Robert O'HaraThe 2014 economycontinues to show promising consumer loan growth – quarterly datain new vehicle loans by themselves show an increase of 14% and somemarkets experienced growth as high as 33% (Callahan, 2014). But asthe industry continues to suffer attrition in mortgages and homeequity, the portfolio gap becomes more and more apparent. How doyou fill it?

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The answer lies in returning to your roots, the foundation onwhich your credit union was built. That would be your members.

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One way to look at this is to imagine that your credit union nolonger has access to the indirect loan channel of your auto loanportfolio. When you take that away, what does your portfolio looklike? This exercise was recently put into play with a leadingcredit union and much to their surprise, they found that less than5% of their membership was taking advantage of auto lending throughtheir credit union.

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Shocking, right? What would happen if you did this exercise? Itis not beyond reason to speculate that any credit union offeringdirect and indirect products could have roughly the same results.This is especially true if not much attention was given to existingmember loans.

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Your members are with you because of the values you espouse andthe loyalty they have to you and your brand. If you are to realizeorganic loan growth, you must capitalize on precisely those valuesand brand loyalty.

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To fill the gap, you must re-engage your existing members.Educate them on why credit union lending is better, what is in itfor them, establish relevancy with a product that speaks to themand entice them with more than mere rate.

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Credit unions separate themselves from banks largely by beingmember-focused, and in all honesty, strive to serve their members'best interests. But when taking a truthful and deep look atpractices, findings indicate that the industry's marketing approachcan often veer from a member's point of relevance and thus resultin lack of engagement – all in spite of good intent.

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For instance, industry practice has focused upon marketing rateswith the intention that members will recognize the inherentbenefits of financing with a credit union. But market researchshows us that (1) credit union rates are sometimes not ascompetitive with captives and big banks and (2) that consumers,even when educated about the truth of 0% financing and faced with achoice between larger savings over a longer period of time orimmediate gratification through cash-back incentives and the like,will choose immediate gratification.

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But when you take the time and resources to educate members andgive them the tools they need to make an informed decision beforethey even contemplate a dealer visit, you not only become theirlien holder, but their partner. They will want to keep their loanswith you and invest in other products that are in their bestinterest. Products such as extended warranties and GAP insurance –the products that a dealer typically throws in at point of sale andthat you offer at better coverage and cost.

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The point here is that there must be an alignment of intent andpractice. Stop marketing from a point of intent. Start marketingbased upon member needs, expectations, relevance and demand. Dothis and organic growth becomes a natural progression.

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The solution is one of layered simplicity. Simple in that alarge part of the answer is to provide a streamlined, one-stopresource for members to research and compare cars and inventoryalong with applying for financing. The layering is in the marketingand engagement of such a resource.

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Put yourself in the shoes of a typical consumer who isconsidering purchasing a home. The first thing Average Joe does isvisit a real estate agent to find his new home. They don't visittheir credit union or bank until they are ready to obtainfinancing. The same applies to auto buying. But, when you providean auto buying resource to your members and market itappropriately, your credit union becomes relevant in the autobuying process.

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When you then take into account that 97% of car buyers(CapGemini 2014) start their purchase online and that future carsales are slowly, but surely moving toward a strictly onlineencounter, the need for a credit union-branded car buying resourceis crystalized.

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And, when you provide members with a resource to shop, researchand buy a car and market it relevantly and engagingly, your memberswill seek you out at the front end of their purchase.

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So, get back to your roots, put your members first and realizeyour true potential.

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Robert O'Hara is vice president of strategic alliancesat GrooveCarInc. in Hauppauge, N.Y. He can be reached at [email protected] or 

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(631) 454-7500.

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