Credit Union Geek

Marketing, Strategy, and The Force by Joe Winn

Tag: car buying

Serving Credit Union Members Best – Auto Loans (Part 3)

Welcome to Part 3 of what became the Unseen Credit Union Competition series. The first part highlighted what members receive in the mail from not-to-your-standards protection services. Did they know you could help them more effectively, at a lower cost?

Then we saw “A Credit Union Member Walks Into a Car Dealership…” This revealed the necessity of positive, mutually-beneficial relationships with car dealers. It also raised the question of what your CU offers alongside that loan. You may know. Do your members?

This post continues right from where we left off, finishing the buying process. We’ll look at how your credit union compares on the “easy scale” for loan closing, protection offerings, funding, and more. Remember, it’s always about getting the member what they really need…easily!

Be Confident! Credit Unions Can Compete.

Women at Table Laughing
What do you mean that’s not you and your dealer partners?

What’s your loan team’s relationship with auto dealers? In the previous post, we saw the range from best buddies to mortal enemies, with everything in-between.

Unless you are able to meet all your lending goals through tent sales, you’re going to need to work with dealers. That doesn’t mean you have to be a pushover!

Explain to your dealer partners how members sent there may receive information about your ancillary services and financing. If the member wants to learn about dealer offerings, that’s their choice.

Some members will just do everything at the dealer. Perfect for your indirect program, if you have one.

Others will want to do it all on their phone before ever visiting the dealer. And stopping at a branch? Fat chance! Thus, how can you help accommodate this scenario? Does your technology allow it?

Credit Unions Can Sell. Really!

It shouldn’t matter how members choose to conduct their car search, financing research, and buying process. You simply need to provide the tools to make it easy.

Talking Through Can and String
An unlikely, though fun, communication medium.

Which leads us right into talking about your products! Ok, maybe not talking, but some form of member interaction, whether chat, clean website/app, or something else. It’s for them as much as for you!

This is where you guide members through what you can offer. Explain why each matters to them (Big Data comes in handy here) and how you are helping reduce their risk, expenses, while preserving peace of mind.

It sounds like selling. Maybe you’re not about selling to members. Then let’s change the word: Helping. Would you be willing to help your members choose what services make the most sense for their situation?

Since you’re not always doing it in-person, yes, that means some pretty awesome site and mobile app design. You can do it!

I was “sold” GAP by my credit union like this:

“Ok, so your loan is approved. Do you want GAP? It can pay the difference between your loan and insurance payout in the event of your vehicle being totaled. It’ll be $$ more per month.”

I declined. Shocked?

I’m Just Browsing

If you’re at a store and someone asks if you need help, what do you say? “No thanks. I’m just browsing.”

In this case, I’m just browsing the ancillary services. If you present them as I expect, ie. selling, I won’t be interested. Yet maybe it’s actually perfect for me!

Ask on Iron Swinging Sign

Presenting your services with a product description and cost isn’t appealing to anyone. It’s about asking the right questions, then offering what makes sense in the right way for that member.

I’m not going into selling here (we’ve talked about that many times in the past). Ok, maybe I am. Again, because it’s so important! Let me repeat: Selling is helping. And you are helping, right?

  • Your car buying service helps save members time and money. Explaining its benefits and how to best take advantage isn’t selling.
  • GAP helps a member avoid thousands in unexpected costs after an insurance settlement. Sharing the exact “GAP curve” that member experiences isn’t selling.
  • VSCs are expensive up-front, but how might a surprise $2000 repair affect your member, their job, family, and financial stability? VSC helps your members keep their car on the road (and reduces repossessions, which are often caused by unaffordable vehicle repairs). HIghlighting this isn’t selling.

Your Member Walked Into A Dealership…

Menu with Food and Dealer Offering
That looks appetizing…

The dealer your member visits will present all of these services. You know they’ll be more expensive, and who knows if they are even the best fit?

But if it’s the first time your member hears about them, that’s a huge opportunity missed for your credit union.

And it’s a disservice to your member.

On the other end, it’s important the credit union recognize the partner status of the dealers. They have the “cool” part of auto loans. Just because you need them doesn’t mean they have to hold all the cards.

Shaking Hands Partners Chalk

Creating a beneficial relationship for all parties means the experience is better for your members (and the credit union, too!).

Then there’s the question of “selling”. There are two extremes. We covered one in the first part: Companies trying to sell your members questionable products they may or may not even need.

The other extreme is not mentioning anything to a member. You probably fall somewhere in the middle, and that’s a great place to start.

Now, it’s up to you to make sure you provide the best everything for a member. And ensure it’s clear and easy for them!

Because isn’t “serving members the best” what your credit union is all about?

Oh No! Millennials Aren’t Doing What We Expected!

The average age of a credit union member is 47. So it stands to reason the industry has a love affair with those of the younger demographic. If only they would talk about it!

Truth be told, a day cannot go by without seeing at least one discussion of Millennials and credit unions (And yes, Gen Z as well).

Everyone Has The Answer

So, is it tech solutions? Or streamlining your lending? There’s a lot of content out there. Most tell credit unions like yours exactly what you need to do to attract Millennials.

