Multiple Avenues to Engage Indirect Members

As the rate of membership growth continues to decline at credit unions across the country, capturing new active members is becoming increasingly important. Learn how multiple tactics employed at once can improve your chance of success.


As the rate of membership growth continues to decline at credit unions across the country, capturing new active members is becoming increasingly important.

Indirect lending, which grew by 10.24 percent in the third quarter, remains an area in which credit unions can direct their attention in order to amplify and augment their base of active members.

“Historically it’s always been a challenge to expand these relationships, and it’s something all credit unions want to do,” said John Dowling of Lending Solutions Incorporated.

“Timing is important, and once 30 or 45 days pass after the loan is made, the bud is off the rose, so to speak,” Dowling said.

To counteract that, industry best practices are to contact new borrowers within a few days of funding the loan. This initial contact should serve to not only verify details of the transaction, but also to provide an overview of credit union products and services to the indirect borrower, with the goal of cross-selling other offerings, such as credit cards, share accounts, and mortgage products.

While many credit unions prefer phone calls, mail represents another opportunity for promoting products and services. Some credit unions treat indirect borrowers the same as regular members, and send them all the same newsletters and other material they would receive if they held additional accounts at the credit union. Other credit unions decide to specialize their contact and use mailings to highlight the benefits of making a credit union their primary financial institution.

But time and method of contact are just two factors in planning an effective indirect member conversion program. Cross-selling credit union products also largely depends on geographic location, borrowers’ credit profiles, and dealer partnerships.

Since convenience and proximity to branches is so vital to gaining members, aggressively targeting only indirect borrowers who reside within a short distance of branches makes for the most efficient allocation of resources. If marketing campaigns are designed around limitations, it is better to forgo indirect borrowers who live far away or have undesirable credit profiles.

Forging effective relationships with dealers can also help to build robust indirect member conversion rates. Thomas Hast of JSC Federal Credit Union suggests focusing on small and family-run dealerships that demonstrate a commitment to the community. When the credit union-dealer partnership is mutually beneficial, JSC will run ads to promote dealerships in their mailings to members, enticing more existing members to apply for auto loans and further strengthening the synergy between the credit union and its dealer partners.

Addressing the issues of time and geography, accounting for borrowers’ credit-worthiness, and building productive dealer partnerships are just a few of the components involved in developing a strategically effective plan to cross-sell credit union services to indirect borrowers.




Feb. 14, 2005


  • More details would be nice. I was looking for the second page.
  • By having a balloon or lease program to enhance your indirect program, you can start off with higher yields than going after the traditional loan which pays off at 24 or 30 months. Also, balloons and leases create repeat buyers who are loyal to the program.