s most Credit Unions try to do more with less when it comes to marketing their Credit Union, it can be difficult to see where to start when tasked with growing a loan base successfully.
Increasingly stringent credit criteria and a decreasing number of loan queries can be discouraging. “Most Credit Unions membership has been increasing in recent years so looking at existing members is usually the first point. Given that many loan applicants are fearful about rejection, so much so they don’t apply at all, addressing the issue of fear is critical” said Mary Cloonan, Marketing Clever, a market development consultancy specializing in financial and professional services.
From discussions with a number of Credit Unions, Mary has identified the following areas of focus to encourage and grow a credit union loan book:
1. Address the fear factor – many Credit Unions acknowledge that applicants can be fearful of rejection, particularly when they know Credit Union staff personally. Methods of addressing that issue include setting simple criteria in place to allow applicants assess themselves before applying. For example successful loan applications usually are regular savers of €100 per month for a minimum of 6/12 months; loans repayments usually shouldn’t exceed X of your monthly outgoings etc.
2. Look to your membership. Review your membership and ascertain the loan penetration. Consider segmenting the membership based on potential loan applicants. Consider members who will repay their existing loan in next 3/6 months. Are they suitable applicants for a renewal of loan? Are there any regular savers that could be offered a loan facility?
3. Applying. Make loan applications easy to follow and available. Consider from the applicants perspective and ensure applications are available, easy to follow and not onerous to complete. The banks have dramatically changed their approach to loan application forms in the last 10 years to shorter forms, usually taken over the phone or online applications.
4. Ask. It sounds simple and it is. Once you have identified potential loan applicants, offer the loan facility to them directly. Direct mailing works, critical to its success are well written clear offers. The banks have used pre approved and priority direct mailing campaigns successfully to build their portfolios. Key to this success is a strong direct follow up and reminders to potential applicants. Reinforcing the campaign in branch is very important as it allows staff to engage with potential applicants on a one to one basis. Ensure you comply with data protection requirements from when you captured the members’ details.
5. Tune in and think like the Applicant – Consider the applicant’s perspective as the year progresses and build your loan campaigns with that in mind. Many are keen to clear credit card debt in Spring or start saving regularly with a particular goal in mind anything from cars, holidays or education. Frame your loan campaigns with the end goal of the loan applicant.
6. Allocate a Resource – It’s important that there is a resource that can take responsibility for your plan, actions, follow through, tracking and reporting back on outcomes. As with any initiative, an owner is critical.
Many Credit Unions are facing similar challenges to grow loan books so reviewing what others do can also inspire. “From my own experience working in the financial services sector, direct mailing campaigns, particularly when followed up, are very effective. A Credit Unions database is very valuable and the first point to consider if marketing budgets are constrained” said Mary.
As with any initiative, it’s important to track your progress and gain feedback over the 6/8 weeks of a particular loan campaign. Tracking the various stages of a campaign from letter issue, reminder, one to one follow up, completed application and drawdown can highlight areas where applications are falling away.
“As with any campaign, results are important and can take some time, so be consistent and persistent and best of luck” concluded Mary.
If you have any queries on how to start your Credit Union campaigns contact Mary Cloonan at [email protected]