With membership growth for all U.S. credit unions at 1.7 percent, indirect lending has been an increasingly important source for gaining new members. Since the beginning of 2005, credit unions have gained a net 736 thousand indirect loans members and, as of September 30, 2005, have a total of 4.4 million indirect loans outstanding.
Unfortunately, these new members are not using credit unions’ other products and services.
In response to this challenge, Wescom Credit Union and CU Direct Corporation set out to explore the feasibility of cross-selling members gained through their indirect lending program. Among the key findings:
Segment Your Markets
Make the distinction between indirect members who reside near the credit union and those who live beyond reasonable driving distance. This distinction is an important step towards making cross-sell efforts cost effective.
Refine Your Communication Strategy
The initial message to new indirect members should be clear, concise and segmented. Personal phone calls or invitations to visit a credit union branch are a good idea for members who reside nearby, while credit cross-sells, such as loans and pre-approved lines of credit are recommended for members who live at a distance.
Make it Easy
While you should aim to increase your credit union’s profile at dealerships, this should be done in a way that minimizes the dealers’ time and effort. Make the credit union’s brand more prominent on the dealership membership application or create a tear-off membership card that an indirect member can take with them.