'I think we can save you some money with this product,' it's more like, 'We can save you $55.' So they can very quickly make a decision."
The software provides different scenarios either within a trading line or to move across trade lines that give the CU product options for members. The calculations are all done in real time and conform to the credit union's underwriting standards.
Cross-selling sales have gone beyond just consumer loans at SAFE. Single-service members have also taken up real estate loans, auto loans and credit cards as well as some of SAFE's insurance products, with GAP being a very popular item.
"What's really interesting is that we're calling these households during the day," said SAFE President/CEO Henry Wirz. "As you can imagine, people are not home. People are receiving these calls as a voice message but we are consistently getting members calling us back to follow up on these offers. We think that's a wonderful indication of how the members see this program."
The endeavor has turned out far better than its previous effort, where SAFE was essentially offering a $50 gas card to people who sign on to additional services. The CU didn't peak much above 6% sell-through using that method, according to Wirz. Promoting its everyday rates, terms and underwriting to these members SAFE has attained four- to five-times the degree of cross-sell into single-service households.
SAFE's early success has caught the eye of both the $1.5 billion Travis Credit Union in Vacaville, Calif., and the $6 billion The Golden 1 Credit Union in Sacramento, Calif., so much so that Wirz said that both CUs are "extremely interested" in the technology.
SAFE also began a somewhat related program that it calls BOB–Book of Business–where its branches and call center contact members utilizing similar techniques to the cross-selling program. Over the last few weeks, SAFE branches have opened 252 checking accounts, Wirz said.
"We're going to dramatically expand the cross-selling program," Wirz added. "Nothing is more compelling than telling a member that you can save them money on an existing loan–we've already qualified you for credit and done the underwriting–all you have to do is say yes and away you go." –[email protected]
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