The day after Thanksgiving is the celebrated start of the holiday shopping season. Major retailers open early and customers camp out in the hopes of picking up heavily discounted merchandise and other specials. Now, credit unions such as Oklahoma Employees Credit Union ($417.8M; Oklahoma City, OK) are offering deals of their own to draw business during a time of year that is historically slow.
“No one is thinking about refinancing their car on Black Friday,” says Scott Bell, senior vice president and chief operating officer at OECU. “You are thinking about waking up at 4 a.m. to buy your daughter a special thing from Toys-R-Us that’s half-price for that day.”
The Black Friday Money $ale
Black Friday itself has become a quasi-national holiday. News outlets lead with stories detailing crazy crowds and retailers publish their discounted merchandize weeks — if not months — in advance. In 2012, consumers shelled out a record $59 billion on Black Friday purchases, both in-store and online, reported CNN.
OECU launched its Black Friday Money $ale in 2011, in part, to build off the shopping holiday
“People are already thinking of Black Friday and discounts,” says Jennifer Lown, vice president of marketing and business development. “We wanted to capitalize on that.”
But the credit union also saw an opportunity to offer its Oklahoma City community members a chance to save during a time of year rife with spending.
“We always want to save our members money when possible,” Bell says.
OECU has run the money sale annually since 2011 and typically offers deals in areas such as autos, credit cards, and, to a lesser extent, real estate. Although the promotions change yearly, auto loans and low rates are a major draw time of the year.
“You’re not going to convince someone to go out and buy a home,” Bell says. “But we want to offer something just in case someone is on the fence. The auto loans, or perhaps the gift cards with no fees, are the big draws. Nothing comes close to the auto loans.”
From Black Friday through Cyber Monday in 2012, the credit union offered surcharge free gift cards, a 1.00% APR discount on unsecured loans, and a 1.49% APR on new or used auto loans for borrowers with credit scores of 640 or higher. It also offered deals stretching from Black Friday through the end of the year, including a 90-day payment deferral and a $149 mortgage loan origination fee. To mitigate delinquencies, the credit union maintains the same underwriting standards it practices throughout the year. Anyone who qualifies for the money sale would qualify any other time of the year.
For the 2013 sale, OECU wanted to see growth in credit cards and mortgages and in fact generated $5.9 million in consumer approved/preapproved loan applications. It also wanted to focus on helping people of all credit situations. This year, according to the website, the credit union offered a 1.90% APR on new and used auto loans, as well as special rates for all credit situations and payment deferrals until February 2014.
“We’re not just looking at that A-paper,” says Lown says. “We’re trying to offer a special rate for all credit situations. We want to help as many people as we can.”
To attract the notoriously difficult mortgage loans, the credit union offered an iPad Mini to every member who is able to originate and close a mortgage loan by the end of the year.
Bell doesn’t expect to have data on the number of iPad Minis it distributed until January, and the credit union won’t have data on the number of booked loans for at least 60 days. However, based on historical data, Bell estimates the credit union will book approximately 60% of its approved and preapproved applications. That puts the best estimate for booked consumer loans around $3.5 million, which exceeds OECU’s promotion goal of $3 million.
Black Friday Savings
That $3 million figure isn’t out of the ordinary. OECU has achieved notable results from these money sale promotions. According to Bell, in 2011 the credit union processed $1.4 million in consumer loans. By contrast, in 2012 the 1.49% APR offering helped the credit union process $6.6 million. Notably, only 40% of the money sale auto loans qualified for the 1.49% APR special offer; the other 60% received higher rates.
OECU’s ability to efficiently and effectively market the promotion is a major contributor to the event’s success. Overall, Oklahoma Employees spends an average $500 or less on each component of the money sale, including marketing. The credit union takes advantage of in-branch resources such as email, social media — it has almost 3,000 Twitter followers — and branch giveaways. It does not use direct mail.
“We have found historically that direct mail in November and December doesn’t have as great of an impact,” Bell says.
Lown agrees, adding: “We see what we can do to get the most bang for our buck. Not to say we won’t use direct mail, but I don’t know if direct mail could get any more expensive.”
The expertise and enthusiasm of Oklahoma Employees’ staff, as well as their unwavering commitment to save members money, are additional contributing factor to the success of the money sale.
“Our staff makes a difference in the success of [the Money $ale],” Bell says. “We give them a teaser about a week ahead of time and they start talking with people as they come in or as they talk to them on the phone. So they’re ready for it. They’re waiting.”