Is it really that simple? Can one thing change everything?

You know better. It’s no one thing. It’s a culture change. Why?

Millennial Challenges

It’s not an easy road to bring in these younger generations. If you listen to all the naysayers, Millennials don’t buy homes (mortgages), they don’t use credit cards, avoid owning cars (auto loans), and have no intention of changing.

Maybe it’s because their wage growth is stagnant and they are buried in student loans…no, it’s probably because they’re completely different from every other human ever to exist.

The World From Our Perspective

Tamagotchi

Alongside the disappearance of Tamagotchi pets, the needs of a generation had changed. Face it, it’s hopeless to even bother being in the banking industry anymore. Consider yourself lucky if you even retain a piece of their meager savings.

Except all of this turned out to be false. Or, as Obi-Wan would say, “from a certain point of view.”

When the average Millennial walked for graduation (like me), here’s what we had to enjoy in “the real world”:

  • Global recession
  • High unemployment
  • A banking sector in disarray
  • Wall Street in free-fall
  • Continuous threats of government shutdowns
  • Student loan burdens

Not an encouraging environment to make a stand!

The “Hesitant” Generation

So, Millennials waited. They put off moving out. They held off on new wheels. All in the hopes for a chance to visualize a solid career path (or a job that fit their degree!).

With all this patience, you can almost call them the Hesitant generation. Sure, adoption of technology, in every form, was rapid, but they also were the first to grow up with the Internet.

It was a given they would be comfortable amongst cyberspace. The real world? Not so much.

Until things started to improve. Like now (written in 2015). It’s far from fixed, however, credit is more readily available. More companies are hiring. For the most privileged (and sometimes, just lucky) growing incomes situated them in up-and-coming urban centers.

Big cities, sure, but also the smaller metro areas (like our own award-winning Fort Lauderdale) are experiencing dramatic influxes of young professionals. “Yeah, but in the city, they don’t drive, and they rent condos, so nothing changed.” Except not.

Millennials Have Drive

Millennials have grown into the second largest car buying group, behind their parents, the Boomers. You were right, they want the technology, and cool for us represents efficient and modern.

Chrome Tesla Headlight

While the Tesla Model S and X stand as the pinnacles of “cool”, I have a number of friends who drive the Model 3. And they love it. Plus, they’re saving money on cost-of-ownership, while making a statement on environmental and social change.

No wonder other carmakers are pushing their own plug-ins, electric, and other forward-looking models. Only, without the culture, I’m not sure how successful they’ll be.

And, it’s true, a lot of younger people want robust public transportation and walkable communities as well. Unfortunately, we’re not there yet in most places. So, cars are still necessary.

Also, Mortgages

Large Home Along Street
A typical Millennial starter home. /s

Millennials are also buying homes, when they finally can afford it. To be clear, building up enough savings to get a traditional mortgage is still out of reach of most. An opportunity for your credit union, perhaps?

Renting was a necessary evil, and also helpful for a rapidly-shifting work environment. Now, the highest wage-earners of the Millennial generation are able to “settle down” just a bit, and that comes with buying property.

Help Us Learn!

Credit card usage amongst Millennials and Gen Z is down, in comparison to older generations. That’s true. However, debit cards are embraced wholly. To me, it’s a financial literacy issue more than anything.

If only credit unions served that role…

Also mentioned in a recent post was the activities of CU Student Choice, helping CUs become financiers of student loans. If you can help reduce the monthly payments, you can change a life.

The Millennial Struggle

So this Millennials group…where do credit unions fit?

It’s about connecting with culture and technology. You can be the coolest cause around, but if we can’t access it all from our phones, then you’re getting passed up.

Woman Drinking Coffee on Phone
It’s a stereotype, guys. But we do enjoy local coffee shops.

What can you do now to attract this generation? Show them how you can help their real challenges:

  • Offer student loan refinancing (Show the savings)
  • Help them get rewards-based debit cards (And work towards credit cards with even more back)
  • Provide a seamless online auto loan experience (With a functional car buying service)
  • Be there for their first mortgage (And help them when they don’t have the savings)

Offer your time-honored service. But pair it with the tech people today expect. Ask yourself: “How much of our banking experience can be done from our mobile app?” If the answer is less than 75%, you’re going to struggle.

Robust. Simple. Genuine.

I’m not saying everything is great for Millennials. It’s not. There are a lot of problems that our society needs to address. However, not being a member of a credit union is one that can get solved.

Millennials use the big banks because they’re easy. Be just as simple, ensure you’re genuine about what you say and do, and package it all to be ready on the go.

Do all this, and you’ve got a bright future ahead.

Sources: http://www.chicagotribune.com/classified/automotive/sns-wp-blm-news-bc-autos-millennials25-20150425-story.html, http://www.cuinsight.com/make-new-friends-reaching-the-younger-demographic.html

Image credit: https://bluesyemre.files.wordpress.com/2012/12/generation-x-y-z.jpg, https://perfectlylegitimatebusiness.files.wordpress.com/2015/09/tamagotchi.png

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